Rishi Sunak will deliver his Spring Statement 2022 next Wednesday with grim news for millions of struggling families.
Energy bills, National Insurance and inflation are all surging in April, outstripping benefit, pension and wage rises.
The Ukraine-Russia war will make inflation worse – and in a bombshell development, the Mirror understands Whitehall officials are braced for it to go higher than 8%.
Boris Johnson said: “We’re taking steps to mitigate that to help people with the cost of living.”
Yet Chancellor Rishi Sunak is understood to be strongly resisting bids to cut fuel duty, give more help for bills, or raise benefits or pensions by the same amount as inflation.
So when and what is the Spring Statement, and what do we know about how it’s shaping up? Here’s what you need to know.
When is the Spring Statement 2022?
Chancellor Rishi Sunak will deliver the 2022 Spring Statement on Wednesday 23 March at 12.30pm.
He will give a speech in the Commons, followed by documents and forecasts published online.
After complaints from the Speaker, less of his statement is expected to be ‘trailed’ in advance.
But the Chancellor is set to appear on Sunday morning TV this weekend to give a preview.
What is the Spring Statement?
The Spring Statement is a ‘mini-Budget’ by the Chancellor on the situation facing the economy.
It is lower-key than a Budget and does not contain the same tax and spending powers.
For instance, fuel duty and taxes on cigarettes and alcohol were already set for the year in October’s Budget.
So was the minimum wage rise from £8.91 to £9.50 in April – though you can expect Mr Sunak to crow about it anyway.
What will Chancellor Rishi Sunak announce during the Spring Statement?
The Chancellor is expected to lay out the sheer scale of the cost-of-living disaster hitting poor Brits.
This will be in the form of Office for Budget Responsibility (OBR) forecasts on GDP growth, borrowing, debt and inflation.
They will also have the warm-up acts of the Bank of England’s interest rates decision tomorrow, and monthly inflation figures for February – which will be published at 7am on the day of the Spring Statement.
While growth is rising post-Covid, so is inflation – and it is set to be much worse than the last forecast (more below).
All this will ramp up pressure to announce extra help for households – but he’s reluctant to do that.
Soaring inflation looks set to push up his borrowing bill, reducing the amount he claims he can spend.
He could recycle already-announced policies or announce vague ‘consultations’ on future ones, but will it be enough?
DANIEL LEAL/AFP via Getty Images)
UK inflation could rise over 8%
Shock analysis last week found inflation is set to peak at 8.3% in April after the Ukraine invasion made it even worse.
The Mirror understands Whitehall officials believe this figure, calculated by the Resolution Foundation, is broadly accurate.
Officials in fact fear it could go even higher, beating the 8.4% rate of 1991 and even hitting 10%.
This will blow October’s forecasts – that inflation would peak at 4.4% this year and could rise to 5.4% – out of the water.
It will mean more expensive food and goods in the shops, hitting the poorest families hardest.
Will there be help with energy bills?
Rishi Sunak is reluctant to offer extra help on energy bills – despite soaring prices and mounting pressure from MPs and charities.
Previously he announced a £150 council tax discount for Bands A-D next month, and a £200 repayable rebate in October.
Yet bills are rising by £693 a year on April 1 and will rise again in October – possibly by another £1,000 a year.
This is a far bigger hit to the poorest tenth of households who spend around 12% of their income on energy. The richest spend 4%.
Treasury officials want to wait until the run-up to the October rise before announcing more help.
But a former Treasury minister told the Mirror that approach is “not going to work”, adding: “He’s going to have to do something, it just can’t be the full Covid.”
Laura Suter, head of personal finance at AJ Bell, speculated that ministers might raise the £200 repayable bills discount in October, or put back the start of repayments, currently April 2023.
But Mr Sunak has rejected Labour’s calls to cut VAT on energy bills or impose a windfall tax. Shadow chancellor Rachel Reeves said: “Millions of people are worried sick about soaring bills. Meanwhile, BP have said they’ve got more cash than they know what to do with, and have compared their record profits from inflated prices to a cash machine.”
A long-term energy supply plan
Boris Johnson will set out a long-term energy supply plan for the UK to wean off Russian oil (but not gas) by the end of the year.
This is expected to invest more in renewable power and nuclear power, as well as trying to get more oil from places like Saudi.
But it’s not directly connected to the Spring Statement and could be published on a different day next week.
Will benefits and pensions rise in April?
Despite gloom-laden inflation predictions, Mr Sunak will raise benefits by just 3.1% – as little as £10.07 a month on Universal Credit. In October he cut Universal Credit for millions by £20 a week.
Pensions will also rise by just 3.1% after the triple lock was axed.
These are both real-terms cuts that will leave the poorest struggling more.
In a Budget “rabbit out of the hat” in October, he handed more generous benefits to 1.9million working families by cutting the Universal Credit taper rate from 63p to 55p. But this only helps those who work, not the sick or out-of-work.
The Resolution Foundation is worried there will be a “rollercoaster” with real benefits down this year and up next year. Tory MP Nigel Mills suggested bringing forward next year’s increase in Universal Credit to this autumn to solve the problem.
The Mirror understands Mr Sunak is unlikely to raise benefits by more than 3.1% because of the multi-billion pound cost – and the need to raise pensions and pay at the same time if he does.
Will there be a pay rise for nurses, teachers and other public sector workers from April 2022?
Inflation means planned rises to public sector wages – due every April – will be wiped out by prices.
Rising prices put huge pressure on the Chancellor to give these vital key workers pay rises above 5% or 6%, to avoid hitting them with a real-terms cut.
But the Treasury is resisting such big cash rises.
The government has spelt out plans to raise salaries for experienced teachers by only 3% in 2022/23.
Health unions have also blasted plans to offer NHS staff in England a “miserly” 3% hike.
Pressure on the Chancellor to reverse this will be huge but again, it will take a lot for him to budge.
Anadolu Agency via Getty Images)
Will fuel duty be cut?
Fuel duty was already frozen at October’s Budget for a 12th year in a row – handing £1,900 to the average car driver since 2010.
Despite environmental fears, Chancellor Rishi Sunak is being pressed to go even further and actually cut it. One idea from a Tory MP is to give a 15% cut to “vital fuel users”, such…