Business and political leaders across the North-west have largely welcomed measures announced in the 2022 Spring Statement, but also called on the Chancellor to do more to address the rising cost of living.
On Wednesday March 23rd, Rishi Sunak announced changes to National Insurance thresholds, a cut to fuel duty and VAT on energy saving measures as a means to help curb the impact of rising inflation, particularly fuel and energy costs; a summary of announcements is available here.
The 5p per litre cut to fuel duty was among the most warmly received measures announced by the Chancellor. Anthony Painter, Director of Policy at the Chartered Management Institute, however also said more needed to be done to prevent the rising cost of living reducing demand for goods for consumers beyond energy costs; he said:
“It is critical that the Government does as much as possible to shield households from potentially crippling increases to prices – which risks detracting from long-term aims. There was some help today but with energy price rises remaining high and continued uncertainty from the Russian invasion. Still more was needed to protect those with lower incomes. This is likely to need re-visiting sooner rather than later.
“The rapidly rising cost of living has a knock-on effect on employers: reducing demand for goods and services at a time of increasing business costs and putting pressure on employees. In the public sector, rising costs create enormous internal pressures as workers, including in the health and care sector, face real wage cuts.”
Kate Nicholls, Chief Executive of UKHospitality, also criticised the Chancellor’s Statement for its omissions. She described that by not extending the reduced 12.5% VAT on the hospitality and tourism sector as a ‘massive missed opportunity.’ She said:
“This is a real setback for thousands of UK hospitality businesses still suffering the devastating effects of Covid, and facing a tidal wave of rising costs. For many businesses, the removal of the lifeline of a lower rate of VAT might prove fatal. For a heavily, disproportionately taxed sector a return to 20% dashes the hopes that many businesses could begin to recoup some of the losses of the last two years.
“Operators in the sector – large and small – have several hurdles to clear on the road to recovery: huge accumulated debts; unprecedented rising costs for energy and raw goods; a chronic shortage of staff; and a fundamentally unfair and crippling business rates regime we’re desperate to see reformed.
“Locking in VAT at 12.5% would have given hospitality businesses a major boost, and helped the sector in its ambition to lead the UK back to post-Covid prosperity. As it is, thousands of jobs could be lost, the UK will remain uncompetitive versus international rivals, and already hard-pressed consumers in the midst of a cost-of-living crisis will see price rises in their favourite pubs, bars and restaurants, further fuelling inflation.”
Liverpool City Region Mayor, Steve Rotheram also criticised the Chancellor for ‘a complete lack of empathy’ in his assessment of measures in failing to address cost-of-living increases; he said:
“Millions of people across the country face a worrying year ahead as the cost of living crisis starts to bite. With energy prices rising, fuel prices rising, the cost of food and other essentials rising, and inflation at its highest point in 30 years, they were looking to him today to offer them a helping hand.
“Instead, he is piling on the pressure, offering no help to ordinary people and putting yet more pressure onto increasingly desperate families. Today’s lack of action will only push more people below the poverty line.”
The lukewarm reaction from the business community has also been matched by a similar response from the public. A snap poll of over 1000 individuals conducted by Opinium on the afternoon of 23rd March found that while most supported the Chancellor’s announcements, nearly two-thirds of those asked felt the government needed to do more.
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