Spring saw the Budget, a once in a year event, when future tax changes were announced just ahead of the start of the new tax year. And that was just about it, given an emergency or two. Then the autumn statement was introduced – initially to present the government’s spending plans, but increasingly looking like a full-service budget. Indeed, it is now referred to as “the Autumn Budget”.
But there is still some tinkering with the tax system to be announced ahead of the end of the tax year. This week, Chancellor of the Exchequer Rishi Sunak delivered his Spring statement. Despite the higher cost of servicing the national debt as a consequence of rising interest rates and the additional economic uncertainty engendered by the war in Ukraine, the Chancellor did appear to have some scope for tax cuts.
The one that many were calling for was a reduction in the level of fuel duty to counter the increase in the cost of petrol and diesel. He might well have argued that fuel duty is already frozen, but in the end he felt capable of slicing 5p off a litre. This is, after all, a cost that affects us all. Aside from filling our own fuel tanks, dearer diesel pushes up the cost of moving goods around the country, which further adds to the upward pressure on inflation.
And inflation is now at a 30 year high. Moreover, the Office of Budget Responsibility expects further rises in the months ahead, hopefully peaking later this year. Of course, the rise in National Insurance contributions will further add to the pain being felt by many working households, so the lifting of the threshold at which this tax bites will be welcomed by many. All in all, the tinkering announced by the Chancellor appeared to deliver some relief against an uncertain background, with the promise of more cuts to come.
It was clear that Mr Sunak does not want to go down in history as a tax and spend Chancellor. Whether he will be able to fulfil his promises early must depend on circumstance largely outside his control. In the meantime, the stock market seems to be holding remarkably steady, despite the worsening scenes emerging from Ukraine. In some ways the news from Westminster came as some sort of relief from the grim reality of war. We must all hope the conflict there ends soon.