Spring Statement at a glance: The key points as Chancellor unveils fuel duty cut and NI change

Chancellor Rishi Sunak has unveiled his Spring Statement, amid a deepening cost of living challenge.

Here are the key points.

Fuel duty

The government has frozen fuel duty for 11 years, but with oil prices soaring, and hitting record highs amid the Russian invasion of Ukraine, the Chancellor announced it will be cut by 5p per litre for a year, from Wednesday evening.

Data firm Experian Catalist saysthe average cost of a litre of petrol at UK forecourts on Tuesday was 167.3p, while diesel was 179.7p.

This represents an increase of 18.0p per litre for petrol and 27.0p for diesel over the past month.

Income tax

There was an unexpected promise from the Chancellor to cut the basic rate of income tax before the end of the current Parliament in 2024.

He told MPs: “A clear goal for Conservative chancellors, and even some Labour ones, has been to cut income tax. The fact this has only happened twice in 20 years tells you how hard it is to do.

“Covid and the war in Ukraine have only added to the difficulty of achieving this by the end of this Parliament.”

He said it would “clearly be irresponsible to meet this ambition this year”.

But he added: “By 2024, the OBR (Office for Budget Responsibility) currently expects inflation to be back under control, debt falling sustainably, and the economy growing. Our fiscal rules are met with a clear safety margin.

“So my final announcement today is this: I can confirm, before the end of this parliament in 2024, for the first time in 16 years, the basic rate of income tax will be cut from 20 to 19p in the pound.

“A tax cut for workers, for pensioners, for savers - a £5billion tax cut for 30 million people. It is fully costed and fully paid for in the plan announced today.”

National Insurance

The cost-of-living crisis will be exacerbated in April by a 1.25 percentage point rise in National Insurance to fund the NHS and social care.

The Chancellor rejected calls to postpone it.

But he raised the threshold at which people start paying NI contributions by £3,000 to £12,570 from July.

This amounts to “a £6billion personal tax cut for 30 million people across the United Kingdom - a tax cut for employees worth over £330 a year”.

He said around 70 per cent of workers would have their tax cut by more than the increase due in April.

VAT

Mr Sunak announced VAT will be scrapped for energy efficiency measures such as solar panels, heat pumps and insulation for five years to tackle high energy bills.

He said: “We’ll also reverse the EU’s decision to take wind and water turbines out of scope – and zero rate them as well. And we’ll abolish all the red tape imposed by the EU. A family having a solar panel installed will see tax savings worth over £1,000. And savings on their energy bill of over £300 per year.”

Energy bills

Mr Sunak had already announced a £200 loan to every family to cut their gas and electricity payments from October – although not until the price cap jumps 54%.

He also announced he would double the Household Support Fund to £1 billion “to do more to help our most vulnerable households with rising costs”.

Local authorities will receive the funding from April, he said.

Benefits

There had been calls to help low and middle-income households through the benefits system.

But Paul Johnson, director of the Institute for Fiscal Studies (IFS), said there was “no new help for those dependent on benefits in today’s statement”.

He tweeted: “The big omission from this statement was anything for those subsisting on means-tested benefits.

“They will be facing cost-of-living increases of probably 10% but their benefits will rise by just 3.1%.

“And (it is a) cut compared to last year if you account for withdrawal of £20 (Universal Credit) uplift.”

Business

Employment allowance will rise to £5,000 from next month, which the Chancellor described as a “new tax cut” worth up to £1,000 for half a million small businesses.

Green technology will also be exempt from business rates from April, saving firms £35million in 2022-23.