Worcester families will keep more of their hard-earned cash following the Chancellor of the Exchequer's Spring Statement announced this afternoon. Rishi Sunak announced that National Insurance starting thresholds will rise to £12,570 from July, meaning hard-working people across the UK will keep more of what they earn before they start paying personal taxes. Worcester MP Robin Walker welcomed the action to help families in his constituency.
The cut in national insurance contributions, worth over £6 billion, will benefit almost 30 million working people with a typical employee saving over £330 in the year from July. This means the UK now has some of the most generous tax thresholds in the world.
Mr Sunak also announced that fuel duty for petrol and diesel will be cut by 5p per litre from 6pm tonight (23 March) to help drivers across the UK with rising costs – a tax cut worth £2.4 billion. This is the biggest cut ever on all fuel duty rates and means a one-car family will now save on average £100. A further freeze in alcohol duties will also help to keep household costs down.
To let people keep more of what they earn, the basic rate of income tax will also be cut by 1p in the pound in 2024, when the OBR expect inflation to be back under control, debt falling sustainably and the economy growing. The cut is worth £5 billion for workers, savers and pensioners and will be the first cut to the basic rate in 16 years.
The Chancellor also set out a series of measures to help businesses boost investment, innovation, and growth – including a £1,000 increase to Employment Allowance to benefit around half a million smaller firms.
Delivering the Spring Statement, Chancellor Rishi Sunak said:
"This statement puts billions back into the pockets of people across the UK and delivers the biggest net cut to personal taxes in over a quarter of a century.
"Like our actions against Russia, I have been able to do this because of our strong economy and the difficult but responsible decisions I have had to make to rebuild our finances following the pandemic.
"Cutting taxes means people have immediate help with the rising cost of living, businesses have better conditions to invest and grow tomorrow, and people keep more of what they earn for years to come."
Following the statement Worcester MP Robin Walker said:
"I was glad to see meaningful help for the day to day costs of living which will help families in Worcester. It is good news to see that fuel duty will be reduced by 5 pence per litre. Having frozen fuel duty for our 12 years in government we are now going further and making a cut on the amount the government receives from fuel purchases. Additionally, the cost of upgrading households to renewable energy systems will benefit from no VAT on vital infrastructure such as solar panels, heat pumps, and insulation.
"70 per cent of families will pay less as a result of the increase in the national insurance threshold from £9880 to £12,750. 30 million people will benefit, with the typical employee benefitting from a tax cut worth over £330. However, the Health and Social Care Levy of 1.5% will still take effect for higher earners and will ensure we have billions more to invest in the NHS and social care. The National Living Wage will also rise to £9.50 from April this year, amounting to an increase of over £1000 a year for a full-time worker.
"Recent events, with the pandemic and Vladimir Putin's illegal invasion of a European neighbour, made this budget a challenging one for the Chancellor. I am glad that, despite this, he has chosen to make some practical changes to help families with the cost of living in Worcester."
Delivering the statement, the Chancellor made clear that our sanctions against Russia will not be cost-free for people at home, and that Putin’s invasion presents a risk to our economic recovery – as it does to countries all around the world.
However, announcing the further measures to help people deal with rising costs, he said the extra support could only be provided because of the UK’s strong economy and the tough but responsible decisions taken to rebuild our fiscal resilience.
The immediate help for people with the cost of living and support for businesses comes as part of a wider Tax Plan announced by the Chancellor that will also create better conditions for growth and will share proceeds from growth more fairly – ensuring people can keep more of what they earn.