Chancellor Rishi Sunak's spring statement offered little for families and firms

The Chancellor lifted the National Insurance threshold, lowered fuel duty and promised an income tax cut by the end of this parliament in 2024

But in truth the combination of the effects of Covid and the measures to deal with it, rising inflation and the effects of the war in Ukraine left him with little room for manoeuvre and it showed.

Reaction has been mixed with many commentators bemoaning the little that was done for both individuals and businesses.

Shadow Chancellor Rachel Reeves for Labour said that the Chancellor’s statement had offered the “promise of jam tomorrow rather than support that is needed now.”

In many places in the statement Mr Sunak referred to measures that will be delivered in future both in his Budget in the autumn but also, with the tax cut, before the end of this parliament: by the end of this parliament due in December 2024.

Significantly adding to the pressure on the Chancellor was the backdrop of steeply rising inflation figures.

Figures from the Office of National Statistics show inflation last month hitting a 30-year high of 6.2pc. This is higher than the ONS had been expecting – they had forecast 5.9pc - but is expected to be some way off its expected peak expected later in the year.

Mr Sunak said the inflation rate over this year will be 7.4pc but that is an average figure with the rate expected to peak at 8.7pc before starting to fall back. That both increased the pressure on families and businesses and the demands for Mr Sunak to lend a helping hand, and limited his room for manoeuvre.

There was the expected cut in fuel duty of 5p per litre, which the RAC say will cut the bill for filling up the average family car about £3.30. But this will do little to scratch the surface of the fuel rises that we have seen. There was also nothing in the way of specific measure for transport businesses that would have eased their finances and allowed them not to pass price rises on that ultimately end in higher prices for the consumer.

A move on fuel duty was expected but there was also movement on the National Insurance threshold, increasing it from £9,600 to £12,750. This is a tax cut of about £300 per worker and has the added benefit of simplifying somewhat a tortuously complicated tax system. Mr Sunak said that about 70pc of workers would benefit from the move.

For business there was precious little in the statement although there was an increase in the Employers Allowance for small businesses, rising to £5,000 from £4,000. He also confirmed a previously trailed cut of 50pc in business rates up to £110,000 for hospitality and leisure firms.

But, as business groups have highlighted, there were a lot of promises about future possible tax cuts on business investment, including adjustments to the Apprenticeship Levy and research tax credits.

Mr Sunak has repeatedly tried to stress that he is a tax-cutting Chancellor but as Rachel Reeves said in her Commons reply: “This Chancellor has raised taxes more in the last two years than any previous Chancellor in the last 50.”

She said that Mr Sunak was “making a historic mistake” in his statement, pointing out that he was the only finance minister in the G7 countries to raise taxes this year.

And in a jibe aimed to hit out at Conservatives who regard themselves as a low tax party, Ms Reeves said: “The Conservatives have become the party of high taxes because they are the party of low growth.”

It was a speech in which Mr Sunak offered no jokes, ones in previous speeches having fallen flat. It was left to Ms Reeves to use humour in her attack, ridiculing Mr Sunak as “Ted Heath with an Instagram account” and claiming that his approach was not based on reality, describing it as “Alice in Sunakland.”

Certainly, the fact that Mr Sunak announced not only what he will do in the autumn but a prospective income tax cut that is expected to be a key part of the Conservatives next general election offering underlines how little he had to offer.