Rishi's 2022 Spring Statement

In my opinion unexciting and disappointing. Lots of talk of protecting the economy and uncertainty re the war. BUT what has happened to good ole tory values - support business and drive spending and drive the economy. To me these measures are just too tight, tokenism and will drive business nervousness.

Summary of headline points:

• Reduce threshold on NIC
• NIC social care levy to go ahead
• Income tax reduction to 19%
• Reduction of 5p on fuel
• Support for energy re investment subsidies
• Increase in small business employment allowance of ￡5000

Background

Inflation is 6.2% - Fastest increase in 30 years, this is treble what the Bank of England targeted, driven by slower bounce back from Covid, particular issues in energy sector & fuel.?Prices increasing in a wide range of sectors

Monthly borrowing ￡24.1 bn last April, down to ￡13.2bn now – so this is some wriggle room

Concern re unexpected items we might be headed to, Ukrain rising energy prices etc – so may need to hold back for

What’s coming:

• Energy price increase to ￡2k
• Loans re energy payments
• Increase in NIC
• Increase in Income tax
• Real terms cut to welfare payments
• Council tax rebate of ￡150 A to D
• Increase in National Living Wage??

Business confidence is beginning to flag

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Notes from his speech :

• Concern and support for Ukrain
• Strength?of our economy and the importance of it in defending our country through crisis as they emerge.?Democracies are divided and strengthening our economy is in doubt.?As a result it is important that we have these passionate debates
• The security of defence, economy, business and individuals is essential to the core of our democracy.?
• ￡400m in aid to Ukrain, Homes for Ukrain, Dollars with the US for equipment, Sanctions – no doubt these will work, Russia stock exchange frozen, bank interest rates at 20%, serious economic issues for Russia.?We stand with Ukrain

This is not cost free to the UK, OBR have said that the economic outlook is extremely unclear and OBR now forecasts at only 3%.?

Good news though, unemployment is low, but cost of living is under serious pressure.?Inflation is 6.2%

￡9bn plan :

3 key measures:

1. Motorists – Fuel Duty to be cut by 5p a litre immediately until March next year
2. Energy Costs – for next 5 yrs 0 percent vat on energy saving activity including solar panels, zero rate wind turbo and abolish red EU tape??????
3. Welfare – doubling household support fund via local authorities

We will also reduce borrowing and debt in the coming years – but we still need to be cautious re the economy and keep some monies back as economy is so uncertain due mainly to the war.??The tax system is a lever of this.?

His ambition is to reduce taxes long term

Today he is issuing a TAX Plan ;

• Careful to consider the broader back drop

3 key areas

• Families and cost of living
• Growth & Business
• Fairness

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Families and cost of living

• Social care and public services are important so health and care levy to stay
• NIC threshold to increase it by ￡3k from July 2022 – largest single personal tax cut in a decade – will help low earners mainly?

Growth and Business

• Plan to be established in September to People Capital Ideas
• Incentivise training
• Incentivise innovation
• R&D tax credit to be more generous
• Business rates discount for hospitality to go ahead as previously announced
• Help to grow management schemes
• Annual investment allowance ￡1m

Small business specifically

• From April employment allowance to increase to ￡5000 per company

Fairness business incentives

• By 2024 OBR predicts inflation to be back on target so before 2024 the basic rate of Income tax will be cut to 19%

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