Chancellor Rishi Sunak has delivered his Spring Statement to the Commons.
In his speech, Mr Sunak linked the strengthening of the UK economy to opposing Vladimir Putin's invasion of Ukraine. He set out the UK's sanctions on Russia - and said he was "proud" to stand with Ukraine.
But the Chancellor said the actions the UK had taken were not "cost free at home".
"It present a rift to our recovery... we came into this crisis knowing the economy was growing faster than expected but the Office for Budget Responsibility has said there is unusually high uncertainty around the outlook," he said.
Mr Sunak addressed a crisis at home, referencing the importance of "more resilient" public finances and said the Government would help with the cost of living.
"Today's statement builds a stronger economy for the United Kingdom," said Mr Sunak.
The chancellor warned inflation could rise to 7.4% this year but he promised the Government would "support the British people". The three immediate measures he announced included:
- Fuel duty being cut by 5p a litre across the country until March next year.
- For the next five years homeowners having energy saving materials installed, such as solar panels or heat pumps, will pay zero VAT.
- Doubling the household support fund to £1bn with £500m of new funding - with local authorities to receive funding from April.
"We can only afford to provide extra support because of our stronger economy," he added.
Mr Sunak has also raised the national insurance threshold. He said he would increase the threshold by £3,000 in 2021. From July people will be able to earn £12,570 without paying income tax or national insurance - a £6bn personal tax cut he said.
He also promised to "reform the generosity" of tax credits on the money private firms spend on R&D. And he said he would cut tax rates on business investment, adding that details would be outlined in the Autumn Budget.
From April, the Employment Allowance will also increase to £5,000 and Mr Sunak said he would cut the basic rate of income tax from 20p to 19p by the end of the current Parliament.
"Cutting taxes is not easy, it requires hard work, prioritisation and willingness to make unpopular arguments elsewhere," he added.
Following the announcement, business leaders from around the South West shared their thoughts.
South West Business Council
Tim Jones, chairman of the South West Business Council, said: “This is a Budget for tomorrow when the crisis is today. We have been through the perfect storm with Brexit, Covid, inflation and now dislocation to the supply chain because of the Ukraine war.
“The only thing here that will remotely address business problems is the cut in fuel duty - and will that be passed on by the retailers? We don’t know the answer to that.
“So it is hugely disappointing. The crisis so many businesses are facing has not been recognised. This was the moment for the Chancellor to exercise a bit of judgement, but now we will have to wait until the autumn Budget so it is a case of businesses being left to row their own boats.”
Devon and Plymouth Chamber of Commerce/British Chambers of Commerce South West
Stuart Elford, chief executive of Devon and Plymouth Chamber of Commerce and chair of British Chambers of Commerce South West, said: “There are some things to be cheered about but nothing that gives huge comfort to businesses at the moment when costs are rising exponentially.
“There was not a huge amount for businesses. The cut in Fuel Duty will be welcomed, especially for those firms in transport and logistics, and the increase in Employment Allowance will be a help.
“But we had hoped he would freeze the rise in National Insurance contributions, but he didn’t. Everyone understands he has a tough job having to repay borrowing for the pandemic without stifling the economy going forward. But businesses are facing rising costs and energy costs in particular are crippling. It is exponential and in some cases could be business ending.”
Cornwall Chamber of Commerce
Kim Conchie, chief executive of Cornwall Chamber of Commerce, welcomed the rise in Employment Allowance for SMEs and the cur in fuel duty but was otherwise underwhelmed by the Chancellor’s statement.
He said: “It is disappointing for businesses with not much to cheer for SMEs. I’m not sure if businesses will get relief on fitting renewables like households will.”
Randall & Payne
Rob Case, tax partner at Randall & Payne, an accountancy and business advisory firm in Cheltenham, said: “Given this was a Spring Statement and not a full Budget there were more announcements than I expected.
"This was clearly driven by recent developments across the globe and the rate of inflation at home. There were some stark warnings that we should be prepared for things to get worse and that the cost of borrowing is still going to rise. That said there were some clear announcements in a new three-step “Tax Plan” and some immediate tweaks to some taxes that will provide a small amount of help to many.
"As usual the devil is in the detail and at a time when there are pressures on household expenses, we will have to wait and see the impact of the measures. Will a reduction in the rate of VAT be enough to incentivise individuals to make the switch to greener home technology? Will the National Insurance changes be big enough to help with the rising costs of living?
"We should of course be grateful for the assistance provided and the pledge to reduce the basic rate of tax in the relatively near future, the big question of course is has he got the balance right and is the support being provided enough?”
Business West
Ian Mean, director of South West chamber of commerce Business West, said: "Rishi Sunak pulled no surprise rabbits out of the hat in his mini Budget for business.
"As predicted he cut fuel duty by 5p per litre but I have to agree with the RAC that this is just 'a drop in the ocean'. Our hauliers here in Gloucestershire wanted at least 12p. However, the cut comes in from 6pm this evening and the welcome news is that it lasts for a year.
"We saw no last-minute changes to the Chancellor's National Insurance hike from April despite howls of protest from some Tory MPs. What he did do-also widely predicted was lower the tax threshold to benefit lower-paid workers.
"And there was a final hint of a tax cut - perhaps timed for the next General Election in say 18 months time."
Federation of Small Businesses (FSB)
Martin McTague, national chair of the Federation of Small Businesses (FSB), which also has a presence in the South West, tweeted: "I'm pleased Rishi Sunak has listened to FSB and is lifting the Employment Allowance, which we originally proposed. The cut in fuel duty is also welcome, but more will be needed for small firms with soaring energy costs."
CBI South West
The business body said: “The Chancellor has taken steps to sustain confidence in our economy. They are welcome but don’t do enough to tackle the current challenges facing firms.
“His new plan to incentivise business investment from next year is very good news. We stand ready to work with the Chancellor on measures essential to transforming productivity such as capital allowances, R&D reforms and a revised apprenticeship levy. These measures lie at the heart of U.K. competitiveness.
“In reality, we cannot wait until October to get growth going. The Government needs to get moving straight away.
“We need concrete plans now on how we get new nuclear, hydrogen and onshore wind investment. We need more EV charging infrastructure deployed this year. We need post Brexit regulation changes that unleash the potential of our health, science and technology sectors.
“The Chancellor is right that the government can’t solve every challenge. However, the only enduring response to inflation, energy prices and cost of living challenges is a relentless campaign for economic growth.”
Optimum Professional Services
Michael Blaken, accounts director at Swindon accountancy and law firm Optimum Professional Services, said the increase in the national insurance contributions (NICs) threshold, to bring it in line with personal allowance at £12,570, would help those on low income. He said plans to reduce the basic rate of income tax from 20% to 19% by the end of this Parliament in 2024 was also good news.
“These measures, and the cut in fuel duty of 5p per litre, will help households and also businesses. They may in turn ease the pressure on businesses to bring in pay rises, because the increase in the cost of living is being shared," he said.
He added that "the devil would be in the detail", because while the NICs threshold had increased for employees from April, he said it appeared employers would be paying the same rate.
“However, the increase in Employment Allowance from £4,000 to £5,000 is good news for employers, because it reduces their annual National Insurance liability by an extra £1,000 per year which helps mitigate the April increase in National Insurance rates of 1.25%.”
Co Charger
Joel Teague, chief executive of the Exeter-based electric vehicle charging app, said: "Although there are motorists and businesses that will welcome the 5p cut in fuel duty, we feel in the light of the climate emergency and the urgent need to shift to electric vehicles, it's not the right move,.
"Even with the rise in electricity costs, driving an electric vehicle is far more economical. And although not all motorists can have a charger of their own, renting a neigbour's charger means those living in flats and terraces can have access to bookable, reliable, affordable EV charging."
FairFuelUK Campaign
Howard Cox, founder of FairFuelUK Campaign, said: "It would be churlish not to be thankful to the Chancellor in cutting Fuel Duty by 5p for 12 months. Well done Rishi. Our relentless campaigning has been fruitful. It will give some respite to millions of motorists, that have had and continue to have no choice but to drive.
"Just as important this fiscal relief to hauliers and small businesses teetering on survival, desperately need this reduction more than most road users, it’s way overdue. It will only benefit drivers and the economy if the new fuel taxation level becomes permanent and is accompanied by the introduction of an independent pump pricing watchdog. Today’s fuel duty reduction must be passed onto drivers immediately. "
Dorset Chamber
Dorset Chamber's chief executive Ian Girling said: “The Chancellor’s Spring Statement won’t have gone far enough for some businesses in Dorset.
“The five pence cut in fuel duty, while welcome, may be a drop in the ocean for hard-pressed firms in sectors most exposed to transport costs.
“Many businesses would have preferred to have seen the National Insurance rise scrapped completely rather than the threshold increased and the Employment Allowance for smaller businesses increased from £4,000 to £5,000.
“Confirmation of retail, hospitality and leisure business rate discounts will help ease the pain for some firms but it appears to be a case of ‘jam tomorrow’ when it comes to other measures.
“While proposed support due to be consulted upon under a new Tax Plan is very welcome, it does little to help immediately when inflation is rising to its highest level in 30 years and businesses remain in the grip of a costs crisis.
“Policies such as the scrapping of VAT on energy efficiency measures are generally welcome, while the proposed income tax reduction by 2024 appears a very long way off when householders are struggling to make ends meet today.
“While I appreciate that his hands were tied in many ways, the Chancellor could have been bolder. Businesses will no doubt be seeking to hold him to his word for support in the Autumn but will also expect intervention before then if the costs crisis deepens significantly further.”
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