Lower paid council workers are set to benefit from a series of eye-catching announcements in Chancellor Rishi Sunak’s spring statement today.
The Chancellor announced that from July the National Insurance Contribution (NIC) threshold would rise by £3,000 in line with the income tax threshold meaning a worker earning up to £12,575 will pay no tax or NI at all.
He also promised that by 2024 he would aim to reduce the lower rate of income tax from 20p to 19p in the pound for a year and cut VAT on fuel by 5p a litre from tonight as well as zero rating domestic energy saving devices like solar panels and heat pumps.
However the Chancellor stuck to his plans to introduce the health and care levy from next month, saying that 70% of employees would still gain more through tax cuts than the cost of the levy. However the tax burden will rise by 3.3% in 2019 to 36.3% of GDP by 2026, the highest since the 1940s.
Mr Sunak also announced a doubling from April of the household support fund, payable through local authorities, to £1bn.
In its separate Economic and Fiscal Outlook the Office for Budget Responsibility said borrowing was down by £55bn compared to its forecast last October, thanks to buoyant tax receipts and lower central and local government spending. However borrowing will rise due to higher interest rate payments.
Public spending is on a declining path as a share of GDP throughout the forecast period to 2027 though it settles at 41.1% of GDP in 2026-27, 2.1%of GDP higher than in 2019/20 and the highest sustained level since the late 1970s. Most of this is down to higher debt interest costs.
