Businesses and authorities in Wales have been reacting to the spring statement announced by the Chancellor, Rishi Sunak.
Mr Sunak delivered his statement to the House of Commons on the day it was revealed that inflation had hit a 30-year high.
Rising fuel costs, goods and food prices have pushed inflation to increase 6.2% in the 12 months to February - the fastest for 30 years - figures from the Office for National Statistics (ONS) revealed.
During his spring statement, Mr Sunak said inflation could rise to 7.4% this year but he promised the Government would "support the British people".
He also said that sanctions against Russia will not be cost-free for people at home, and that Putin’s invasion presents a risk to economic recovery.
Mr Sunak announced that the Office for Budget Responsibility (OBR) has downgraded the growth forecast for this year to 3.8%.
But he said downgraded growth forecasts had "not affected our strong jobs performance" as he said unemployment was back to levels seen before the pandemic.
The key points in the spring statement:
- Fuel duty to be cut by 5p per litre until March 2023
- Basic rate of income tax to be cut from 20p in the pound to 19p by the end of this Parliament in 2024
- Threshold for National Insurance Contributions (NICs) will rise from £9,500 to £12,570, an increase of £3,000. Sunak said this was a tax cut for employees worth over £330 a year and will affect 1.2m workers in Wales.
The Employment Allowance, which gives relief to smaller businesses' National Insurance payments, will increase from £4,000 to £5,000 from April
Tax cuts "on business investment and innovation with final decisions to be announced in the autumn Budget" and a reform of research and development tax credits
- New infrastructure projects as a result of the second round of the £4.8 billion Levelling Up Fund. It will continue to focus on regeneration, transport and cultural investments.
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For Wales, the HM Treasury announced that the 海角视频 Government is providing an additional £27 million to Wales through the Barnett formula next year, as a result of measures announced by the Chancellor.
Following the announcement, businesses and organisations in Wales have reacted to the news.
Welsh Government
Finance and Local Government Minister Rebecca Evans has said: "People will be right to feel let down by today’s threadbare statement. 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 海角视频 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.
"In Wales we provided a cost of living support package worth nearly double the equivalent support provided in England. We encourage everyone to familiarise themselves with what is available and to take advantage of the support on offer. But we also recognise it doesn’t provide all the answers, and that many of the key levers such as welfare support lie in Westminster. We will continue to call on the 海角视频 government to join us in providing a full crisis response to help people with the rising cost of living."
British Chambers of Commerce
Director general of the BCC, Shevaun Haviland said: “The Spring Statement falls short of the action businesses needed to see today. While there are some positive announcements that firms will welcome, it did not fundamentally address the huge cost pressures they are facing.
“Businesses will be pleased that the employment allowance has been increased. This long running ask of the BCC will provide a small amount of financial headroom for firms facing rising costs.
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“But today was a missed opportunity to rebuild and renew the economy and ensure business has the resilience to weather the uncertain and volatile times ahead.
“The cut in fuel duty, though very welcome, is just a drop in the ocean compared to the larger tsunami of surging costs that is bearing down on firms and households. Smaller businesses are particularly exposed as they have neither the protections or financial support provided to households, nor the negotiating power of larger businesses.
“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.
“We urge the government to take further action – including the introduction of an SME energy price cap - to tackle the escalating cost of doing business crisis. Firms need the headroom to keep a lid on prices, protect jobs and make investment that is so vital to sustaining our economic prospects.”
Aviva plc
Welsh businesswoman Amanda Blanc, Group CEO of Aviva plc, said: “Today’s package of support is necessary and welcome. It won’t stop the cost of living pain, but it will make it a little more bearable for those who are feeling it most. I am also pleased to see plans for tax reform to stimulate further investment in 海角视频 growth.”
Quantum Advisory
Simon Hubbard, a senior consultant and actuary at Cardiff-based Quantum Advisory, said: “There has been some concern about the new health and social care levy at a time when prices are rising and family budgets are being squeezed. Reduced National Insurance bills will bring some welcome relief and leaves lower earners paying no Income Tax or National Insurance.
“However, this does have a knock-on effect and will mean that salary sacrifice arrangements for pension contributions for those employees who currently earn between £9,880 and around £12,570 will no longer be beneficial to them. Employers who offer these types of arrangements should review these arrangements to ensure that employees within these thresholds are not impacted.”
PwC
Christine Cairns, tax partner at PwC, said: "While the tax-free personal allowance has steadily risen in recent years to £12,570 in line with long-standing Government policy, the NI threshold has lagged behind, quietly hovering below £10,000, partly because it’s so closely linked with state welfare benefits such as pensions and jobseeker’s allowance. However, last year’s announced 1.25% increase from April brought NI sharply into focus and having reaffirmed his commitment to the rise, increasing the threshold was one of the only options left to try and soften the blow for those who will feel it most.
“While it might seem curious to be effectively both increasing and cutting NI at the same time, today’s change is clearly targeted at helping those with the lowest earnings who may already be below the income tax threshold. The true impact of this cut, as well as of the future decrease of the basic rate tax rate, for middle income earners will need to be assessed against the impact of the freezing of the income tax bands until 2026.”
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ICE (Institution of Civil Engineers)
Chris Richards, director of policy for ICE, said: “The 海角视频 is facing a cost-of-living crisis, with today’s inflation of 6.2% not even being the peak expected this year. The Chancellor's solutions, such as the fuel duty cut will help remove some of the financial burden for those in need, while removing VAT on energy efficiency home improvements will convince households that can afford it to invest.
“The forthcoming energy security strategy must seek evidence from the National Infrastructure Commission to design and deliver a realistic and stable change, ensuring that we see security of supply guaranteed while costs and carbon come down. We have options to avoid this turning into a deep-rooted cost of living crisis, but a realistic and decisive plan moving towards a lower cost of operation for the 海角视频 infrastructure system is needed and it starts with decarbonising energy rapidly by 2030.”
FSB Wales
The Federation of Small Businesses (FSB) in Wales welcomed the response to calls for an increase to the Employment Allowance but cautions more will need to be done to help local firms faced with a challenging forecast.
FSB Wales Policy Chair Ben Francis, said: “We are extremely pleased the Chancellor has adopted FSB’s calls to increase the Employment Allowance to £5,000, to help small businesses keep their heads above water and support the staff they employ.
"However, the challenging fiscal forecast laid out by the Chancellor only reinforces the urgency of our calls to help small businesses now. In April, businesses can expect to face a cocktail of rising costs, including energy bills, the reduction of the 100% business rates relief for retail, leisure and hospitality to 50%, along with rising VAT and National Insurance Contributions.
"These challenges will be set against increased supply chain and staffing issues. Small businesses have gone above and beyond through the pandemic to keep customers and staff safe and account for 99.4% of total enterprises in Wales - the backbone of our economy. It is only right that they will need to be supported through this challenging landscape."
He added: "Against this difficult backdrop Welsh Government too must now consider how it can best support Welsh small businesses not only to come out of the pandemic but to successfully navigate the difficult months ahead.
"We look forward to engaging with the Economy Minister as he develops plans for the Welsh economy.”
Association of Chartered Certified Accountants (ACCA) Cymru
Lloyd Powell, head of ACCA Cymru / Wales said: “The Chancellor had the chance with this Spring Statement to prioritise supporting Wales’ small and medium businesses through the current onslaught of cost increases.
“While some positive steps were announced, many small businesses would have wanted to see more immediate support. Changes to the Employment Allowance and National Insurance Contribution thresholds are both welcome steps, though we called for the NICS increase to be postponed by a year. Many small firms will welcome the fuel duty cut announced but are likely to be frustrated by the lack of help on business energy bills.
“In conclusion, the Chancellor has tried to find manoeuvrability to tackle rising costs and increase the 海角视频’s growth rate. We would have hoped for a little more to support individuals and businesses to cope with high costs and tax increases they face.
“But as the Chancellor says, tax cuts need to be paid for and the future promise to cut the basic rate of income tax may go some way to do that - but it’s not a panacea. It’s clear that thresholds are not keeping up with inflation and so this needs careful monitoring with strong policy decisions going forward and announced at the Autumn Budget.”
Penderyn Distillery
Chief executive Stephen Davies said: "The major challenges we face at the present time are focused on rising costs of our raw materials and cost of energy plus the rising cost and poor availability of packaging goods and supplies. In addition, we have to deal with the ongoing problem of increasing cost of transportation and the lack of availability of these services.
"There didn’t seem to be much good news for small businesses there today to assist us in these very substantial issues but we recognize that these are challenging times all round. "
Crafty Devil Brewing Co
Rhys Watkins of Cardiff-based small craft brewery, Crafty Devil Brewing Co, said: "It's quite disappointing that we didn't really see any further support for small businesses, especially in the hospitality industry. We're in recovery from the pandemic and the next two years will be crucial for businesses like ours, I think the 海角视频 Government has forgotten that. It's survival now to pay back everything which we've had to borrow over the last two years as interest rates start to rise and VAT is still returning to 20%."
"We welcome the NI tax cut. National Insurance was going to become a huge worry for us in the new financial year and that alleviates some strain. But 5p off a litre of fuel when it's going up £10-£15 a week, it doesn't make any difference to us at all. We're still going to have to put up delivery charges and our prices in April."
"Our haulage company we use to send pallets around the country, every week their prices change. For example, a month ago we paid £33 to send a pallet anywhere in the 海角视频. Last week, we were spending £55. We can't even have fixed costs on those sorts of things. That, added to the extra cost which Brexit brought on businesses and the extra strain on supply chains, it's another nail in the coffin for small businesses."
"I would have welcomed a Windfall tax on energy companies. That would have helped reduce energy costs across the board. We have massive high energy use because we're brewing and we have buildings open 12 hours a day and our energy costs are going up, so we have to build that into our price rise as well. It's going to be a tough year for us."
Welsh Conservatives
The Welsh Conservatives welcomed the cut in fuel duty in the spring statement.
Shadow Minister for Finance and Member of the Welsh Parliament for Monmouth, Peter Fox MS, said: “The Chancellor has made it clear today he has a clear plan to tackle the cost of living by protecting jobs, growing the economy and leaving more money in people’s pockets to support family budgets. I particularly welcome the action by the Chancellor to cut fuel duty after our campaign to support hard-working Welsh families.
“However, whilst the 海角视频 Conservative Government is taking steps to support families, Labour minister in Cardiff Bay continue to play politics with the cost of living. We need to see more action and less words from them. If Labour in Wales were serious about easing the financial pressures on Welsh families, Labour ministers would use devolved levers and cut income tax in Wales.
“In stark contrast to Rishi Sunak in cutting the cost of politics, Labour and their nationalist coalition partners are looking to increase the number of unknown politicians in the Cardiff Bay bubble.
“The additional £12 million a year would be better spent on hundreds of extra nurses and doctors a year to tackle Wales’ NHS waiting time crises and ambulance responses times. Once again, Labour ministers have their priorities wrong.”
Secretary of State for Wales
Welsh Secretary Simon Hart said: “The Chancellor’s Spring Statement tackles the huge challenges facing Wales and the rest of the 海角视频, with a package of support to ease the pressures everyone is experiencing around the rising cost of living.
“The reduction in fuel duty, help for working families, and the tax cuts for low and middle earners will help thousands of people across Wales, while the Welsh Government will receive £27m more funding to support vulnerable families over the coming months.
“During the past two years of the pandemic, the 海角视频 Government has supported people’s jobs and incomes across Wales. The war in Ukraine has now brought new challenges, but today’s measures show that we are continuing to build a stronger and more secure economy for the whole of the United Kingdom.”
What do you think of the spring statement? Let us know in the comments.