Business

Spring Statement 'nowhere near enough' to address spiralling cost crisis

Chancellor of the Exchequer Rishi Sunak leaving 11 Downing Street ahead of Wednesday's spring statement. Picture by Aaron Chown/PA Wire

THE UK Chancellor’s move to cut fuel duty by 5p per litre and raise the national insurance threshold does not go far enough to address spiralling fuel and energy costs, the Finance Minister has said.

With inflation now at a 30-year high, Conor Murphy said the measures announced in Wednesday’s Spring Statement “provides nowhere near enough support to people and businesses struggling with the rising cost of living”.

Mr Murphy has also confirmed that the £34 million earmarked for Stormont from the Spring Statement cannot be spent without a functioning executive.

But the Sinn Féin minister said the Treasury is considering a request to ring-fence the money for the cost of living crisis, which could enable him to allocate it for similar support here without executive sign off.

If that doesn’t happen, the £34m will be added to the £300m cash pile which cannot be allocated until a reformed executive approves a new budget for Stormont.

That need for that money appears all the more pertinent with the Treasury-funded Office for Budget Responsibility (OBR) yesterday warning that households face the biggest fall in living standards on record.

The OBR said inflation is likely to average 7.4 per cent in 2022, hitting a 40-year high of 8.7 per cent in the final three months of the year.

The OBR said inflation - combined with rising taxes - will "weigh heavily on living standards in the coming 12 months".

Against that backdrop, Rishi Sunak announced a 5p cut in fuel duty for 12 months. The reduction came into effect at 6pm on Wednesday.

He also unveiled a plan to increase the threshold at which people start paying national insurance contributions by £3,000 to £12,570 from July, benefitting around 30 million UK workers with a tax cut worth more than £330.

It will mean 70 per cent of workers will pay less national insurance than they otherwise would have, even after April's tax hike.

He promised further support in 2024 with a pledge to cut the basic rate of income tax from 20p in the pound to 19p.

Mr Sunak said his tax plan "delivers the biggest net cut to personal taxes in over a quarter of a century".

But Stormont’s Finance Minister Conor Murphy labelled the measures as “extremely limited”.

He said Rishi Sunak should have scrapped his planned increase in national insurance altogether and described the 5p cut in fuel duty as “minimal”, adding that petrol and diesel prices had already increased by 20-30p per litre since the start of the year.

Mr Murphy said it was also “hugely disappointing” that the chancellor is proceeding with the removal of the red diesel rebate.

Industry bodies have warned that it could cost the north’s construction, manufacturing and minerals sectors up to £25 million a year.

The finance minister’s view has been largely shared by the main parties at Stormont.

DUP MP Sammy Wilson welcomed the measures to assist with the cost of living crisis, but said Mr Sunak could have done more.

SDLP finance spokesperson Matthew O’Toole said Mr Sunak “had the chance to do something serious to help with the cost of living but… chose to play to the Tory tax cutting gallery”.

Alliance MP Stephen Farry said it does little for the most vulnerable in society and doesn’t address climate change.

“The most necessary intervention was to increase universal credit and other benefits in line with the current rate of inflation of 6.2 per cent, which is set to rise even further, rather than the historic rate of 3.1 per cent from last September.

“This represents a real-terms cut for the most vulnerable in our community and will put even more pressure on people who are desperately struggling to make ends meet.”

The UUP’s finance spokesperson, Steve Aiken said the statement “did little to alleviate the real pain of the rising cost of living”.

“For some there will be a degree of relief, but for far too many, the most vulnerable, and many who are now no longer ‘just about managing’, today’s statement was a real blow.”

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