Spring Statement – what impact does it have on our industry?

Jacqui Kavanagh

This week, Chancellor Rishi Sunak revealed his Spring Statement – an update on the current state, and future expectations of the nation’s finances and it confirmed that we should brace ourselves for things getting more expensive at a faster rate later in the year.

Within the Spring Statement he announced some new policies that will affect our personal budgets in the coming months and years. But what impact will there really be and how will it affect our industry as a whole?

Rising fuel costs

Let’s start with fuel costs. We’ve all seen fuel prices soar these last few months, even before the horrific ongoings in Ukraine. As a result, the average price of petrol has risen by more than 40p per litre since last year’s Spring Statement.

But don’t worry, the chancellor announced a 5p a litre reduction in fuel duty for the next year, which apparently takes some of the sting out of rising prices. If you ask me, that’s a drop in the ocean as it would only knock approximately £3.30 off the cost of filling a typical 55-litre family car.

However, when you compare it with the ongoing rise in rail fares, you have to think about what the most cost-effective, and sustainable way to travel moving forwards is.

Taxes and NI

In September, the government announced that employees will pay 1.25p more in the pound from their pay packet in National Insurance contributions. In a significant move, he has now said that the earnings threshold at which people start to pay National Insurance will rise.

As it stands, most workers start paying National Insurance contributions when their income hits £9,568. They pay 12% of earnings between £9,568 and £50,270, then 2% on any earnings above £50,270.

From July, the chancellor has said that National Insurance will be paid on income over £12,570 a year – the same level as income tax starts being paid.

But what does this really mean?

Simply, anyone earning less than £35,000 a year will pay less for National Insurance. That is about 70% of all workers. Those who earn more will see a tax rise, albeit smaller than they would have expected.

This could be of benefit the majority of workers in our industry. For example, an employee who earns around £20,000 a year, will see an annual National Insurance cut of £180 in 2022-23, instead of an £89 rise expected before the announcement.

In addition to this, the Employment Allowance, which gives relief to smaller businesses’ National Insurance payments, will increase from £4,000 to £5,000 from April.

Unemployment rate dropped

The unemployment rate is now predicted to be lower over the next few years than in the OBR’s previous forecast in October. But I ask this? Where are all the workers? Our industry is crying out for people. My LinkedIn feed is full of people recruiting. Our industry is coming back, and it’s coming back stronger, and we need workers to fill the demand.

With all the refugees coming over from Ukraine, now is the time to fast track visas and make these people employable. The jobs are out there, we just need the people to fill them.

Looking to the future

In reflection, we look at what has been announced, and many are questioning if this is enough. Is the government holding back for an election year to then swoop in with amazing cuts? Possibly so, but that doesn’t help us now as there is a continued cry for help from individuals and businesses for the support needed for survival.

We will remain positive about the future of our industry – because that’s just what we do. But it’s a time when we must remain supportive of one another as we continue to fight the challenges we all face ahead as our industry continues to fight back.