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Spring Statement Preview 

By Will Neale
22 March 2022
Public Affairs

By William Neale 

During this morning’s media round, Business Minister Paul Scully explained that the Chancellor recognises “there are a lot of headwinds people are facing”. Ahead of tomorrow’s Spring Statement, the Chancellor once again finds himself constrained by massive political and economic challenges.  

Rishi Sunak, who keeps a photograph of Nigel Lawson on his desk, is slowly becoming defined by big-state, high-spend interventions on the British economy, a long way from his political home. A range of options will be presented to the Chancellor aimed at tackling rising levels of inflation and soaring energy costs  

More than 50 Conservative MPs have written to the Chancellor calling for a cut in fuel duty, to combat rising prices at the pumps in recent weeks.   

Sunak told the Today programme, “We recognise the importance of people being able to fill their cars up, and that not being prohibitively expensive.”  

Asked if he was prepared to step in to help people cope with the cost-of-living crisis, he said: “Of course I am and people can judge me by my actions,” adding: “I will stand by them in the same way that I have done in the past couple of years. Where we can make a difference, of course we will.”  

It is expected that Sunak will announce a cut of 5 pence per litre to help ease the burden, despite this only resulting in a price cut of £2 per tank. Whilst the move is likely to appease some Conservative MPs, how much it will do to reassure the British public is still up for debate.  

The Telegraph are reporting that up to five Cabinet Ministers are calling on the Chancellor to defer the 1.25% National Insurance rise due next month.  

Analysis from Goldman Sachs has shown the Government has accumulated between £45 and £75 billion more in tax revenue than had previously been anticipated, leading some MPs, including Tory stalwarts Sir John Redwood and Peter Bone, to argue this headroom means “there’s no basis for the rise” and that “it should be scrapped.”  

Sunak will be hesitant to take such a drastic step in the Spring Statement, making a deferral less likely than the alternative - a review of the NI thresholds, which currently kick in at just £9,568.  

The impending removal of the energy price cap will also add an additional £700 onto the average British energy bill. The Chancellor has already revealed plans to give every household a £200 energy bill rebate and £150 council tax refunds, yet these measures do not respond to further anticipated rises as a result of the Russian invasion of Ukraine.  

The Treasury has played down chances of new large-scale interventions before the next Budget due in the Autumn, but – just as with the rising tax burden and the ongoing pressure on energy prices – the Chancellor will know his Spring Statement must offer something to tackle the cost of living crisis well before that Budget.