Spring Statement: The reaction from Cambridge as MP claims Rishi Sunak is ‘playing games’
The Chancellor has unveiled his Spring Statement, intended to address the cost of living challenge.
But has he succeeded? Below, we gauge the views of political and business leaders in the Cambridge region.
But first, here’s a quick reminder of what Rishi Sunak unveiled.
- Fuel duty to be cut by 5p per litre for a year, from Wednesday evening.
- Before the end of this Parliament in 2024, the basic rate of income tax will be cut from 20 to 19p in the pound.
- The threshold at which people start paying NI contributions will rise by £3,000 to £12,570 from July.
- VAT will be scrapped for energy efficiency measures such as solar panels, heat pumps and insulation for five years to tackle high energy bills.
- The Household Support Fund, paid to local authorities, will be doubled to £1 billion to help households with rising costs.
- Employment allowance will rise to £5,000 from next month
- Green technology will also be exempt from business rates from April
You can read about the measures in more detail here. But what did our politicians and business analysts make of them?
Cambridge’s Labour MP Daniel Zeichner
“Sunak hasn’t got a clue,” responded the unimpressed Labour MP for Cambridge, Daniel Zeichner.
“He has tinkered when families across Cambridge are facing the biggest prices rises in memory. Playing games, raising and cutting the same tax on the same day won’t cut it when people are faced with huge increases in their gas and electricity bills.
“Labour would axe the National Insurance rise, and levy a windfall tax on the oil and gas companies who are rolling in cash. We would use that to cut bills by £600 for nine million of the hardest pressed households, a real help for many Cambridge families – but Sunak and Johnson just don’t understand what most people are facing, because they live in a different world, and play by different rules.”
South Cambridgeshire Conservative MP Anthony Browne
Anthony Browne is a member of the Treasury Select Committee and now chair of the Conservative Backbench Treasury Committee.
He said: “Today, I asked the Chancellor to confirm the measures announced today, and the measures this government has pursued since 2019, have emphasised fairness while ensuring that the poorest households have benefited the most and the wealthiest households have contributed the most.
“The new Tax Plan, that I welcomed today, will help families with the cost of living, create the conditions for private sector-led growth, and share the proceeds of growth fairly. These include:
- Cutting fuel duty by 5p for 12 months – a £5 billion tax cut and largest fuel duty cut ever
- Cutting National Insurance now – a £6 billion tax cutfor 30 million working people across the UK from July, worth over £330 a year – 70 per cent of people will pay less tax even after the levy
- 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.”
Cambridge BID CEO Ian Sandison
Mr Sandison was disappointed that calls from high street businesses for further help from the Chancellor went largely unheard.
“Whilst it is welcome that fuel duty has been decreased and filling up an average car will come down by a few pounds, there was really very little in his statement for businesses trying to recover from the pandemic with inflation forecasted to hit eight per cent later this year,” he said.
“Hospitality businesses were really hoping for a pause in the return to paying full VAT, and businesses want more help in filling the 1.2 million vacancies in the UK by adapting the points-based immigration system to recognise retail hospitality and leisure as important sectors. ‘
“The fuel duty reduction and changes in the level at which workers will pay national insurance is helpful and will offset some of the current weak consumer confidence brought on by high inflation and the conflict in Ukraine.”
Stuart Wilkinson, EY’s head of tax in the East of England
“Rishi Sunak clearly considered that the lack of a formal Budget was no reason to avoid making changes that would have made many a Chancellor proud – 11 measures which between them encompassed immediate tax cuts, promises of further incentives and cuts in the autumn and, to top it off, the ultimate rabbit from the hat of a cut in the income tax rate. There was not a single tax rise in sight.
“The immediate cuts were focused on today’s sources of pain – that of fuel duties – matched with commitments to allow the Chancellor to maintain credibility in the journey to net zero. Beyond this, the measures were few but targeted.
“However, the Chancellor spent much of his speech in design mode, setting out his aspirations and announcing the publication of his 11 page ‘Tax Plan’, replete with potential costed announcements. This is a positive step forward, providing a forum for engagement, and avoids the criticisms of the previous business tax roadmap, which was more of a travel journal covering the past than a vision of the future.
“So, today the Chancellor not only provided some ‘jam’ today but reached out for the recipes to ensure that he can deliver cakes in the real Budget in the autumn.”
Hazel Platt, partner and local head of tax at Grant Thornton UK in the East of England
“For business it was a case of some jam today, more tomorrow.
“The Chancellor seems keenly aware that a major challenge to business confidence is a potential cliff edge when the super deduction comes to an end next year and the higher rate of corporation tax is introduced. And so, he was focused on providing a clear roadmap for what comes next.
“The Tax Plan – people, ideas and capital – is a clear signpost on what is coming in the autumn budget and the opportunity for business to shape changes to reliefs for training, innovation and capital investment in the meantime, through consultation. That should inspire some confidence from the mid-market.
“There is an inherent risk that this slows investment in the short term, as business wait to see what incentives the autumn budget will actually deliver, but the Chancellor clearly sees that as a risk worth taking to foster longer term confidence.
“The changes to R&D tax incentives are also welcome, with further reform likely at the Autumn Budget later this year. The expansion announced today to include data and cloud computing, and the interesting inclusion of pure mathematics going forward, will potentially expand the scope of the scheme to the most innovative businesses and the varied projects they are undertaking.”
New Economics Foundation
The foundation claimed the Spring Statement leaves 48 per cent of all children living in families that have to make sacrifices on essentials this spring, like putting food on the table or replacing clothes and shoes
Its analysis suggests that 23.5 million people will be unable to afford the cost of living by £8,900 a year.
In the East of England, the foundation said 1.9 million people were in this position, with an income on average £7,700 below the minimum income standard (MIS).