Earlier this week, the Chancellor made his Spring Statement. We all know that the UK is facing serious economic challenges in the year ahead and we must recognise the tough choices that needed to be made. In times of economic challenge, when the economy has slowed down it is essential to recognise that continued calls for increased government spending will mean that taxes will normally have to go up. It is only right then that taxes should be going down as the economy improves and we move out of such dangerous territory.
This is clearly something that the Chancellor has recognised. Borrowing will be lower than forecast as our economy is recovers from the damage of the Covid pandemic and it continues to fall as a proportion of GDP. He has announced the biggest cut to personal taxes for 15 years as well as increasing the threshold before people have to start paying National Insurance contributions by £3,000. The change to National Insurance means that nearly 30 million UK workers will be better off than they otherwise would be, with the typical employee saving over £300. The government is rightfully looking to shield lower earners from the effects of the pandemic as they are the ones that have been most affected.
The rising cost of living is hitting all of us, with first the Covid pandemic affecting global supply chains and now the knock-on effects of the invasion of Ukraine hitting us before we had fully recovered. Rishi Sunak was absolutely right to say that it was morally right for us to be using sanctions to support Ukraine in their struggle against Putin’s Russia. This is despite sanctions against Russia having an impact on us here in the UK.
Therefore, one of the measures that has been announced is a fuel duty cut by 5p per litre. This is biggest cut to fuel duty rates ever in the UK and will remove a £5 billion burden on drivers up and down the country. This will help alleviate the spiralling fuel costs that we are facing as we look to move away from Russian energy. I would have liked it to have gone further and clear recognition that as the situation continues to develop greater fuel duty cuts may be required, but this is a good step in the right direction. This fuel duty cut is accompanied by a complete removal on the cost of installing energy saving measures such as solar panels and installation.
The government has also recognised the challenges facing smaller businesses, the backbone of our local economies, by cutting up to £1,000 from National Insurance contributions for half a million smaller businesses.
The measures announced by the Chancellor clearly demonstrate that the government knows that challenges facing all of us. However, there is still more that could be done. These measures must be accompanied by a real commitment to future tax cuts as the economy continues to bounce back from Covid. Just as importantly, the government needs to understand that we must invest in domestic energy supplies so we are never again so affected by a hostile nation. This means reversing the short-sighted decision to ban fracking, investing in nuclear and fully utilising our own oil and gas reserves. Only by securing the long term energy supplies of this country can we truly prevent the cost of living skyrocketing again.