People 'disappointed' with Chancellor's spring statement but what does it mean for Wales?

  • Report by Cost-of-Living Correspondent, Carole Green

Chancellor, Rishi Sunak has today announced a raft of financial measures to help tackle the cost-of-living crisis.

In his spring statement, he announced that despite warnings, he is sticking with the planned National Insurance contributions rise of 1.25 percentage points but said he was raising the threshold to help the lowest paid workers.

The threshold at which people begin to pay National Insurance will increase by £3,000 from £9,568 a year to £12,568. It means anyone earning below that amount will not have to pay a penny in National Insurance or income tax. And in 2024 the basic rate of income tax will be cut from 20 to 19 pence in the pound.

Fuel duty is being slashed by 5p

Fuel duty is also being slashed by 5p to help drivers manage, with fuel prices at petrol pumps currently higher than they've ever been before.

Universal Credit payments will also increase to help struggling families deal with the cost-of-living crisis. The benefit will increase in April as it does each year in a bid to keep up with inflation.

The chancellor resisted pressure to increase Universal Credit payments after removing the £20 uplift in October last year.

Mr Sunak said he will also scrap VAT on energy efficiency measures such as solar panels, heat pumps and insulation installed for five years.

But the cost-of-living isn't expected to get cheaper, with the energy price cap set to lift by 54% in April - hitting household bills with an increase of around £700 per year.

Chancellor, Rishi Sunak

Speaking in the House of Commons, Chancellor Rishi Sunak said: “Today we’ve announced that we’re putting hundreds of pounds a year more in the pockets of more than 1.2 million people in Wales by raising the National Insurance thresholds and from next year we’re cutting income tax so people can keep more of their money.

“Our reduction to fuel duty will save money for people across Wales every time they fill up, which together with the freeze means people save £100 per car on average a year.

“Thousands of businesses across the UK will benefit from the increase to the Employment Allowance, a tax cut worth up to £1,000 a year, boosting innovation and growth."

But what do people in Wales think of these financial measures?

Katie Jones, 23, is a lorry driver from Llanelli. She works two jobs and works seven days a week to try and save for a house.

She doesn't believe these measures go far enough.

"I don't think it will make any difference at all", she said.

"I'm currently renting in Llanelli with my partner. Obviously with all the cost increases at the moment, it's a little bit difficult. I've got myself a part-time job on weekends just for that extra bit of money. We're saving for a house but with everything going up, that's not the easiest thing to do.

"Driving to work, it used to cost me £60 to fill my tank, that's gone up to £80. That's every week going back and forth from Llanelli to Swansea."

Katie Jones

As the cost-of-living crisis worsens, Katie says she's had to cut back on some things.

"We're generally eating out less, tending to cook from home a lot more. We don't really go out on date nights as much and I don't go out with the girls as much because it's difficult at the moment.

"I tend to work 7 days a week just to keep up with all the costs and obviously saving for a mortgage as well so all of the luxuries have had to go."

Discussing the increase in the National Insurance threshold, she added: "I haven't even thought that far ahead - we tend to be living week by week at the moment and obviously we'll deal with that when April comes."

Stephen Morgan is the company director for haulage firm A.T Morgan & Son. He says the measures have "helped a little" but he would've liked to have seen them go further.

Stephen Morgan

As a haulage firm, 35-40% of their costs are fuel related and Steven believes they'll be spending £1 million on fuel this year.

Reacting to the announcement that fuel duty will be cut by 5p a litre, he said: "It helps a little bit but nowhere near enough if I'm honest. I would've liked to have seen him go a lot further with that given that fuel certainly over the last few weeks has gone up in excess of 50p a litre.

"It's having a huge cost impact on us. The driver cost went up last year and now we're having the increase in the fuel. We're having to approach customers to ask for an increase in the prices we're charging them and that pushes on to their customers and so on.

"I suppose it's only so much he can do. Every little helps but I would've liked to have seen a lot more."

Rebecca Evans MS

Welsh Government Finance Minister Rebecca Evans has said the spring statement has let down people struggling with the rising costs of living.

“People will be right to feel let down by today’s threadbare statement", she said.

"Bills are rising rapidly and disposable income is falling, but there is not enough in today’s statement that recognises the struggle many are facing.

"It’s an ideological, regressive statement from the Chancellor that lacks practical measures to help those who need help the most – there is nothing for those who cannot work and those on lower incomes.

“The UK Government has squandered the opportunity to provide meaningful support.It exposes an out-of-touch Chancellor and exacerbates the fairness gap running through Westminster’s lacklustre approach to the cost of living crisis.”

Luke Young, Head of Policy & Campaigns at Citizens Advice Cymru also said the spring statement was "disappointing".

He said: “The Chancellor’s refusal to uprate benefits in line with current inflation is disappointing. It would’ve targeted support at people who are really struggling right now. “Record numbers of people are accessing crisis support such as food banks, and we know that living standards are going to take further hits this year. This is the reality that the UK Government and Welsh Government need to get to grips with.

“We expect modest consequential funding to the Welsh Government, and while we await full details, we believe this money should be used as additional help for low income households across Wales.”

  • Analysis by Cost of Living Correspondent, Carole Green

As prices rise at their fastest rate for 30 years all eyes were on the Chancellor’s Spring statement today. The cut in fuel duty by 5p a litre has been welcomed by drivers and businesses.  However they know it won’t offset the  record increases at the pump in recent weeks and they’ll have to make savings elsewhere.There are already signs people are adjusting their spending habits: planning on eating out less and fewer treats in order to meet the growing cost of the basics: food, fuel, and energy. With more pressures on family budgets, consumer confidence could weaken- just as the Economy was  moving forward from the Pandemic.As always, the lowest income households are hit the hardest. They spend a higher proportion of their income on the basics. The Chancellor  was criticised today for not uprating benefits in line with rising inflation. In practice, it means low income families have had a pay cut - benefits are not keeping pace with rising costs.Wages aren’t keeping pace either so even people in work are noticing they have less disposable income. Work is no longe a guarantee  or a protection from Poverty as it was once. Here in Wales, the age old structural challenges of our economy, lower pay and lower productivity mean a higher percentage of households will feel the cost if living pinch.Businesses had low expectations of a U turn or delay in introducing the rise in National Insurance payments-although the point at which people start to pay has risen. The Chancellor as expected stuck to his guns on NI.The question is, has the Chancellor done enough today to stave off the worse effects of spiralling costs, especially for those on low incomes. The coming months are unlikely to bring respite with inflation expected to nudge 10%. People will be looking to the Welsh Government too to use all its levers to protect the most vulnerable.