The 2022 Mini-budget – What Does It Mean For Me?
Now the dust has settled on last week’s Spring Statement, we evaluate the impact it is likely to have on ordinary households.
Ever since Chancellor of the Exchequer Rishi Sunak announced his mini-budget last Wednesday, people have been trying to work out how it will affect them over the coming months.
We’ve taken a look at the main talking points from Mr Sunak’s Statement to help our members understand just what they mean to them.
With so much having been made about the sky-rocketing cost of energy recently and with the energy price cap set to rise significantly on April 1st, many people were hoping that measures designed to reduce energy bills would be announced in the mini-budget.
However, no such help was forthcoming. Instead of helping families faced with the prospect of having to choose between eating or heating, the Chancellor only announced that VAT would be scrapped on energy efficient measures like solar panels and heat pumps. Although energy efficiency is undoubtedly important, this new measure does nothing to support the vast majority of families and it’s hard to not to feel like this was a missed opportunity to offer some support to those who need it most.
The cost of fuel
Fuel prices have been reduced by 5p per litre, making the cost of filling a 55-litre family car approximately £3 cheaper, equating to an annual saving of around £100 for the average car driver. The reduction is effective immediately and will last until next March.
Unfortunately, with the recent rises in fuel prices, this reduction merely brings the costs back to the levels they were at last year and, as such, offers little relief for motorists.
National Insurance and income tax
Good news – the national insurance contribution threshold has been raised, allowing workers to earn £12,750 before they have to pay any income tax or national insurance. This means anyone earning around £15,000 will be circa £330 better off per year. Furthermore, from 2024, the basic rate of income tax will be cut from 20% to 19%.
Although in an ideal world the income tax cut would come into effect sooner, the raising of the NI threshold is great news for workers earning less than £40,000 per year.
Household Support Fund
Designed to support people recovering from the financial impact of the pandemic deal with rising utilities, food and energy bills, the Household Support Fund has been given a £500m injection, meaning £1bn is now available to help the UK’s most financially vulnerable households – another welcome announcement.
For information on how to apply, click here.
Despite the ongoing cost-of-living crisis, no additional support was announced for those on universal credit.
While there were some crumbs of comfort in the Spring Statement, the ever-increasing cost of living means it’s impossible to get excited about it as it simply does not offer enough financial help or support to those who need it most.
Consequently, our advice is to continue trying to reduce your outgoings wherever possible and shop around for the best deals on essentials. A recent report from consumer champion Which? found that Lidl currently offers the best value for money on groceries so if you live near a branch, it’s worth getting as much of your weekly shop from there as possible.
If you are struggling with rising bills, one of our affordable loans or savings accounts could help you get your finances back on track. For more information, click here.