Markus Andrews

Britain is heading for its biggest fall in living standards since the 1950s this year, despite a mini-Budget in which chancellor Rishi Sunak slashed £330 off national insurance for the average worker and took 5p off the tax on a litre of petrol.The chancellor also promised a 1p cut in the basic rate of income tax in 2024, in what was immediately denounced as a pre-election bribe.But he did nothing for the poorest, who see welfare benefits far outstripped by inflation which is expected to peak close to 9 per cent this year. And he rejected opposition calls for a windfall tax on the bumper profits of North Sea oil and gas companies to pay for a cut in VAT on energy prices.An offer of zero-VAT rating for green home improvements, including the installation of solar panels and heat pumps, fell far short of the immediate help sought by households facing an average £600 leap in domestic gas and electricity bills in eight days’ time and a further hike of similar magnitude in the autumn.Martin Lewis, who runs the Money Saving Expert website, said his head “sunk” when he heard the chancellor’s “limited” measure on energy, adding: “It won’t impact the majority of households who will see a likely £1,300 average increase in year-on-year bills by October.”The government’s official forecasters, the Office for Budget Responsibility, said that the impact of rising prices will mean real household disposable incomes per person falling by 2.2 per cent in 2022-23 – “the largest fall in a single financial year since ONS records began in 1956-57”.The OBR said that changes announced in Mr Sunak’s spring statement – billed by the Treasury as the largest tax cuts for a quarter of a century – did no more than remove one-sixth of the tax hikes he had previously announced since becoming chancellor in 2020.Even after the £6bn cut in national insurance contributions (NICs) coming into effect in July and the £5bn reduction in income tax in 2024, the OBR said that the overall tax take will rise from 33 per cent of GDP in 2019-20 to 36.3 in 2026-27 – its highest level since the 1940s.The respected Institute for Fiscal Studies think tank said that the total impact of changes introduced by Mr Sunak will see almost all workers paying more tax on their earnings in 2025.Sunak was “giving with one hand on tax, having previously taken away with the other”, said the IFS, as unexpectedly high inflation saw his earlier freeze on income tax thresholds turn into a massive revenue generator, dragging many more workers into higher rates and more than paying for the spring statement giveaways.The chancellor won room for manoeuvre thanks to a £15bn windfall from additional tax receipts, as well as £5bn from increased student loan repayments, giving him the flexibility to pre-announce a cut in the basic rate of income tax without breaking his rules on debt and borrowing. The new 19p basic rate will be the lowest since the First World War.But the OBR warned that uncertainties resulting from the Ukraine war and volatile energy prices meant that his calculations “could be wiped out by relatively small changes to the economic outlook”. More

Boris Johnson giggled and pulled funny faces as the Commons was reminded of the suffering of Ukrainians “huddled in basements”, triggering strong criticism.The prime minister was accused of being “beneath contempt” when his joking and gurning were captured on camera during Rishi Sunak’s tribute to the “bravery” being shown under Russian fire.“As I stand here, men, women and children are huddled in basements across Ukraine seeking protection,” the chancellor said – while Mr Johnson curled his bottom lip and wiggled his eyebrows.“The sorrow we feel for their suffering, and admiration for their bravery is only matched by the gratitude we feel for the security in which we live,” MPs were told.The gaffe follows condemnation of the prime minister for his weekend claim that Ukraine’s fight for survival against Russia is like the Brexit referendum vote.Chris Bryant, a Labour member of the Commons foreign affairs committee hit out at Mr Johnson for his latest insensitivity, during the chancellor’s spring statement.“This man is beneath contempt. It’s spine-tingling what little respect he has for others who are less fortunate than himself,” he said.Layla Moran, the Liberal Democrats’ foreign affairs spokesperson, said: “It’s all a joke to Boris Johnson. His buffoonery is a national embarrassment.“He should apologise to the people of Ukraine. Their bravery stands in great contrast to Johnson’s childish behaviour.”The prime minister’s likening of Ukraine’s struggle to the UK leaving the EU has been attacked by the former Ukrainian president, Petro Poroshenko, as he donned a bullet-proof jacket in his invaded country.“How many Britons died because of Brexit? Zero,” he asked, adding: “Only today we have 150 Ukrainian children who were killed by Russian soldiers and Russian artillery.“Can I ask you how many houses were destroyed because of Brexit? We have whole cities that have been completely destroyed. With this situation, please, no comparison.”Mr Johnson’s spokesman refused to withdraw his remarks, made to the Tory spring conference, arguing both struggles displayed a “desire for freedom”. More

Rishi Sunak has offered some new help through the tax system for millions of workers worried about the mounting cost-of-living crisis and the impact of the Ukraine war on the economy.The chancellor cut 5p off fuel duty and eased some of the burden from the forthcoming national insurance hike by raising the threshold at which people start paying by £3,000.However, Labour dubbed the chancellor “Alice in Sunak-land” and accused him of ignoring the scale of the crisis since there was no new help on energy bills or benefits. The Independent took a closer look at what he left out.Universal Credit and other benefitsThe chancellor chose not to act on calls from Labour, campaigners and experts to boost universal credit and other benefits to keep pace with inflation and ease the burden on the very poorest.While benefits will increase 3.1 per cent next month as previously planned, Mr Sunak did not announce any further increases – despite inflation jumping to 6.2 per cent.Institute of Fiscal Studies (IFS) director Paul Johnson said it would not been enough to meet expected inflation levels of 8 per cent – and warned that those on means-tested benefits were facing cost-of-living increases of 10 per cent.The IFS expert said it meant a “big cut in living standards” for those on the lowest incomes. “What was completely missing was anything for people on universal credit or the state pension,” said Mr Johnson.The Trussell Trust – the nation’s largest network of food banks – said it would mean “many more people will have no option but to use a food bank” this year.Mr Suank did say he would double the emergency Household Support Fund – aimed at allowing local councils to distribute hardship funds to the very poorest – to £1bn.But Citizens Advice said the chancellor’s statement was “very disappointing … it will barely touch the sides of the crisis and the unprecedented demand we’re seeing”.Energy bills and windfall taxMr Sunak resisted Labour and Lib Dem demands for a windfall tax on oil and gas giants, after the opposition urged him to raid record profits and use it to ease the burden on families struggling with energy bills.In fact, there was nothing new in the chancellor’s spring statement that would reduce household bills, despite record inflation and the added impact of Russia’s Ukraine invasion.The chancellor had already announced a £200 loan for gas and electricity payments from the autumn, although not until the price cap jumps 54 per cent in April – with further hikes expected in October.Labour’s shadow climate secretary Ed Miliband tweeted: “The rise in energy bills is a national emergency. Rishi Sunak thinks £200 of loans is the answer. He just doesn’t get it.”Money saving expert Martin Lewis said his head “sunk” following Mr Sunak’s plan. He said it “won’t impact the majority of households who will see a likely £1,300 average increase in year-on-year bills by October”.Spring Statement: Rishi Sunak increases household support found to £1bnGreen levies on energy billsSome “net zero” sceptic Conservatives had been particularly keen to see the chancellor cut VAT and green levies on energy bills.But Mr Sunak decided to keep the green levies aimed at paying for energy efficiency measures and the move towards renewable energy.Backbench Tories had also urged the chancellor to use some of “financial headroom” to go further on tax cuts, after reported forecasts showing that the deficit was better than expected this year.But Mr Sunak set aside some of the better-than-expected revenues for dealing with the deficit, rather than investing the full sum in driving down the cost of living.The chancellor did announce that VAT will be cut to zero on energy efficiency products such as solar panels, heat pumps and insulation for the next five years.But Green MP Caroline Lucas claimed there was “a climate-shaped hole at the heart of this statement” – saying the zero VAT incentive was not enough to deliver a “home retrofit revolution”.Spending on militaryBoth Labour and Tory MPs had urged the chancellor to boost defence spending in light of Russia’s war on Ukraine, and the heightened threat level the invasion brings.John Healey MP, shadow defence secretary, said there was a “deafening silence” from Mr Sunak when it came to defence spending.“The spring statement had no halt to army cuts, no review of defence spending, no reform of military procurement and no change to the real cut in day-to-day MoD spending which means less money for forces recruitment, training, pay and families,” he said.Mr Sunak said that there was a “moral responsibility” to help Ukraine and impose sanctions on Russia – but warned it would not be “cost-free” for the UK economy.Fall in living standards and tax burdenMr Sunak claimed his statement amounted to “the biggest net cut to personal taxes in over a quarter of a century”.But the Office for Budget Responsibility (OBR) said the tax burden is set to hit its highest level since the 1940s. The amount of tax paid compared to gross domestic product will hit the highest level since the years after World War II.The chancellor also failed to mention that the OBR predicted the biggest drop in living standards in more than 60 years. The public body predicted a significant cut in disposable incomes – saying it would be the biggest drop in spending power since records began in 1956. More

Rishi Sunak is scooping a staggering £5bn from a shake-up that will force many more students to pay back their loans, helping to fund his tax cuts.Last month’s overhaul of student finance – requiring graduates to start repayments with lower earnings and to pay off debts for 40 years, instead of 30 – was widely criticised as unfair.Proposals to bring back maintenance grants for low-earning families and to slash annual tuition fees from £9,250 to £7,500 were rejected.Poorer students will lose out, while top-earning graduates pay less, as the proportion repaying their loans in full soars from around 25 per cent to 70 per cent.Now the Treasury watchdog’s book reveals the changes will bring in £5bn a year – accounting for more than one quarter of Mr Sunak’s higher-than-expected receipts in his spring statement.Of the overall £19bn gain, compared with last October’s Budget, £10bn is being spent on slashing taxes, in particular hiking the national insurance threshold, with the rest used to cut borrowing.The watchdog, the Office for Budget Responsibility, states: “The reforms amount to the equivalent of an income tax rise for most existing and new students over their working lives.”The real-terms cut in the repayments’ threshold, combined with 40-year repayments, are “equivalent to imposing a 9 percentage point marginal income tax rise”, it says.The student loans shake-up – a long-delayed response to a report to Theresa May three years ago – will:* Freeze maximum fees at £9,250 a year until 2025, meaning they will not have risen for seven years – while rejecting a cut to £7,500.* Cut the repayment threshold to £25,000 for students starting courses from September 2023 until 2027 – despite the backlash against the recently-announced freeze.* Extend the period before loans are written off from 30 to 40 years for new students – meaning many will be nearing retirement before they are out of debt.* Deny loans to students who fail to achieve at least two Es at A-Level or at least a Level 4 pass in English and maths at GCSE.* Link the student loan interest rate to the – higher – RPI measure of inflation, scrapping interest for students from 2023, both during studies and after graduation.Labour described the package – three years after the Augar report was published – as “another stealth tax for new graduates”, which would be “slamming the door on opportunity”.The Education Policy Institute think-tank warned it would be “regressive” and threatened to hit “students from disadvantaged backgrounds”. More

Rishi Sunak has said he will cut the basic rate of income tax from 20 to 19 pence in the pound before the end of the current Parliament, in 2024.The chancellor’s announcement came as he again resisted calls to drop a hike in national insurance contributions by 1.25 percentage points from 1 April for the vast majority of workers.But he also used the spring statement on Wednesday to increase the national insurance threshold by £3,000, which he described as a “tax cut for employees worth over £330 a year”.Turning his attention to the next general election, he told MPs a “clear goal” of Conservative chancellor’s has been to cut income tax, but said: “The fact this has only happened twice in 20 years tells you how hard it is to”.“Covid and the war in Ukraine have only added to the difficulty of achieving this by the end of this Parliament.”He added: “It would clearly be irresponsible to meet this ambition this year — and yet I refuse to let that ambition wither and drift. “By 2024, the OBR currently expects inflation to be back under control, debt falling sustainably, and the economy growing. Our fiscal rules are met with a clear safety margin.“So, my final announcement today is this: I can confirm, before the end of this Parliament, in 2024, for the first time in 16 years, the basic rate of income tax will be cut from 20 to 19p in the pound.“A tax cut for workers, for pensioners, for savers. A £5 billion tax cut for 30 million people. It is fully costed and fully paid for in the plan announced today.”But Paul Johnson, the director of the Institute for Fiscal Studies (IFS), said: “Oh for goodness sake. What is the possible justification for cutting income tax rate while raising NI rate?“Drives further wedge between taxation of unearned income and earned income. Yet again benefits pensioner and those living off rents at expense of workers”. More

The general secretary of Nato has told Vladimir Putin to stop “nuclear sabre-rattling” and said the alliance has concerns that weapons of mass destruction could be used in Ukraine.Speaking to reporters on Wednesday ahead of a Nato leaders’ summit in Brussels Jens Stoltenberg said Russia could not “win a nuclear war”.His comments come after Kremlin spokesman Dmitry Peskov said Russia could use nuclear weapons in defined circumstances and in the case of an “existential threat for our country”.Last month Mr Putin ordered Russia’s nuclear forces on high alert – while UN secretary-general Antonio Guterres warned last week that “the prospect of nuclear conflict, once unthinkable, is now back within the realm of possibility”.Mr Stoltenberg, the face of the military alliance, told reporters that Russia “must stop its nuclear sabre-rattling”, branding the approach “dangerous and it is irresponsible”. “Russia must understand that it can never win a nuclear war,” he added on the eve of the meeting, whose attendees will include Joe Biden and Boris Johnson.But in a news conference kicking off the meeting Mr Stoltenberg reiterated the alliance’s position that it would not deploy soldiers to Ukraine.”Nato is not part of the conflict … it provides support to Ukraine but isn’t part of the conflict,” he said. “Nato will not send the troops into Ukraine… It is extremely important to provide support to Ukraine and we are stepping up. But at the same time it is also extremely important to prevent this conflict becoming a full-fledged war between NATO and Russia.” There is little sign of an immediate threat of nuclear weapons being used in Ukraine, where Russian forces have encountered stiffer resistance than expected from dug-in Ukrainian troops.But Mr Stoltenberg noted that Russia had apparently facilitated the use of chemical weapons in Syria and elsewhere.”Russia has used chemical agents before against their own opposition and also on Nato ally territory in Salisbury,” he said.”And Russia was of course, part of the use of chemical weapons in Syria. They facilitated and supported the Assad regime, which has actually used chemical weapons several times. “So we are concerned and that’s also reason why we are ready and we’ll address tomorrow ways to provide support to Ukraine to protect themselves.”The secretary general on Wednesday also called on China to condemn Russia’s invasion, claiming that the east Asian country’s government had spread misinformation about the situation on the ground and about Nato itself.Boris Johnson is to arrive at the top-level meeting in the Belgian capital on Thursday morning. Later on Thursday European leaders will then attend an EU European Council summit – bringing Joe Biden with them as a guest. Mr Johnson has not been invited and is expected to return home after the first meeting.At the Nato meeting leaders are expected to discuss how to seek an end to the conflict in Ukraine. Leaders are under pressure to make announcements about new sanctions on Russia, as well as more humanitarian assistance for refugees and extra support for Ukraine’s military. Ukraine’s president Volodymyr Zelenskyy is expected to speak to leaders. More

Boris Johnson said it appeared P&O Ferries had “broken the law” by sacking 800 workers without notice, as he vowed that the government would “take them to court”.“It looks to me as though the company has broken the law,” the prime minister told the Commons at PMQs. “We will be taking action therefore, and we will be encouraging workers to take action.”Mr Johnson claimed P&O Ferries had a duty to notify the government about the sackings 45 days before the move – promising that the firm “aren’t going to get away with it”.But Labour leader Sir Keir Starmer accused the PM of “half arsed bluster and waffle” on the firings, and said he was “all mouth, no trousers” on employment rights.The PM’s pledge of legal action comes as it emerged that the ferry company felt able to sack 800 staff without warning about because of a law change brought in by former minister Chris Grayling.The ex-transport secretary quietly amended legislation in 2018 meant to protect workers to create an exemption where there are mass redundancies on ships registered overseas.But Mr Johnson said the government would not “sit by” over the mass sackings – and said that under section 194 of the Trade Union and Labour Relations (Consolidation) Act 1992 it appeared the ferry giant had broken the law.The legislation means consultation must begin at least 45 days before the first dismissal takes place if a company wants to making more than 100 employees redundant.It also means companies are under a duty to notify the government of the proposal to dismiss 45 days before the first dismissal.The PM told the Commons: “We are taking legal action against the company concerned – that is the right thing to do because it seems to me they have broken the law … We’ll take them to court. We’ll defend the rights of British workers.”Mr Johnson added: “P&O plainly aren’t going to get away with it any more than any other company that treat its employees in that scandalous way.”The Commons clash came as the company’s chief executive issued an apology for the impact of sacking staff without notice – but insisted the firm had acted legally.Peter Hebblethwaite said he understood the “anger and shock” about the loss of jobs, but highlighted the apparent loophole in a letter to business secretary Kwasi Kwarteng.“The very clear statutory obligation in the particular circumstances that applied was for each company to notify the competent authority of the state where the vessel is registered,” he wrote.Kevin Barnett, head of employment at marine law specialists Lester Aldridge LLP, said that Mr Grayling’s 2018 amendment meant that it was “incorrect” for the government to threaten the ferry company over notification rules.“The amendment states the notification must be made to the competent authority of the state where the ship is registered, instead of the secretary of state,” he said.Sir Keir said the prime minister “had not lifted a finger” to prevent the sackings last week. “If the prime minister can’t stop that, what’s the point of his government?”The Labour leader said workers he has spoken to are worried they could be next if P&O is allowed to “get away with it”, adding: “Why does the prime minister think that they will take a crumb of comfort from his half-arsed bluster and waffle today?”The opposition leader also pointed out that as the law stands, it is not illegal to pay seafarers below the national minimum wage – even if they are working at UK ports and in UK waters.Sir Keir said: “Two years ago, prime minister, his government admitted that that was unjustifiable … British workers don’t need another empty review, they need action. So when will the prime minister fix that gap in the law?”Mr Johnson replied: “We are going to address the defects in the 1998 Living Wage Act … and make sure that everybody serving in the UK exclusive economic zone, work in the UK exclusive economic zone gets paid the living wage as people do in the rest of the country.” More

People will keep an extra £3,000 before they pay national insurance, under the “largest ever” tax cut announced by Rishi Sunak.The chancellor sparked a surprise by scrapping a plan to increase the threshold by just £300 – replacing it with a “personal tax cut” worth £330 to the average worker costing £6bn, he told MPs.The Institute for Fiscal Studies said the move would compensate 70 per cent of workers who will be hit by the 1.25 per cent hike in national insurance contributions (NICs) – kicking in next week.But the Resolution Foundation think-tank warned only one third of the £6bn cost will go to the poorest half of earners in the United Kingdom.Mr Sunak also announced that the basic rate of income tax will be cut from 20p to 19p in the pound – before voters go to the polls in 2024.The national insurance change will bring the threshold to start paying the levy into line with that for income tax – at £12,570 – and fulfils a Conservative manifesto pledge.But the chancellor scuppered expectations that he would try to ease the cost of living crisis by increasing benefit payments through changes to universal credit.Those payments will raise by just 3.1 per cent next month – when inflation is tipped to average 7.4 per cent in 2022 – leaving claimants with a sharp real-terms cut.The key “rabbit” in what was expected to be a relatively news-free spring statement came after Mr Sunak also announced an immediate 5p cut in fuel duty.The chancellor revealed he will publish a “tax plan” that will underline that the government’s priority will be “lower taxes not higher spending”.“Our current plan is to increase the NICs threshold this year by £300,” he told the Commons.“I’m not going to do that, I’m going to increase it by the full £3,000 – delivering our promise to fully equalise the NICs and income tax thresholds.“And not incrementally over many years, but in one go, this year. From this July, people will be able to earn £12,570 a year without paying a single penny of income tax or national insurance.“That is a £6bn tax cut for 30 million people across the UK. A tax cut for employees worth over £330 a year. The largest increase in a basic rate threshold ever – and the largest single personal tax cut in a decade.”However, the chancellor insisted the national insurance contributions hike – for the NHS and, eventually, social care – must go ahead, saying: “If it goes, so does the funding.” More