Spring Statement - key measures
The United Kingdom’s security and ability to be a force for good in the world is in large part based on the strength of our economy. Thanks to the hard work of British workers and businesses, and the support packages provided by the government, Britain's economy has been recovering well, with record job vacancies and unemployment back at pre-crisis levels.
However, even before Putin's illegal invasion of Ukraine, which would have had dire consequences around the world for energy and food prices even without sanctions, a variety of world factors including the impact of COVID was already causing leading to energy cost rises and presenting many households and businesses with serious challenges through rising costs of living and doing business.
The steps Britain and other nations are taking to sanction Russia will not be cost-free for us at home: the biggest impact will be on the cost of living for working families. But as the PM said at the weekend, the cost of doing nothing in the face of Putin's aggression would have been even worse.
Nevertheless, the effect of the energy price rises we were already facing on world markets, the further rises which the war is directly causing, and the impact of sanctions will mean that millions of people are facing the largest cost of living challenge in decades.
That is why the chancellor has today published a new tax plan in his Spring statement to reduce and reform taxes over the Parliament: helping families with the cost of living, creating the conditions for private sector-led growth, and sharing the proceeds of growth fairly:
Key measures include:
- Cutting fuel duty by 5p for 12 months – a £5 billion TAX CUT and largest fuel duty cut ever
- Cutting National Insurance by raising the employee threshold at which people start to pay it by three thousand pounds to line up with the Income Tax threshold. This will particularly protect low aid workers but in total it will help 30 million working people around the UK from July, Effectively this is a £6 billion TAX CUT, worth over £330 a year – 70 per cent of people will pay less tax even after the levy to raise more money for the NHS and for Adult Social Care
- Cutting the basic rate of Income Tax to 19p from 2024 – the first income TAX CUT for 16 years, a £5 billion tax cut for over 30 million workers, savers and pensioners
- Cutting business employment taxes now by raising the Employment Allowance to £5,000 – a TAX CUT for half a million small businesses worth up to £1,000 per business
- Cutting VAT on energy saving materials like solar – a TAX CUT only possible because of Brexit
- Doubling the Household Support Fund to £1 billion for councils to support the most vulnerable
- Creating the conditions for private sector-led growth – through Autumn Budget TAX CUTS on business capital investment and R&D
Make no mistake, this year is still going to be tough, but these measures will help reduce the impact of rising costs for millions of families and delivers the biggest net cut to personal taxes in a single statement in over a quarter of a century.
It is only because a Conservative government is capable of the tough but responsible decisions to fix our public finances that we can announce today that taxes are being cut, debt is falling, and public spending is increasing. Delivering this plan will require continued discipline on public spending that only a Conservative government can provide.