Rishi Sunak will deliver his Spring Statement 2022 tomorrow with grim news for millions of struggling families.
Energy bills, National Insurance and inflation are all surging in April, outstripping benefit, pension and wage rises.
Meanwhile tax and student loan repayment thresholds are being frozen in a squeeze on the cost of living.
The Ukraine-Russia war will make inflation worse in OBR forecasts out tomorrow – the Mirror understands Whitehall officials are braced for it to go higher than 8%.
Chancellor Rishi Sunak has is considering cutting fuel duty by 5p a litre after dropping a heavy hint on Sunday – but Labour warn this would barely touch the sides.
He’s also said to have looked at raising the National Insurance threshold, to take some of the lowest-paid Brits out of the soon-to-be-hiked tax.
But he’s resisting any bigger action like axing the NI hike entirely – as demanded by five anonymous Cabinet ministers.
And he seems unlikely to raise pensions or benefits beyond 3.1%, as called for by Labour and despite pensions being set to rise more than 7% in April 2023.
A source told the Sun on Sunday: “The Spring Statement will be very policy-light. Don’t expect him to pull a rabbit out of a hat. Maybe a few baby bunnies, no more.”
The SNP called for an “emergency package of support” while Labour demanded a windfall tax on oil giants.
And TV’s Martin Lewis said: “As the Money Saving Expert who’s been known for this – I am virtually out of tools to help people now.
“It’s not something money management can fix. It’s not something for those in the lowest incomes, telling them to cut their bills will work. We need political intervention.”
The Tory Chancellor said “where we can make a difference, of course we will” and has set up a cost of living unit in the Treasury – amid suggestions he could raise the £150 council tax rebate or £200 repayable discount off energy bills.
He also claimed he would be lowering taxes by 2024 – after raising the tax burden to its highest in 70 years.
Yet the only policy he had actually announced by Sunday is a demand for the NHS to make £4.75bn of “efficiency” savings to cut “waste” in a move reminiscent of austerity.
Mr Sunak also warned Brits “it’s not going to be easy”, saying: “I wish government could solve absolutely every problem, that I could fully protect people against all the challenges that lie ahead. I can’t do that.”
So when and what is the Spring Statement, and what do we know about how it’s shaping up? Here’s what you need to know.
When is the Spring Statement 2022?
Chancellor Rishi Sunak will deliver the 2022 Spring Statement on Wednesday 23 March at 12.30pm.
He will give a speech in the Commons, followed by documents and forecasts published online.
After complaints from the Speaker, less of his statement is expected to be ‘trailed’ in advance.
What is the Spring Statement?
The Spring Statement is a ‘mini-Budget’ by the Chancellor on the situation facing the economy.
It is lower-key than a Budget and does not contain the same tax and spending powers.
For instance, fuel duty and taxes on cigarettes and alcohol were already set for the year in October’s Budget.
So was the minimum wage rise from £8.91 to £9.50 in April – though you can expect Mr Sunak to crow about it anyway.
What will Chancellor Rishi Sunak announce during the Spring Statement?
The Chancellor is expected to lay out the sheer scale of the cost-of-living disaster hitting poor Brits.
This will be in the form of Office for Budget Responsibility (OBR) forecasts on GDP growth, borrowing, debt and inflation.
They will also have the warm-up acts of the Bank of England’s interest rates decision tomorrow, and monthly inflation figures for February – which will be published at 7am on the day of the Spring Statement.
While growth is rising post-Covid, so is inflation – and it is set to be much worse than the last forecast (more below).
All this will ramp up pressure to announce extra help for households – but he’s reluctant to do that.
He reportedly has £40bn more in coffers than hoped as rising prices lead to higher taxes. But soaring inflation looks set to push up his borrowing bill, as debt costs more to pay back.
He could recycle already-announced policies or announce vague ‘consultations’ on future ones, but will it be enough?
DANIEL LEAL/AFP via Getty Images)
UK inflation could rise over 8%
Shock analysis last week found inflation is set to peak at 8.3% in April after the Ukraine invasion made it even worse.
The Mirror understands Whitehall officials believe this figure, calculated by the Resolution Foundation, is broadly accurate.
Officials in fact fear it could go even higher, beating the 8.4% rate of 1991 and even hitting 10%.
This will blow October’s forecasts – that inflation would peak at 4.4% this year and could rise to 5.4% – out of the water.
It will mean more expensive food and goods in the shops, hitting the poorest families hardest.
Will fuel duty be cut on petrol – but tolls on roads?
Fuel duty was already frozen at October’s Budget for a 12th year in a row – handing £1,900 to the average car driver since 2010.
But on Sunday the Chancellor dropped a heavy hint he could go further and cut it – after the war saw prices rocket.
Mr Sunak said: “Obviously I can’t comment on specific things. But what I would say, I understand that, I have a rural constituency, people are incredibly reliant on their cars and this is one of the biggest bills that people face, watching it go up, right, we’re all seeing that, when we’re filling up our cars. I get that.”
The Resolution Foundation declared fuel duty cuts “will inevitably be part of the package announced this week”.
Shadow Chancellor Rachel Reeves said Labour would not vote against a fuel duty cut – but warned Sky News: “Even a 5p reduction in fuel duty will only reduce filling up the car with petrol by £2. So I don’t think that really rises to the scale of the challenge.”
Meanwhile, it’s been claimed the Chancellor is looking at new ways of taxing drivers in the long term – including toll roads.
AFP via Getty Images)
Will National Insurance thresholds change?
National Insurance will rise from 12% to 13.25% from April 2022. Tory MPs are still pushing for this to be cancelled as it’s a major tax rise just as a cost-of-living crisis hits.
Downing Street insisted the rise is going ahead, despite reports that five Tory Cabinet ministers staged a last-minute plea to axe it.
But could it be tweaked instead?
It’ll be paid by anyone earning over £9,880 a year – up from the £9,568 a year now. There’s some speculation the Chancellor could raise this threshold, which is currently lower than the point at which people pay Income Tax.
That would take some of the lowest earners out of paying the tax altogether. The failure to raise the threshold by inflation is a “stealth tax” that’s costing Brits an extra £45 a year, says research.
One Tory told the Mirror: “If it’s about pride, they can now say that Ukraine is the reason they need to change course.”
Pensions will be cut now – but hiked later
Pensions could rise by more than 7% next April after the Tory DWP chief promised to bring back the triple lock – despite soaring inflation.
Therese Coffey suspended the triple lock – a solemn manifesto pledge – for one year in 2022/23 because post-Covid wages were bouncing back in an “anomaly”.
That sparked fury as it meant the state pension will rise by only 3.1% next month, less than inflation. That is a real-terms cut of £388 to Britain’s 12million pensioners, Shadow DWP chief Jon Ashworth said.
But Ms Coffey said the triple lock would return in 2023/24 as promised. That could lead to a rise of 7.2%, experts predict.
NHS forced to cut £4.75bn of ‘waste’
The Chancellor announced a demand for the NHS to make £4.75bn of “efficiency” savings over three years to cut “waste” in a move reminiscent of austerity.
That means DOUBLING the annual NHS efficiency target to 2.2%. “The current level of waste across government is simply not acceptable,” Mr Sunak said.
But Pat Cullen, General Secretary of the Royal College of Nursing, said: “Trying to squeeze even more out of the same staff will not work. The existing shortages already mean nursing staff work unpaid overtime to keep the NHS running.”
Another £800 million is predicted to come from a review of “Quangos” or arm’s lengths bodies – publicly funded but not entirely Government-controlled.
BBC/AFP via Getty Images)
Could Rishi Sunak change energy grant?
Previously Rishi Sunak announced a £150 council tax discount for Bands A-D next month, and a £200 repayable rebate in October.
Yet bills are rising by £693 a year on April 1 and will rise again in October – possibly by another £1,000 a year. This is a far bigger hit to the poorest tenth of households who spend around 12% of their income on energy. The richest spend 4%.
There’s speculation Mr Sunak could increase the £150 or £200 packages to make them more generous.
Treasury officials want to wait until the run-up to the October rise before announcing more help.
But a former Treasury minister told the Mirror that approach is “not going to work”, adding: “He’s going to have to do something, it just can’t be the full Covid.”
Will there be help for childcare?
The Chancellor is considering more help for parents who pay for childcare after Boris Johnson raised the issue in Cabinet, according to the Sunday Times.
Ministers are said to be looking at plans to increase the number of children that registered childminders can look after, which now stands at six up to the age of eight.
Dad-of-six Jacob Rees-Mogg – who has a nanny – is said to have backed the idea saying: “Even I can look after six children at once.”
Row over energy supply plan and nuclear power
Boris Johnson is supposed to set out a delayed, long-term energy supply plan this week – for the UK to wean off Russian oil (but not gas) by the end of the year.
This is expected to invest more in renewable power and nuclear power, as well as trying to get more oil from places like Saudi.
But Rishi Sunak reportedly insisted it should be delayed to give him more time to assess the costs of nuclear and green power.
The PM is privately frustrated with his Chancellor’s refusal to endorse a massive surge in nuclear power, according to the Sunday Telegraph.
AFP via Getty Images)
Will other tax hikes change?
The Income Tax personal allowance and 40p rate threshold will freeze at £12,570 and £50,270.
The IFS think tank warns the threshold freezes will lead to more than £20bn in ‘stealth’ taxes as inflation soars – and by 2025, 2% of GDP will have been added to the UK tax burden.
Meanwhile the VAT rate for hospitality firms, currently 12.5% due to Covid, is due to return to 20%.
There are spaces here for the Chancellor to act – but it would scupper his claims to be recovering from Covid.
Will benefits and pensions rise in April?
Mr Sunak will raise benefits by just 3.1% – as little as £10.07 a month on Universal Credit and far less than inflation. In October he cut Universal Credit for millions by £20 a week.
Pensions will also rise by just 3.1% after the triple lock was axed.
In a Budget “rabbit out of the hat” in October, he handed more generous benefits to 1.9million working families by cutting the Universal Credit taper rate from 63p to 55p. But this only helps those who work, not the sick or out-of-work.
The Resolution Foundation is worried there will be a “rollercoaster” with real benefits down this year and up next year. Tory MP Nigel Mills suggested bringing forward next year’s increase in Universal Credit to this autumn to solve the problem.
Shadow Chancellor Rachel Reeves called for benefits to rise by the rate of inflation – which is 5.5% now and could rise beyond 8%. That could be double the 3.1% rise in April, worth just £10.07 a month on the standard allowance of Universal Credit.
She told the Observer: “The chancellor should look at how to uprate benefits in a fair way. They are supposed to go up by inflation and they are not at the moment.”
But Mr Sunak seems unlikely to raise benefits by more than 3.1% because of the multi-billion pound cost – and the need to raise pensions and pay at the same time if he does.
Will defence spending rise?
Westminster sources told the Sunday Mirror the Chancellor is planning to raise the £49billion MoD budget.
One said: “Ministers are no longer talking about defence cuts. They now see the need to beef up our forces to confront Russia.” And that could reverse the planned reduction of 82,000 troops to 73,000 by 2025.
But the Chancellor tried to hose down the reports, saying he has already presided over the biggest rise in defence spending since the Cold War.
Will there be a pay rise for nurses, teachers and other public sector workers from April 2022?
Inflation means planned rises to public sector wages – due every April – will be wiped out by prices.
Rising prices put huge pressure on the Chancellor to give these vital key workers pay rises above 5% or 6%, to avoid hitting them with a real-terms cut.
But the Treasury is resisting such big cash rises.
The government has spelt out plans to raise salaries for experienced teachers by only 3% in 2022/23.
Health unions have also blasted plans to offer NHS staff in England a “miserly” 3% hike.
Pressure on the Chancellor to reverse this will be huge but again, it will take a lot for him to budge.
Anadolu Agency via Getty Images)
Will alcohol prices rise and when?
The cost of beer and sparking wine will fall, but whisky and vodka prices will rise, according to changes already announced by Chancellor Rishi Sunak in his October Budget.
Currently there is a complicated system of 15 separate tax bands for booze, across four main areas: beer, cider, spirits and wine. But the chancellor will do away with the old system and bring in a new one from February next year.
This means tax cuts on drinks like normal-strength beer, wine, cider and liqueurs, but tax hikes on spirits like whisky.
Sparkling wine costs will fall by around 62p a bottle.
A vision beyond Covid and the war?
The Chancellor will likely try to set out a world beyond Covid but the Ukraine war and soaring inflation will make this difficult.
Expect many references to infrastructure and ‘levelling-up’ but be on the lookout for old pots of money being reannounced.
One Tory admitted to the Mirror: “The Rachel Reeves line that we’re a high tax, low growth Government is true at the moment.
“We don’t seem to have many pro-growth policies, we’ve pretty much given up on supply-side reforms.”
https://www.mirror.co.uk/news/politics/spring-statement-2022-fuel-predictions-26512608 When is Spring Statement 2022 and what will Rishi Sunak announce - all the predictions