Spring Statement: Where's the news about it?

The government often tests the water on potential changes by leaking information to the press, and business groups are rarely shy about making their wish lists known to the public. In this blog, we consider why it has been relatively quiet so far in the run up to the Spring Statement.

‘Partygate’ and Ukraine

In recent weeks the UK’s news has been dominated by the Prime Minister’s problems over ‘Partygate’. More recently, the build-up to Russia’s invasion of Ukraine has been dominating the headlines. Against this backdrop it is understandable that the Spring Statement has struggled for media oxygen.

It has also been a busy time for budgets and economic forecasts. COVID-19 prompted several such statements, giving impacted and businesses the necessary support to get through the pandemic.

This March’s event will be the first Spring Statement since 2019. In 2020, Chancellor Sunak announced a Summer Economic Update and a Winter Economy Plan. Last year we had full Budgets in Spring and Autumn, which both saw some major announcements.

The cost-of-living crisis

The other issue dominating the news agenda is the cost-of-living crisis. This is seeing households begin to struggle with rising inflation driving up prices and soaring energy bills. However, the government has already announced it will provide a £200 rebate to help with energy bills, and some households will qualify for a £150 council tax rebate.

There have also been calls on many fronts for the Chancellor to reverse the government’s planned 1.25% hike in national insurance contributions. Yet, the Prime Minister and Chancellor have jointly ruled this out.

Squeezed public finances

The latest public finance figures suggest that the government is on track to borrow less this tax year than forecast. However, it still needs to raise a significant amount of money to meet the cost of its coronavirus economic support packages.

There has been some speculation that the Chancellor will look to pensions and capital gains tax to raise some of this money. In last year’s Spring Budget, Mr Sunak froze the pensions lifetime allowance for five years. He also froze income tax, inheritance tax and capital gains tax thresholds.

There has been speculation that the Chancellor could reduce, or even abolish, pensions tax relief.

The Chancellor could also increase capital gains tax to align with income tax. A proposal made by the Office of Tax Simplification last year but so far not implemented. This would simplify the system and bring in an estimated £14 billion (PDF 3.6mb) to the exchequer a year.

Super deduction to stay

The run up to economic statements usually sees business groups request changes they’d like to see.

The Confederation of British Industry (CBI) has been the only one to do so thus far. It suggests the Chancellor makes the super deduction permanent to boost investment.

The CBI says that announcing a permanent successor at Spring Statement could increase annual capital investment by 17% by 2026. That would equate to £40 billion a year boost to the UK economy, it adds.

Keeping your clients informed

We’ll find out what Chancellor Rishi Sunak has in store on 23 March. You can keep your clients up to date with our detailed Spring Summary, available in a range of formats including printed copies, PDFs and flipbooks.