How did the Chancellor fare at Spring Statement?
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Tim Evershed 
25 March 2022 16:11
Chancellor Rishi Sunak faced a tough task at this year’s Spring Statement. As inflation continues to soar, the Chancellor heard calls from businesses, consumer groups, charities and politicians from all parties. These voices made a range of demands for tax cuts and increased spending, and not all of them could be met.
It’s now 48 hours since the Chancellor delivered his Spring Statement, in this blog we reflect on the key issues raised.
Tax cutting measures
The Chancellor started and finished his Spring Statement speech with two tax-cutting flourishes. It began with the widely expected cut to fuel duty, which saw 5p per litre cut from petrol and diesel.
Mr Sunak’s grand finale saw him pledge that the basic rate of income tax will be cut by 1p in the pound in April 2024. By then the Chancellor said that the Office for Budget Responsibility (OBR) expects inflation to be back under control, with debt falling sustainably.
Swings and roundabouts on NICs
In between these announcements the Chancellor disappointed those who hoped he would cancel the Health and Social Care Levy, which adds 1.25% to national insurance contributions (NICs), and will be implemented this April.
However, he softened the blow of this rise by raising the starting thresholds for NICs to £12,570, which brings them into line with income tax thresholds.
Business benefits
The Chancellor also gave some businesses a boost with a £1,000 increase to the Employment Allowance, which will benefit SMEs.
Meanwhile, he revealed that no business rates will be due on a range of green technology used to decarbonise buildings, while there will also be 50% business rates relief for eligible retail, hospitality and leisure properties from April 2022.
Breathing space
The Federation of Small Businesses (FSB) gave one of the more enthusiastic responses to the Spring Statement. It said that uprating the Employment Allowance and cutting fuel duty would ‘provide crucial breathing space’ to small businesses.
However, other business groups did not hide their disappointment that the Chancellor had not laid out further measures. The British Chambers of Commerce (BCC) said the Statement fell short of the action needed and ‘did not fundamentally address the huge cost pressures [businesses] are facing’.
Meanwhile, the Confederation of British Industry (CBI) warned that the measures announced by the Chancellor ‘don’t do enough to tackle the current challenges facing firms’.
Energy costs
Coming into the Spring Statement, soaring energy costs had been one of the major issues facing the Chancellor. In response he made three announcements, including the fuel duty cut.
The other measures saw the removal of 5% of VAT from the cost of energy saving materials. In addition, vulnerable households will be aided by £500 million of new funding.
Limited impact
However, these measures drew a scathing response from consumer champion Martin Lewis.
Taking to social media, he : ‘If that's all he's doing on energy - it is limited and won't impact the majority of households who will see a likely £1,300 average increase in year-on-year bills by October. My head has sunk. I just hope there's a rabbit to come out of the hat.’
However, the only rabbit to come out of Mr Sunak’s hat saw him pledge to make a cut to income tax in two years’ time.
Keeping your clients informed
Our detailed Summary covers all the key announcements from the Spring Statement. It is available in a range of formats including printed copies, PDFs and flipbooks.
