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Sunak’s Spring Statement is a mixed bag

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As the dust settles from another Spring Statement, the accounting community has its say on the day’s events.

23rd Mar 2022
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For days prior to the announcement, rumours had been circulating among the accounting community on what members were expecting to see from the Chancellor of the Exchequer come 23 March. While some believed the course charted by the Government up to now was correct, many more were hoping for a litany of drastic policies to be announced to combat the continuing cost of living crisis.

What the community ended up with, of course, was a mixed bag from the Chancellor, who seemed stuck between the spiralling crises facing the UK and the senior members of the cabinet.

Wishful thinking

In the days running up to the announcement, much of the discourse focused on what the community wanted from the Chancellor and what they hoped to hear from him on the day. 

When asked what they expected, much of the community (rightly) predicted that the Chancellor would lean heavily on the war in Ukraine, and the pressures it has wrought on the UK, as the catalyst for much of his policy reasoning. 

In a recent Any Answers post, reader DJKL was quick to point out that while raising interest rates, as the Bank of England had done the week before, was a useful tool in battling rampant inflation, they were unsure how this would work “when the drivers of inflation are food and warmth, which are pretty much core essentials of life that humans will keep buying irrespective of price.”

Other contributors, such as Richard Grant, believed that the Chancellor may “introduce a 0.5% tax to ‘help’ Ukraine” and questioned Sunak’s credentials as a “low tax” Chancellor. 

Conducting a poll on what the community wanted to see showed significant support for halting on further tax rises, especially the controversial national insurance hike.

 

A mixed bag

As the day of the announcement wore on, it became increasingly clear that fuel duties, R&D tax relief and NI hikes would be big topics of discussion throughout. However, Sunak did manage to throw some curveballs into the mix, with slashes to VAT for sustainable homes, increasing the NI tax threshold to £12,570 and a commitment to cutting income tax over the life of the current government.

The community reaction was, like Sunak’s announcement, a mixed bag. On the Any Answers forums, there was a positive response to Sunak’s increasing the tax threshold, with many believing that the change had been a long time coming.

“Tax and NI both starting at £12,570; did I hear right, has Rishi finally done something clever?” user DJKL asked on another Any Answers thread, with user stepurhan quipping that “even a stopped clock is right twice a day.”

However, while the change seemed positive to some, there was a level of cynicism among other readers who were unsure as to whether the policy would make much of a difference.

User SoL was quick to point out that not everyone would feel the benefits of this threshold increase, noting that “there's no mention of any movement on the secondary threshold, so no real impact in salary planning for a typical sole director setup.”

Others were unsure why the increase had been delayed until July, with users such as SXGuy wondering “why July and not April? What happens in between then?”

More to be done

After both the Chancellor and Shadow Chancellor had said their pieces and the statement was put to the Commons floor, it became clear that many in the community believed more needed to be done in order to make any sort of substantial dent in the cost of living crisis.

Tax expert Rebecca Cave voiced her irritation at the relative bluster of Sunak’s speech, saying the document had “no substance”, while Richard Murphy took to Twitter to lambast the Chancellor for his lacklustre attempt at tackling issues that affect the poor.

 

This disappointed feeling was also felt among the Any Answers community with DJKL once again summing up the mood after the statement had finished. “The Chancellor's statements are always like Hogmanay – eagerly anticipated but always fail to live up to expectations,” they said, adding that “even the IT bit was a damp squib”.

Yet, overall it seems that the community, while happy with some points, felt that the Chancellor has not been brave enough to make the changes required to drag the UK out of its current situation, as our poll on the matter shows.

 

With the details still being ironed out and the experts still picking over the document, we will simply have to wait and see whether the Chancellor’s policies can make a difference.

Spring Statement coverage brought to you in association with Accounting Excellence.

2022 Spring Statement in association with Accounting Excellence Awards

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