Chancellor’s spring statement ‘not enough’ for cost of living crisis: Finance Minister Conor Murphy

Northern Ireland’s Finance Minister Conor Murphy has accused the Chancellor of “tinkering on the edges” and not going far enough in his spring statement to alleviate the worst impacts of the spiralling cost of living.

Fuel duty and National Insurance have been adjusted by Rishi Sunak, but he warned MPs the nation must prepare for “the economy and public finances to worsen, potentially significantly” because of the impacts of Russia’s invasion of Ukraine.

Mr Sunak said he was exempting the lowest paid workers from National Insurance contributions and income by lifting the threshold by £3,000 from £9,568 a year to £12,568.

He also cut fuel duty by 5p after record prices at the pumps.

However, Conor Murphy said “much more could and should have been done” by the Chancellor.

“Increasing the threshold for National Insurance contributions will help mitigate the impact of the hike on workers on the very lowest incomes, but the Chancellor should have gone further by scrapping his planned increase in National Insurance entirely,” the Finance Minister said.

“The reduction in fuel duty for motorists is minimal. A 5p reduction will be of little comfort to motorists given that petrol and diesel prices have increased by over 20 and 30 pence per litre respectively since the start of this year.

“At a time when households are facing spiralling costs to heat their homes, today’s statement fails to reduce VAT on energy bills or uprate benefits.”

Mr Murphy also branded the decision to proceed with the removal of the red diesel rebate “hugely disappointing” and said it “couldn’t come at a worse time”, given the pressures facing construction and agri-food sectors.

Chancellor of the Exchequer Rishi Sunak delivering his spring statement Credit: House of Commons/PA

The Finance Minister also said Northern Ireland will receive £34million in Barnett consequentials for 2022-23 as a result of Wednesday’s announcement.

“I have asked the Chancellor to consider ring-fencing any additional Barnett for the cost of living crisis. This may enable me to allocate the money for similar support here,” Mr Murphy said.

“My request remains under consideration. Therefore, this £34m will be added to the £300m which in the absence of an Executive cannot be allocated to help families, communities and businesses.”

  • Video: UTV's Jordan Moates reports on reaction in NI to the Chancellor's statement

DUP MP Sammy Wilson said it “would be churlish not to accept that the Chancellor has taken action which will help people who are struggling with the cost of living currently”.

He added: “Raising the threshold for National Insurance contributions and the reduction in fuel duty will all make a difference to family budgets.

However, it is disappointing that more wasn't done given the Chancellor has had additional tax revenue from inflation and from the quicker than expected recovery in economic growth as we emerge from the pandemic.

“Those could have allowed him to be more ambitious in the assistance provided.”

Petrol prices at the pumps have continued to soar Credit: PA

Mr Wilson added: “The reduction in fuel duty could have gone further, particularly when we look to other countries and the steps they have taken.

“There was also no mention of postponing the change in the red diesel rebate, something which will hit the construction and haulage industries hard.”

He further said: “It is particularly notable that the announcement to scrap VAT on energy efficiency measures cannot be applied to Northern Ireland because the Protocol ties us to the EU VAT regime.

“Those who have been cheerleaders for the Protocol and who have demanded its rigorous implementation need to step forward and explain why they continue to support something which is restricting efforts to help hard-pressed families cope with rising costs.”

The East Antrim MP also pointed to the impact of the Russian invasion of Ukraine and warned that future defence spending will be a further challenge to face.

“The invasion of Ukraine has highlighted the need to have armed forces who are capable of responding to such a threat,” Mr Wilson said.

“If the threat from Putin continues, or he moves his attention beyond Ukraine, then the demands on our armed forces will increase. That demands a commensurate increase in defence spending.

“The Chancellor is going to have to address those challenges in the coming months, alongside the pressures that will families will continue to face.”

A building that was damaged by shelling in Mariupol, Ukraine Credit: Evgeniy Maloletka/AP

The Northern Ireland Chamber of Commerce and Industry also accused the Chancellor’s statement of falling short.

Chief Executive Ann McGregor said: “While there are some positive announcements that firms will welcome, it did not fundamentally address the huge cost pressures they are facing.

“For example, while cuts to fuel duty are welcome, in reality, the reduction is small when compared to the larger tsunami of surging costs that is bearing down on firms and households.”

Ms McGregor also warned that things will get worse before they get better and that smaller businesses are left most exposed.

“As the economic outlook is likely to get worse before it gets better, many firms will be forced to continue raising prices, further fuelling the cost-of-living crisis,” she said.

“Businesses are braced to face some gruelling weeks and months ahead. More is needed to support them and protect jobs through the domestic and global economic shocks to come.”