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Friday, May 27, 2022

When is Rishi Sunak’s spring statement and what will be announced?

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Finance Minister Rishi Sunak holding his ministerial ‘Red Box’ (Victoria Jones/PA) (PA Wire)

Rishi Sunak is facing intense pressure to help struggling families in this month’s spring declaration by easing the cost of living crisis, which has been dramatically exacerbated by the Russian invasion of Ukraine.

Surveys have suggested that a third of Britons fear they won’t be able to pay gas and electricity bills if they continue to rise.

The chancellor’s last two spring statements were dominated by Covid, with extensive spending packages and bailouts to help businesses and workers get through the pandemic.

But this month, skyrocketing energy bills, rising inflation and a controversial increase in national insurance dominate the agenda.

So what should we expect from this month’s statement?

What is the spring declaration?

The spring statement is an annual statement made by the Chancellor to the House of Commons.

Known as the “mini-budget,” it is an opportunity for Rishi Sunak to provide an update on the overall health of the economy and an update on progress made since the fall budget.

Crucially, it doesn’t include major tax or spending changes, which are made once a year in the fall budget.

The Chancellor can update the public on policies announced in the Budget, as well as make smaller funding promises and policies.

When is the spring 2022 statement?

Sunak is set to deliver the spring statement on March 23, along with the latest forecasts from the Office of Budget Responsibility (OBR), which are released twice a year.

Following the publication of the OBR forecasts, the Chancellor will address the House of Commons around noon.

What is likely to be included?

The Chancellor will provide an update on his “jobs plan” and the post-pandemic recovery.

Despite the rapidly escalating cost-of-living crisis, he is understood to be resisting calls for another big relief package, with aides saying costs could change a lot by October, when energy price caps change again.

Instead, it is thought he could focus on support for universal credit, while Boris Johnson could unveil a broader energy strategy as early as this week.

In February, the Chancellor announced a package of support measures in response to rising costs of living, including a £150 council tax rebate for households in bands A to D, as well as a £200 credit on utility bills. energy to be paid for over the next five years. years.

New analysis from the Institute for Fiscal Studies (IFS) suggests the impact of Russia’s invasion of Ukraine on energy prices means such measures may now shield consumers from just a fifth of the next surge.

With public borrowing expected to hit as previously forecast for the year, there is hope for more aid or other benefits, such as increased child benefit, to keep up with rising bills.

The government has already said it will go ahead with plans to widen the eligibility criteria for the Warm Home Discount scheme, increasing the number of people who can apply by around a third. In addition to this, the value of the benefit will increase from £10 to £150 from October.

Will National Insurance work out?

Treasury sources have continued to reject the idea of ​​abandoning the rise in Social Security that would come into force in April.

The increase will tax the average worker £250 a year and increase costs for companies that hire staff.

However, some have argued that the plan for an immediate increase may be more political than economic.

Sir Charlie Bean, a senior official previously tasked with investigating the Treasury’s plans, told the BBC: “There is no problem with the UK borrowing several billion pounds for another year. do is run large deficits, but the rate at which you close a deficit is basically an impeachment judgment.

This echoes calls from Shadow Chancellor Rachel Reeves last month, who said there was still time to stop the surge.

There are concerns that the increase will have a greater impact on the lowest paid. This is because workers pay 12 per cent National Insurance on earnings between £9,564 (£9,880 from April) and £50,268. However, earnings above this amount attract a rate of only 2 percent.

Ruling out the increase would relieve pressure on struggling households.

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