Chancellor of the Exchequer – The NEN

Chancellor announces tax cuts to ease cost of living pressures in Scotland

‘A failure of courage, a failure of compassion and a failure of justice‘ – Peter Kelly, The Poverty Alliance

Chancellor announces Spring Statement tax cut for 2.4 million Scottish workers through rise in National Insurance thresholds – saving the typical employee over £330 a year.
Unveiling plans to give families further help with the cost of living, Rishi Sunak also slashes fuel duty on petrol and diesel by 5p per litre for the next 12 months.
Spring Statement also sets out measures to help businesses boost investment, innovation, and growth – including a £1,000 increase to Employment Allowance to benefit around half a million SMEs across the UK
The UK Government is providing an additional £45 million to the Scottish Government next year as a result of measures announced by the Chancellor today.

The Chancellor delivered a Spring Statement today that ‘puts billions of pounds back into the pockets of hard-working people in Scotland’– unveiling a series of tax cuts to ease the cost of living.

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.

The cut, worth over £6 billion, will benefit 2.4 million working people in Scotland with a typical employee saving over £330 a year, whilst the typical self-employed person will save over £250. 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. 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.

As a result of a cut to the basic rate of income tax for savings income, taxpayers in Scotland will see benefits worth £3 million. As other income tax rates are devolved in Scotland, the Scottish Government’s funding is automatically increased as a result of this tax cut as set out in the agreed Fiscal Framework. This is initially worth £350 million in 2024-25.

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 businesses.

As a result of measures in this Spring Statement the UK Government is providing the Scottish Government with an additional £45 million through the Barnett formula next year.

Chancellor Rishi Sunak said: “We’re slashing taxes for millions of hard-working people in Scotland, getting pounds in people’s pockets and helping pay cheques to stretch further – from July more than 2.4 million in Scotland will get a tax cut with the typical employee keeping £330 more each year.

“By cutting fuel duty, we’re making it cheaper for people in Scotland every time they go to the pump, which together with the freeze means people save £100 per car on average a year.

“We’re boosting small business growth by increasing the Employment Allowance – a tax cut worth up to £1,000 for thousands of businesses.”

To grow the world’s very best talent in AI, the UK Government will partner with industry and academia to create 1,000 new AI PhDs. The Government will invest £117m to create PHDs across the UK at Centres for Doctoral Training, building on the existing three sites in Scotland. This will train a new generation of AI researchers who will develop and use AI in areas such as healthcare, climate change and creating new commercial opportunities.

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 financial support for people and businesses comes as part of a wider tax plan announced by the Chancellor that will create better conditions for growth and will share proceeds from growth more fairly – ensuring people can keep more of what they earn.

Mr Sunak also announced that the Scottish Government will receive £41 million more funding as there will be an extra £500 million for the Household Support Fund, which doubles it’s total amount to £1 billion to support the most vulnerable families with their essentials over the coming months.

The Chancellor also reduced the VAT on energy saving materials such as solar panels, heating pumps and roof insulation from 5% to zero, helping families become more energy-efficient.

This cost of living support comes on top of the measures that the Chancellor has already announced over the recent months to support families. This includes an over £9 billion energy bill rebate package, worth up to £350 each for around 28 million households, an increase to the National Living Wage, worth £1,000 for full time workers, and a cut to the Universal Credit taper, worth £1,000 for 2 million families.

The Spring Statement also confirms that:

A new Efficiency and Value for Money Committee will be set up to cut £5.5 billion worth of cross-Whitehall waste – with savings to be used to fund public services.
£50 million new funding to create a Public Sector Fraud Authority to hold departments to account for their counter-fraud performance and to help them identify, seize and recover fraudsters money.
Local residents across the UK will benefit from a fresh set of infrastructure projects as we open the second round of the £4.8 billion Levelling Up Fund. It will continue to focus on regeneration, transport and cultural investments.

Chancellor’s statement ‘a failure of courage and compassion’, says Poverty Alliance

Reacting to today’s Spring Statement, Peter Kelly, director of the Poverty Alliance, said: “Government should be about compassion and justice, and making sure people are able to live as full a life as they can.

“The Chancellor said his Spring Statement today was all about security. Yet his plans show a failure to comprehend the situations being faced by households across the country, leaving them with insecure and falling incomes in the face of rising costs.

“Amid a rising tide of poverty, the Chancellor could have thrown a lifeline by increasing benefits in line with inflation and by scrapping the unjust benefit cap. Instead he has provided additional funding of only £500m to the Household Support Fund which, although welcome, will quickly be consumed by the rising cost of living for families on the lowest incomes.

“The increase in the National Insurance threshold has also been presented as a support to people living on low incomes. In reality two thirds of this effective tax cut will go to middle and higher income households.

“By ignoring the tidal wave of rising living costs that is pulling so many people into poverty, the Chancellor has made clear his priorities. His tax cutting agenda will generate positive headlines, but could see another 400,000 people across the UK swept into poverty.

“Ultimately, the Chancellor’s statement is a failure of courage, a failure of compassion, and a failure of justice.”

The UK Government has not delivered the support and help that families and businesses need today, according to Finance Secretary Kate Forbes.

Responding to the Spring Statement, Ms Forbes said the Chancellor failed to help thousands of worried households facing poverty as a result of soaring energy bills and a cost of living crisis.

In 2018/19, the Scottish Government introduced a more progressive approach to tax, including a 19% starter rate band below the basic rate, ensuring those who can afford to pay a little more do so.

Ms Forbes said: “The Spring Statement has failed to address the biggest challenges facing households today. With soaring energy bills and a cost of living crisis, the Chancellor has not used his Spring Statement sufficiently to provide lifeline support that could prevent households facing fuel poverty.

“The Scottish Government is providing a further £10 million to continue our Fuel Insecurity Fund into 2022-23, which supports people struggling with their energy bills. Most powers relating to the energy markets remain reserved and Scottish Ministers have repeatedly called for the UK Government to urgently take further action to support households – including a reduction in VAT on household energy bills and support for those on low incomes.

“We are doing all we can to tackle the cost of living crisis – including doubling the Scottish Child Payment from £10 per week per eligible child to £20 next month. The UK Government should have followed our lead and matched the 6% uprate on social security benefits which the Scottish Government is adding to eight of the benefits we deliver. The Chancellor failed to match that commitment which could have provided lifeline support to thousands of households.

“On taxation, we have already acted to introduce a 19% starter rate of income tax below the basic rate, in line with our commitment to progressive taxation, which makes Scotland the fairest taxed part of the UK. We will continue to take that approach when we set taxation policy in future budgets.”

In the midst of the biggest wages and bills crisis in living memory, Rishi Sunak’s Spring Statement has failed families who need help NOW, says the TUC.

He didn’t stand up for families. He didn’t take the opportunity to stand up to the bosses who’ve sacked hundreds of workers at P&O. And he didn’t set out a plan to get wages rising – leaving the average workers facing a wage cut of over £500 this year.

Last week, we set out what we needed to see from the Chancellor to get a spring statement that is fit for purpose.

We were looking for the Chancellor to:

Deliver an immediate boost to pay
Fund efforts towards a peaceful solution to the conflict in Ukraine
Take additional measures to support families in the UK with rising energy prices
Deliver the long-term changes needed for a high-wage, high skill, high productivity economy

Below we set out how the spring statement matched up to our tests and assess what it means for working people.

The Chancellor didn’t deliver an immediate boost to pay

Workers’ pay prospects from the statement don’t look good. The OBR forecasts real weekly wages to fall by £11p/w (2.0 per cent) in 2022, and fall again in 2023. This will put wages back below their 2008 levels (after a brief recovery in 2021), where they’ll stay until 2025. And even this contains some optimistic wage forecasts, with the OBR forecasting pay before inflation to rise by as much as 5.9 per in Q3 2022.

The OBR forecasts that the 2022-23 financial year will see the biggest fall in living standards since records began in 1956-57, explaining that the “failure of nominal earnings growth to keep pace with rising inflation” is a “key factor” in this.

It adds that the policy measures announced since October only “offset a third of the overall fall in living standards that would otherwise have occurred in the coming 12 months”.

But there was no action to tackle falling pay in the Chancellor’s statement: nothing on raising the minimum wage, or funding public sector pay rises, and no recognition that collective bargaining (and union presence) is the most sustainable way to get wages rising.

Measures to support families in the UK with rising energy prices and the cost of living were totally inadequate

The spring statement offers little good news for struggling families, especially those in receipt of benefits.

Benefits uprating

Worst of all there was no increase in the basic rate of benefits. As it stands, the standard allowance for Universal Credit and legacy benefits is set to rise by 3.1 per cent in April 2022. But this is far below the latest inflation figure (CPI is 6.2% in Feb 2022 and RPI is 8.2%), with inflation forecast to rise higher in the coming months.

This will leave those on benefits facing a real terms cut at a time when energy bills are rising by 54 per cent. The families who need the most help have been left totally out in the cold by the Chancellor today.

The decision not to cut benefits in real terms will particularly impact those who are unable to work. This reflects a wider ignorance of the equalities impact of the cost of living crisis.

We also didn’t see a reversal of the decision to suspend the state pension triple lock. The decision to abandon the pensions triple lock will cost pensioners almost £500 a year. Pensioners are particularly vulnerable to price hikes as they spend a higher percentage of their income on food and fuel.

Targeted support

The big new announcement for targeted support for low-income households was £500 million in additional funding for the Household Support Fund – a temporary discretionary fund run by local authorities. This scheme was set to end this month, and the initial funding was £500 million.

This extra money is worth less than £10 each to the six million families claiming Universal Credit – in the unlikely event they hear about it and are able to jump through the hoops needed to claim it. And contrast this £500 million to the £10 billion cut to benefit spending in 2022-23 as a result of not uprating benefits in line with inflation.

Income tax and national insurance threshold

Changes to tax cuts won’t help the families who need it most now. Raising the National Insurance threshold mostly benefits middle earners and, compared to increasing benefits payments, does little to help those with low income. This can be seen in the chart below, from the Resolution Foundation.

And promises of income tax cuts tomorrow do nothing for families facing cuts to their living standards now.

Childcare and sick pay

Recent TUC research found that 1 in 3 parents with pre-school children spend more than a third of their pay on childcare. And yet the spring statement made no mention of childcare –or even children.

And the Chancellor has missed another opportunity to raise sick pay and make it available to all. Living with Covid requires decent sick pay for all, yet we’re still waiting for government to take action on this.

VAT-free insulation and solar panels

Alongside this was the removal of the 5% Value Added Tax currently applied to building materials, like home insulation and solar panels. But this only benefits families who own a home and can afford to renovate it anyway.

The Chancellor should’ve taken the opportunity to invest in home retrofits at scale. Improving the average UK home’s energy efficiency to band C would reduce the country’s gas demand by 15% and cut hundreds of pounds off fuel poor homes’ energy bills. A massive social homes retrofits programme, delivered by local authorities, could also create over a quarter million good jobs over two years. But here again the Chancellor failed to act.

Transport

The 5p cut on fuel duty does next to nothing to support those at the sharp end of the wages and bills crisis. Analysis by NEF estimates that a third of this tax cut will go directly to the richest 20% of households, while the poorest 20% will on average only receive £5 per month. To make transport truly affordable for everyone, Government should be expanding bus and rail services in the public sector.

The Chancellor didn’t talk about the long-term changes needed for a high-wage, high skill, high productivity economy

We heard nothing on reforms to corporate governance, industrial strategy or expanding the public sector workforce to deliver the decent public services we need to level up.

The Chancellor did announce a review of the apprenticeship levy. We believe that any changes to the levy should focus on significantly increasing the number of high-quality apprenticeships and widening access to groups facing long-standing barriers. A review must not be an exercise in allowing employers to duck their responsibilities on apprenticeships.

And much more than this is urgently needed to tackle the shortfall in training, including increased government skills funding and new workplace training rights to expand opportunities for everyone to upskill and retrain.

The Chancellor didn’t stand up to the scandalous behaviour by bosses P&O

The Chancellor talked about security but did nothing to take on the bosses who take every measure to undermine their workers’ job security. He could’ve made it clear that no employer who treats workers with the contempt shown by P&O Ferries would receive a penny of public money until they reinstate their workforce, including by taking freeports contracts off DP World, the parent company of P&O.

Yet once again the Chancellor failed to mention the issues that matter to working people.

The government’s response to those fleeing conflict and war is inadequate

The Spring statement document outlines the £400m in humanitarian support the government has given to Ukraine, and says it has committed “to provide local authorities with £10,500 per person for support services, and between £3,000 and £8,755 per pupil for education services depending on phase of education, as well as £350 per month for sponsors for up to 12 months”.

But it’s clear that the government’s support for the people fleeing war and conflict is worse than inadequate. The Ukraine for Homes scheme is no substitute for a properly funded system that provides universal refugee protection. And yesterday, the Government’s nationality and borders bill, passed a vital stage in the House of Commons, meaning that those fleeing conflict may find themselves treated as criminals and deported, instead of finding sanctuary.

The Chancellor let families down today.

Families are facing soaring bills at a time when their incomes have been squeezed by years of wage cuts and attacks on the social security system. The wages and bills crisis is a consequence of decisions taken by successive governments. Today the Chancellor chose to make the pain last for longer.

THERE WAS SOME PRAISE FOR SUNAK’S MINI-BUDGET, HOWEVER:

Simon Roberts, Chief Executive Officer, Sainsbury’s said: “We know our customers and colleagues are concerned about increases to the cost of living and at Sainsbury’s we are doing everything we can to support them.

“We really welcome today’s changes to fuel duty and national insurance. We are passing a 6 pence per litre cut in fuel across our forecourts from 6pm tonight as we know fuel costs are one of the biggest pressures everyone is facing right now.

“We were pleased to welcome the Chancellor to one of our stores today to discuss what we are doing to offer customers great value and to invest over £100 million in increasing pay for our colleagues with a new hourly rate of £10 per hour nationally and £11.05 in inner London.”

Michelle Ovens CBE, Founder, Small Business Saturday said: “Moves in today’s Spring Statement to increase the employment allowance, reduce fuel duty and raise the National Insurance threshold are welcome, and will go some way to help businesses deal with rising costs.

“In particular, It is good to see the immediacy of this rise in employment allowance.”

Martin McTague, Chair, Federation of Small Businesses, said: “We are very pleased to see the Chancellor adopting our top ask for this Spring Statement: uprating the Employment Allowance to help small employers with national insurance costs.

“We originally put forward the Employment Allowance as a targeted measure to help small firms, and it has now been expanded three times since its creation.

“Together with a cut to fuel duty, these measures will provide crucial breathing space for our embattled small employers.

“This Spring Statement marks a good starting point, with welcome measures on business rates, net zero and energy investment taking effect next month.

“With steep inflation, energy bills increasing fast, without the same support in place as enjoyed by consumers, and hiring pressures landing hard on small firms, more of the right stuff will be needed in the autumn given this challenging backdrop.

“We’ve seen a VAT cut on net zero investments for households today, which is good for small firms involved in their installation.

“However, a high street shop or local bar cannot access the same support that consumers do when dealing with the same energy supplier, and they should have access to the same assistance to reduce energy use and support the move to net zero.

“We look forward to working with the Chancellor on his new tax plan. Achieving the new culture of enterprise vision he rightly aspires to, alongside levelling up aspirations, will mean putting community small firms and sole traders front and centre of reforms.

“That means taking more of them out of the business rates system, protecting SME R&D investment incentives and delivering on commitments to end an endemic late payment culture that destroys thousands of firms a year.”

Alex Towers, Director of Policy and Public Affairs, BT Group said: “We welcome the Chancellor’s focus on tax reforms for business investment, given how central this is to UK infrastructure and growth.

“This is particularly important for BT Group as we make once in a generation investments to build the UK’s full fibre broadband and 5G networks. The existing super-deduction has already helped us to significantly increase and accelerate that investment.

“We agree that longer-term incentives are now needed, to support this country’s growth and competitiveness, and we will be keen to contribute evidence to aid the Government’s decision-making.”

Dr Clive Hickman OBE, Chief Executive, the Manufacturing Technology Centre said: “We welcome the Spring Statement, which outlines concrete steps to ensure that the manufacturing sector remains competitive, sustainable, and resilient.

“The Government’s commitment to cut tax rates on business investment is important if the UK is to boost manufacturing productivity and create high-quality jobs. In addition, the reform to R&D tax credits is a very positive step that will enable the scheme to be more effective, better value for money, and more generous.

“These measures will be crucial to spur innovation and encourage investment across the country.”

Julian David, Chief Executive, TechUK said: “Rightly the majority of the Spring Statement focused on addressing the cost of living concerns resulting from the war in Ukraine and rising inflation. Along with this vital action, the Chancellor also outlined a welcome package of consultations and policy programmes aimed at boosting businesses investment.

“In our recent Digital Economy Monitor Survey UK tech companies said increasing support to invest in R&D would be their top ask of Government, with 76% saying R&D is important to their business operations in the UK.

“The proposals unveiled today to further expand R&D tax credits and consult on ways to maintain the tax deduction for capital expenditure have the potential to unlock more investment into UK innovation.

“However, to get this right the Government must ensure that the software and intangible assets that power modern business investment are kept in scope. Otherwise, the Government risks missing an opportunity to unleash the potential of tech led growth.”

Dom Hallas, Executive Director, COADEC said: “Better R&D tax credits would mean more innovation from startups and innovative companies.

“We’re delighted the Chancellor recommitted to expanding it to cover cloud and data costs – and look forward to discussing the many ways to improve the credit further.”

Irene Graham OBE, Chief Executive, ScaleUp Institute said: “In the face of increasing pressures of inflation and wider international uncertainties, it is very good to see the Spring Statement continues to recognise the importance of business growth and innovation.

“It reaffirms policies targeted towards R&D, people and skills, investment, and innovation including the new Innovation Challenge across central government departments. We will continue to work closely with the Government on the evolution and development of these policies which are so vital to our scaleup economy.”

Michael Moore, BVCA Director General, said: “Increased business investment is key to the future of the UK economy and we welcome the measures announced by the Chancellor today which support this objective.

“Private capital’s focus on sectors like AI, robotics and fintech has helped the UK to become a world leader in these areas – further reform of R&D tax credits will help businesses to drive further innovation and strengthen the UK’s position in this new economy.”

Fuel Duty

Edmund King, President, the AA said: “The AA welcomes the cut in fuel duty. However, we are concerned that the benefit will be lost unless retailers pass it on and reflect a fair price at the pumps. Average pump prices yesterday hit new records- despite the fall in wholesale costs.

“The Chancellor has ridden to the rescue of UK families and businesses who use their vehicles, not for pleasure, but to function in their daily lives. Since the start of the year, the 20p-a-litre surge in pump prices has been the shock that rocked the finances of families, and particularly young drivers, pensioners and lower-income workers who need to commute each day.

“AA research showed that even in November, when petrol pump prices set new records at around 148p a litre, 43% of drivers were cutting back on car use, other spending to compensate or both. That rose to 59% among young drivers and 53% among the lower-paid. Petrol started this week averaging 167p a litre.

“On top of the duty cut, there has been a substantial reduction in wholesale road fuel costs feeding through to the forecourts since 9 March. That needs to drive lower pump prices also. The road fuel trade shouldn’t leave the Treasury to do the heavy lifting when cutting motoring costs.”

Elizabeth de Jong, Director of Policy, Logistics UK said: “With average fuel prices reaching the highest level on record and rising inflation, there has been an unstainable burden on logistics businesses which operate on very narrow margins of around 1%; the Chancellor’s decision today will help to ensure operators can continue to afford supplying the nation with all the goods it needs, including food, medicine and other essential items.

“Fuel is the single biggest expense incurred by logistics operators, accounting for a third of the annual operating cost of an HGV. The cut in fuel duty of 5ppl will result in an average saving of £2,356 per year per 44-tonne truck; this move will help to strengthen the UK’s supply chain during a time of ongoing financial and operational challenges.”

Zero rating VAT in energy efficiency measures

David Cowdrey, Director of External Affairs, MCS said: “The Chancellor has used the Spring Statement as an opportunity to kick-start the home heating revolution by zero rating VAT on home energy efficiency and renewable technologies for five years.

“This announcement allows people to insulate their homes and save on our fuel bills, making houses cheaper to run, especially when gas prices are at a record high.

“The government’s bold move to zero rate VAT can help the UK meet its net zero targets by using proven, off the shelf, zero carbon domestic energy solutions, such as solar and heat pumps, which are ready to be upscaled now.“

Professor Robert Gross, Director, U.K. Energy Research Centre, Professor of Energy Policy, Imperial College said: “The VAT cut on energy efficiency products is a great first step in helping households adopt simple measures to help cut fuel bills for the coming winter.

“Better insulated houses need less energy to keep warm and this is good for our bills, energy security and the environment.”

Amy MacConnachie, Director of External Affairs, Association for Renewable Energy and Clean Technology (REA), said: “The REA warmly welcomes today’s announcement to remove VAT on domestic renewables for five years. We have long campaigned for this change because we know these installations will help protect people from volatile gas prices and reduce their energy bills, while also supporting the transition to Net Zero and providing a catalyst for new jobs and investment across the country.

“The move to bring forward business rate exemptions for green technologies from April 2022, including solar panels and heat pumps, will help to further drive down costs and support the decarbonisation of buildings.

“We now want to see the Government clarify and go further on the range of technologies included as Energy Saving Materials, particularly energy storage, but this is a positive package of measures for our sector.

“We stand ready to deliver an energy future which is independent, secure, and stable.”

Spring Statement: Chancellor vows to ‘stand by hard-working families’

Chancellor expected to unveil Spring Statement that builds a stronger, more secure economy for the United Kingdom.
Rishi Sunak will set out further plans to support people with the rising cost of living and pledge to continue to “stand by” hard-working families during the challenging times ahead.
He will say that freedom and democracy remain the best route to peace, prosperity, and happiness and that a strong economy is fundamental in enabling us to counter the threat Russia poses to our values.

The Chancellor will today deliver a Spring Statement that ‘builds a stronger, more secure economy for the United Kingdom’.

With people across the UK facing growing pressures exacerbated by the war in Ukraine, Rishi Sunak will pledge to continue to “stand by” hard-working families and outline further plans to help with the rising cost of living.

Alongside Britain continuing its “unwavering” support to Ukraine, he will add that a stronger economy is vital in responding to the threat of President Putin and that freedom and democracy remain the best route to peace, prosperity, and happiness.

Delivering the Spring Statement, Chancellor Rishi Sunak is expected to say: “We will confront this challenge to our values not just in the arms and resources we send to Ukraine but in strengthening our economy here at home.

“So when I talk about security, yes – I mean responding to the war in Ukraine. But I also mean the security of a faster growing economy.

“The security of more resilient public finances. And security for working families as we help with the cost of living.”

The Chancellor’s statement is also expected to set out how the government plans to create a new culture of enterprise, with the private sector training more, investing more, and innovating more.

The Spring Statement will build on UK government support worth around £21 billion this year and next to help families with the cost of living.

That includes the £9.1 billion Energy Bills Rebate, putting an average of £1,000 more per year into the pockets of working families via changes to Universal Credit and freezing fuel and alcohol duties to keep costs down.

The Government is also raising the National Living Wage to £9.50 per hour from April, meaning people working full time on the National Living Wage will see a £1,000 increase in their annual earnings.

And the Government’s Plan for Jobs is also helping people into work and giving them the skills they need to progress – the best approach to managing the cost of living in the long term.

Bold action needed to tackle cost of living

The UK Government must take bold and decisive action to help protect people from soaring living costs, according to Holyrood Finance Secretary Kate Forbes.

Speaking ahead of the Spring Statement, Ms Forbes said the Chancellor of the Exchequer must use every tool available to provide support through what is expected to be a turbulent period of economic uncertainty.

Finance Secretary Kate Forbes said: “This is not a time to be ducking the considerable challenges we face, and I expect the Chancellor to use the Spring Statement to outline significant actions to support households and businesses, considering that most of the relevant powers are reserved to the UK Government.

“The Scottish Government is doing all it can to help those most in need. We are uprating eight Scottish benefits by 6% from 1 April as well as doubling our Scottish Child Payment to £20 per week per eligible child. I call again on the UK Government to follow our lead and uprate social security benefits by 6%.”

The Scottish Government has called on the Chancellor to:

increase benefits at a higher rate, closer to inflation
implement business relief on National Insurance contributions
provide immediate funding to sectors directly impacted by the Russia/Ukraine conflict
remove/reduce VAT on household energy bills
take VAT off energy efficient and zero emissions heat equipment and products
provide powers to implement flexible working, to get more people into jobs
deliver two extra Cold Weather Payments – one immediately and another in winter 2022-23 when energy bills will have risen again.

Read the Finance Secretary’s letter in full here.

Commenting on today’s (Wednesday) inflation figures, which show CPI inflation rising to a 30-year high of 6.2% in February, TUC General Secretary Frances O’Grady said: “The Chancellor must respond to high inflation today with much greater help for families with soaring bills and a plan to get wages rising.

“Families need grants, not loans to help with soaring energy bills. These should be funded by a windfall tax on excess profits from gas and oil. Universal credit should get a boost to help families keep up with the rising cost of living.

“And we need a comprehensive plan to get wages rising, including new pay bargaining rights for workers and their unions.”

Ofgem: Energy price cap to increase by £693 from April

“We know this rise will be extremely worrying for many people, especially those who are struggling to make ends meet”

Record increase in global gas prices sees energy price cap rise of 54%
Ofgem knows this rise will be extremely worrying for many people
Customers struggling to pay their energy bill should contact their supplier to access the help available

The energy price cap will increase from 1 April for approximately 22 million customers. Those on default tariffs paying by direct debit will see an increase of £693 from £1,277 to £1,971 per year (difference due to rounding). Prepayment customers will see an increase of £708 from £1,309 to £2,017.

The increase is driven by a record rise in global gas prices over the last 6 months, with wholesale prices quadrupling in the last year.

It will affect default tariff customers who haven’t switched to a fixed deal and those who remain with their new supplier after their previous supplier exited the market.

The price cap is updated twice a year and tracks wholesale energy and other costs.

It stops energy companies from making excessive profits, ensuring customers pay no more than a fair price for their energy.

The price cap allows energy companies to pass on all reasonable costs to customers, including increases in the cost of buying gas.

Since the price cap was last updated in August, the current level does not reflect the unprecedented record rise in gas prices which has since taken place.

Under the price cap mechanism, energy companies will be allowed to pass on these higher costs from April when the new level takes effect.

This is because energy companies cannot afford to supply electricity and gas to their customers for less than they have paid for it.

Over the last year, 29 energy companies have exited the market or been put in special administration in the wake of soaring global gas prices, affecting around 4.3 million domestic customers.

Jonathan Brearley, chief executive of Ofgem, said: “We know this rise will be extremely worrying for many people, especially those who are struggling to make ends meet, and Ofgem will ensure energy companies support their customers in any way they can.

“The energy market has faced a huge challenge due to the unprecedented increase in global gas prices, a once in a 30-year event, and Ofgem’s role as energy regulator is to ensure that, under the price cap, energy companies can only charge a fair price based on the true cost of supplying electricity and gas.

“Ofgem is working to stabilise the market and over the longer term to diversify our sources of energy which will help protect customers from similar price shocks in the future.”

Ofgem will tomorrow announce further measures to help the energy market weather future volatility by increasing financial resilience and have the flexibility to respond so that risks are not inappropriately passed on to consumers.

This follows measures announced in December.

The further measures include enabling Ofgem to update the price cap more frequently than once every 6 months in exceptional circumstances to ensure that it still reflects the true cost of supplying energy.

Help available for customers:

If customers are struggling to pay for energy bills, they should contact their energy supplier as soon as possible. Depending on their circumstances, customers may be eligible for extra help with their energy bills or services, such as debt repayment plans, payment breaks, emergency credit for prepayment metered customers, priority support and schemes like the Winter Fuel Payment or Warm Home Discount rebate.
Breathing Space Scheme: This is a scheme to give households time to receive debt advice and find a solution to sort out their debt problems. Breathing space will last for 60 days as long as applicants remain eligible during which time all creditors who have been included will be informed and must stop any collection or enforcement activity. Once the breathing space ends, creditors will be able to collect the debt in the usual way. Call the National Debtline on Freephone 0808 808 4000 or visit www.nationaldebtline.org
The Citizens Advice consumer service can provide advice on how customers can resolve problems with their energy provider. You can contact Citizens Advice via webchat, or by calling 0808 223 1133. For complex or urgent cases, or if a person is in a vulnerable situation, they may then be referred onto the Extra Help Unit.

2. Ofgem will announce further measures tomorrow including:

Introducing an uplift in the wholesale cost allowance in the price cap: after reviewing the evidence, Ofgem has decided that the existing price cap methodology did not appropriately account for the additional wholesale energy costs energy companies have incurred during the current price cap period following the unprecedented scale of wholesale energy prices and volatility. This adjustment represents less than 10% of the overall price cap increase.
Changing licence conditions to give Ofgem the more flexibility to change the price cap level if needed in between the regular six-monthly cap updates: Ofgem has set ourselves five tests which mean we will only expect to use the power in exceptional circumstances.
Further reforms to the price cap from October: In December we set out three options to make the price cap more robust to high and volatile wholesale energy costs while preserving as far as possible the benefits of the price cap for consumers. The consultation published tomorrow will include all three options, with quarterly updates as our preferred option

Breakdown of costs in the energy price cap

Dual fuel customer paying by direct debit, typical energy use (GB £)

*Network costs: The main driver of this increase is the recovery of Supplier of Last Resort (SoLR) levy costs (£68). A supplier acting as a SoLR can make a claim for any reasonable additional, otherwise unrecoverable, costs they incur. These levy claims are paid to energy companies by the distribution network companies and recovered from consumers via their charges.

5. The charts below show the wholesale prices that are used to determine the wholesale cost allowance within the price cap from spring 2018 ahead of the introduction of the price cap in January 2019.

Wholesale costs make up the majority of a customer’s bill. An efficient supplier will purchase energy for their customers on the wholesale market in advance of when they need to supply that energy.

This purchasing strategy is reflected in how the wholesale allowance is calculated within the price cap. We observe the forward-looking energy contracts that energy companies typically purchase over time and combine these to determine the wholesale cost allowance within the price cap.

We do this twice a year when we update the price cap in August for the winter period (October – March) and in February for the summer period (April – September) based on the price of these forward-looking energy contracts over the previous six months.

The fixed horizontal line shows the average wholesale cost allowance for each 6 month price cap period based on the price of the relevant forward looking energy contracts (the jagged line).

The recent spike in the prices of relevant forward looking energy contracts over the last 6 months can be clearly seen. The scale and pace of wholesale price increases has resulted in a big increase in the wholesale cost allowance for the price cap level for summer 2022.

Wholesale gas price costs in the energy price cap

Pence per therm

Wholesale electricity price costs in the energy price cap

Pounds per megawatt hour

Data sets behind these graphs are proprietary and can be sourced from ICIS.

Chancellor’s statement – Energy Price Cap

Statement, as delivered by Chancellor Rishi Sunak, on 3 February 2022:

Mr Speaker,

The UK’s economic recovery has been quicker and stronger than forecast.

In the depths of the pandemic, our economy was expected to return to its pre-crisis level at the end of 2022.

Instead, it got there in November 2021 – a full year earlier.

Unemployment was expected to peak at nearly 12%.

Instead, it peaked at 5.2% and has now fallen to just over 4% – saving more than 2 million jobs.

And with the fastest growing economy in the G7 this year…

Over 400,000 more people on payrolls than before the pandemic…

And business investment rising…it’s no wonder Mr Speaker, that borrowing is set to fall from £320bn last year …

… the highest ever peacetime level …

… to £46bn by the end of this Parliament.

As we emerge from the depths of the worst recession in 300 years, we should be proud of our economic record.

The economy is stronger because of the plan we put in place; because of the actions we took to protect families and businesses.

And that plan is working.

But for all the progress we are making – the job is not yet done.

Right now, I know the number one issue on people’s minds is the rising cost of living.

It is the independent Bank of England’s role to deliver low and stable inflation – and the Governor will set out their latest judgements at midday today.

And just as the government stood behind the British people through the pandemic…

… so we will help people deal with one of the biggest costs they now face – energy.

The energy regulator, OFGEM, announced this morning that the energy price cap will rise in April to £1,971 – an increase of £693 for the average household. Without government action, this would be incredibly tough for millions of hardworking families. So the government is going to step in to directly help people manage those extra costs.

Mr Speaker,

Before I set out the steps we are taking, let me explain what’s happening to energy prices, and why.

People’s energy bills are rising because it is more expensive for the companies who supply our energy to buy oil, coal, and gas.

Of the £693 increase in the April price cap, around 80% comes from wholesale energy prices.

Over the last year, the price of gas alone has quadrupled.

And because over 85% of homes in Britain are heated with a gas boiler, and around 40% of our electricity comes from gas, this is hitting households hard.

The reasons gas prices are soaring are global.

Across Europe and Asia, a long, cold winter last year depleted gas stores.

Disruption to other energy sources like nuclear and wind left us relying more than usual on gas during the summer months.

Surging demand in the world’s manufacturing centres in Asia…

… at the same time as countries like China are moving away from coal…

… is further increasing demand for gas.

And concerns about a possible Russian incursion into Ukraine are putting further pressure on wholesale gas markets.

And so prices are rising.

Mr Speaker,

The price cap has meant that the impact of soaring gas prices has so far fallen mainly on energy companies.

So much so, that some suppliers who couldn’t afford to meet those extra costs have gone out of business as a result.

It is not sustainable to keep holding the price of energy artificially low.

For me to stand here and pretend we don’t have to adjust to paying higher prices would be wrong and dishonest. But what we can do is take the sting out of a significant price shock for millions of families … by making sure the increase in prices is smaller initially and spread over a longer period.

Mr Speaker,

Without government intervention, the increase in the price cap would leave the average household having to find an extra £693.

The actions I’m announcing today will provide, to the vast majority of households, just over half that amount – £350.

In total, the government is going to help around 28 million households this year.

Taken together, this is a plan to help with the cost of living worth around £9bn.

We’re delivering that support in three different ways.

First, we will spread the worst of the extra costs of this year’s energy price shock over time.

This year, all domestic electricity customers will receive an upfront discount on their bills worth £200.

Energy suppliers will apply the discount on people’s bills from October.

With the government meeting the cost in full.

That discount will be automatically repaid from people’s bills in equal £40 instalments over the next five years.

This is the right way to support people while staying on track with our plans to repair the public finances.

And because we are taking a fiscally responsible approach, we can also provide more help, faster, to those who need it most – the second part of our plan.

We’re going to give people a £150 Council Tax rebate to help with the cost of energy, in April – and this discount won’t need to be repaid.

And I do want to be clear with the House that we are deliberately not just giving support to people on benefits.

Lots of people on middle incomes are struggling right now, too – so I’ve decided to provide the council tax rebate to households in Bands A to D.

This means around 80% of all homes in England will benefit.

And the third part of our plan will provide local authorities with a discretionary fund of nearly £150m…

… to help those lower income households who happen to live in higher Council Tax properties…

… and households in bands A-D who are exempt from Council Tax.

We’re also confirming today that we’ll go ahead with existing plans to expand eligibility for the Warm Home Discount by almost a third…

… so that 3m vulnerable households will now benefit from that scheme.

And that’s not all we’re doing to help vulnerable households.

We’re providing £3bn over this Parliament to help more than half a million lower income homes become more energy efficient, saving them on average £290 per year.

Increasing the National Living Wage to £9.50 an hour in April, a pay rise of over £1,000 for 2 million low paid workers.

And providing an effective tax cut for those on Universal Credit, allowing almost 2 million households to keep an average of £1,000 per year.

The payment through energy suppliers will apply across England, Wales and Scotland.

Energy policy is devolved in Northern Ireland, with a different regulator, and the government does not have the legal powers to intervene.

So we will make sure the Executive is funded to do something similar, with around £150m for Northern Ireland through the Barnett formula next year.

And because the Council Tax system is England only, total Barnett consequentials of around £565m will be provided to the devolved administrations in the usual way.

Mr Speaker,

I know that some in this House have argued for a VAT cut on energy.

However, that policy would disproportionately benefit wealthier households.

There would also be no guarantee that suppliers would pass on the discounts to all customers.

And we should be honest with ourselves: this would become a permanent Government subsidy on everyone’s bills.

A permanent subsidy worth £2.5 billion every year – at a time when we are trying to rebuild the public finances.

Instead, our plan allows us to provide more generous support, faster, to those who need it most, providing 28m households with at least £200, and the vast majority receiving £350.

It is fair, it is targeted, it is proportionate – it is the right way to help people with the spike in energy costs.

Mr Speaker,

Today’s announcements are just one part of the government’s plan to tackle this country’s most pressing economic challenges.

A plan for growth – with record investments in infrastructure, innovation and skills.

A plan to restore the public finances – with debt falling by the end of this Parliament.

A plan to cut waiting lists and back the NHS with £29bn over three years and a permanent new source of funding.

And, with the measures I’ve announced today – a plan to help with the rising cost of energy with £350 more in the pockets of tens of millions of hard working families.

That’s our plan to build a stronger economy – not just today but for the long term.

And I commend it to this House.

Commenting on the energy cap rise, interest rate rise and the Chancellor’s measures to address the cost of living crisis, TUC General Secretary Frances O’Grady said: “The Chancellor’s announcement is hopelessly inadequate. For most families it’s just £7 a week and more than half must be paid back.

“It’s too little, it’s poorly targeted, and it’s stop gap measures instead of fixing the big problems.

“Britain needs a pay rise. The best way to help families is to get wages growing again. But this government has no plan to end pay misery.

“Ministers should be getting urgent help to families that need it most through raising universal credit. And we need a windfall tax on the excessive profits from North Sea gas to cut bills and boost investment in affordable energy.”

Responding to today’s announcements on energy costs and the cost of living, Katie Schmuecker, Deputy Director of Policy and Partnerships for the independent Joseph Rowntree Foundation said: “The Chancellor has offered cold comfort to families in poverty, who are already rationing what they can spend on essentials such as heating and food.

“These families are now expected to find at least half of the eye watering increases in energy bills, when many are already getting into debt to keep their houses warm and food on the table.

“Three quarters of those who can claim the enhanced support are not in poverty. Meanwhile inflation is set to rise at more than double the rate of benefits. This support will not get people through the next few months and it will not protect those most at risk of hardship.

“People in poverty are hit hardest by all these pressures because our social security system is simply not offering adequate support, and until that changes they will continue to be exposed to every economic shock.

“The Chancellor has made his choice, the harder choices will now be coming for those who still can’t afford essentials for themselves and their families.”

University of Birmingham’s Harriet Thomson on the rise of energy price caps: “This news comes at a time when families across Great Britain have already been facing years of rapidly increasing energy prices, as well as chaotic energy market conditions with the collapse of around 20 energy supplies since January 2021 alone.

“Just last month, ONS data found that 2 in 3 adults said their costs of living had gone up in the past month, with 79% of those attributing blame to gas and electricity prices.

“We know from the extensive body of existing evidence on this topic that lower income households will be disproportionately hit by the price cap increase, risking pushing millions more into a situation fuel poverty.

“This will have serious consequences for physical and mental health, social isolation, and educational attainment, with households forced to make difficult everyday decisions over whether to ‘heat or eat’.

“Moreover, these price increases are likely to push more people into using risky and/or polluting alternative energy sources, such as DIY candle heaters that have been linked to house fires, burning scrap wood and other flammable materials, and digging up peat. As well as the obvious risks to human life, these approaches will also exacerbate climate change.

“It’s clear that energy companies are reeling from the potent combination of cash flow reductions due to pandemic-related economic pressures on families who are building up more energy debt, and the global gas crisis.

“But the answer is not to burden households with yet more costs. The energy market is broken and needs radical reform – now is the time for the UK government to show ambition and commitment to the nation by investing in deep retrofits of our old and leaky housing stock, and to rollout decentralised renewable energy systems at scale.”

Chancellor: ‘Inspiring’ Scots get back to work after furlough

Chancellor of the Exchequer Rishi Sunak yesterday praised the “inspiring” people and businesses of Scotland during a visit to meet those supported by the UK Government’s £352 billion Plan for Jobs.

Rishi Sunak travelled to Fife, Edinburgh and Glasgow where he visited several businesses that have returned workers from furlough, held a roundtable of Scottish business leaders and saw how Scotland is creating jobs and leading our green recovery.

Around one in three jobs in Scotland have been supported by the UK Government’s support package and more than 90,000 Scottish businesses received more than £4.1 billion in loans since the start of the pandemic.

The Chancellor’s visit came as new figures released yesterday show that the number of people in Scotland on furlough has halved in the last three months, with just 141,500 jobs still furloughed.

Chancellor of the Exchequer Rishi Sunak said: “It’s been inspiring to hear stories of people and businesses in Scotland that are now starting to feel the weight of the pandemic lifting off them as they get back to work – our Plan for Jobs is working and it’s great to see people succeeding after a year of uncertainty.

“It’s been a challenging time but the UK Government has delivered one of the most generous packages of support in the world, protecting one in three Scottish jobs.

“Scotland will be key in ensuring the UK’s economic success – creating jobs, powering our growth and driving a green recovery by hosting COP26 later this year.”

During the visit, the Chancellor toured the Offshore Renewable Energy Catapult Turbine in Leven, Fife. The turbine is the leading technology innovation and research centre for offshore renewable energy.

He met SMEs who have used the turbine for development and have benefitted from UK Government funding for green ventures.

The Chancellor highlighted the important contributions Scotland makes to the UK, including towards the UK’s Net Zero transition and climate change leadership on the world stage, ahead of the COP26 Glasgow conference in November.

He also conducted a roundtable with Scottish businesses in the retail banking sector at the new Queen Elizabeth hub in Edinburgh, where he thanked them for their role in responding to the pandemic, keeping call centres and banks open for vulnerable customers, and distributing many of the UK Government business support schemes.

The Chancellor went on to see preparations for the International Festival and the Fringe. The UK Government gave £1m of funding to Edinburgh Festivals this year, to help the festival promote itself digitally to a bigger audience.

He visited a number of small businesses including Liggy’s Cake Company, which was supported through the furlough scheme and is now hiring new staff.

He also visited Dynamic Earth, an award-winning visitor centre in Edinburgh dedicated to educating people about the earth and environmental issues, and met with several staff who have returned from furlough and met a group of children taking part in the centre’s outdoor activities.

NUMBERS ON FURLOUGH FALL TO LOWEST LEVEL SINCE START OF PANDEMIC

Almost three million people have moved off furlough since March, according to latest data
More than half a million people left the scheme in the month of June alone, with fewer than two million people now remaining on furlough
Chancellor welcomes new data while meeting furloughed employees on a visit to Scotland

ALMOST three million people have moved off the furlough scheme since March as the economy began to bounce back and businesses reopened, according to new statistics.

Figures published yesterday which cover up until the end of June, show the fewest number of people on furlough since the scheme launched in March 2020, down from a peak of nearly nine million at the height of the pandemic in May last year.

1.9 million people remained on the scheme by the end of June, more than half a million fewer than the 2.4 million at the end of May.

The Business Insights and Conditions survey (BICS) shows numbers may have fallen even further – with estimates that between 1.1 and 1.6 million people are still on furlough.

It comes as the Chancellor visited Scotland where he has hailed the economic strength of the union and where the Government’s Plan for Jobs has supported businesses and families during the pandemic.

Ahead of meeting Scottish businesses and individuals in Edinburgh, Glasgow and Fife, where he talked to employees who have returned from furlough, Rishi Sunak welcomed the statistics.

Chancellor of the Exchequer Rishi Sunak said: “It’s fantastic to see businesses across the UK open, employees returning to work and the numbers of furloughed jobs falling to their lowest levels since the scheme began.

“I’m proud our Plan for Jobs is working and our support will continue in the months ahead.”

The figures also show a striking fall in the number of young people on furlough, who for the first time ever, no longer have the highest take-up of the scheme.

In the last three months, younger people have moved off the scheme twice as fast as all other age brackets, with almost 600,000 under 25s moving off the scheme.

Jobs in sectors including hospitality and retail are now also moving off the scheme the fastest, – with more than a million coming off the scheme in the last three months.

This decline means those in hospitality and retail no longer make up the majority of all those on furlough.

Furlough was extended until the end of September to allow for businesses to adjust beyond the end of the roadmap and to bring people back to work.

Starting on 1st August, the employer contribution to furlough costs will increase to 20% and that contribution level will continue until the scheme ends at the end of September.

The Government’s Plan for Jobs continues and is still in place to provide support, including Kickstart, traineeships and more work coaches to help people find jobs.

The government says this ‘is is the right thing to do’ to reduce long term economic scarring in the labour market and our ongoing Plan for Jobs means that we will continue to support people as the economy recovers.

EXCLUDED UK: Please sign our Open Letter to the Chancellor

We need your signature please!

Deadline Monday 1 March, 5pm

In our efforts to make as much noise as possible ahead of the Budget, we’ve drafted an open letter to send to the Chancellor urging him to do the right thing and provide support to those who have thus far been excluded from support through no fault of their own.

Please help us and sign this letter and share! The letter can be found at this link:

The letter can be found at this link:

https://docs.google.com/document/d/1oo0zKEWqxxD8rmTsQg7LY8O-UhgiCq4Ij0fZqQSm4H0/edit?usp=sharing

You can simply add your name to the end of the letter by typing directly into it.

Please keep your signature to one line with your name and if you wish you can add profession/ organisation/ affiliation/ business name/ category for exclusion.

The letter will be published tomorrow evening.

Thank you!

Best wishes from the ExcludedUK Team.

#relentless #wearenotgoingaway #franticfebruary

PS: This is for anyone excluded from UK Government Covid-19 support OR wishing to show support … please sign!

Join our facebook community: www.facebook.com/groups/excludeduk

If you’re on Twitter – share our tweets here:@ExcludedUK

Devolved nations issue united call for financial action

Finance Ministers from across the devolved nations have joined forces to call for flexibility, fairness and clarity from the UK Government.

For the first time, all three finance ministers – Kate Forbes, Rebecca Evans and Conor Murphy – today made co-ordinated statements in their respective legislatures.

The ministers are asking the UK Government for greater fiscal flexibility to manage the implications of coronavirus (COVID-19), meaningful involvement in the Spending Review to enable planning of budgets and an assurance that lost EU funding will be replaced in full and brought under the control of devolved administrations.

Finance Secretary Ms Forbes said: “Today the finance ministers of the devolved administrations are taking this unprecedented step to demonstrate the level of concern we share across the different nations of the UK, across different parties and across different legislatures.

“The importance of these issues cannot be overstated. They directly impact our ability to respond to COVID-19, to manage our nations’ finances and to support our communities and businesses during the pandemic.

“As representatives of our three nations, we are calling for the UK Government to provide the clarity, certainty and flexibility we require. These calls must not go unanswered.”

Ms Evans said: “I am focused on protecting the people of Wales from the worst impacts of the pandemic, while laying the foundations for recovery based on jobs, our young people and the environment.

“However, the Chancellor’s decision to cancel the UK autumn budget, alongside the uncertainty of the Spending Review and the complete lack of information on replacement EU funding, all contribute to making our task harder still.

“Wales, Scotland and Northern Ireland are today calling on the UK government to provide the fairness, flexibility and clarity we need to support and protect our communities and businesses.”

Speaking in the Northern Ireland Assembly, Mr Murphy said: “As Finance Ministers we represent over 10 million people and today we speak with one voice. We are calling for more fiscal flexibility to manage the implications of COVID-19.

“We are calling for proper involvement in the Spending Review so we can plan our Budgets. We are also calling for lost EU funding to be replaced in full, and brought under local control.”

Finance Secretary Kate Forbes’ statement to the Scottish Parliament is available online.

Decade of Renewal? Chancellor launches Budget process

Chancellor says Budget will set out ambitious plans to unleash Britain’s potential, level up across the UK and usher in a decade of renewal
Budget will start a new chapter for the economy, seizing the opportunities that come from getting Brexit done

Continue reading Decade of Renewal? Chancellor launches Budget process