2022 Spring Statement

The Spring Statement was billed as a plan to strengthen the economy, help families with the cost of living and share growth fairly. Many commentators have already argued against all three objectives!

The NI changes are literally giving with one hand and taking away with the other. The fact that Gordon Brown felt able to criticize the approach was a highlight. The simplification of tying the NI threshold to the tax free allowance is welcome. However this used to be the case until a change made by Gordon Brown. It did however disguise the fact that the Personal Allowance was not increased so results in one of many tax rises as a result of Fiscal Drag.

The reduction in the basic rate of income tax in 2024 is a classic Jam Tomorrow approach pioneered by Gordon Brown. This is a complication that will save higher earners £375 a year and lower earners less. Combined with other issues, principally fiscal drag in inflationary times, it is not significant.

The references to Gordon Brown are not accidental in that he was regarded as a good chancellor whilst giving away huge sums of public money. History has not judged him so kindly!

The most important changes coming are in respect of corporation tax that I have commented on before in my Spring and Autumn Budgets for 2021. In order to correct the structural deficit the Chancellor initially needs to return spending to pre pandemic levels. This would allow him to provide assistance to those who need it and tax breaks to boost the economy.