Posted: Wed 23rd Mar 2022

Spring Statement : 5p cut in fuel duty “a drop in the ocean” says RAC

News and Info from Deeside, Flintshire, North Wales
This article is old - Published: Wednesday, Mar 23rd, 2022

The RAC has said the 5p cut in fuel duty announced by Chancellor Rishi Sunak earlier today is a “drop in the ocean” and will take prices at the pumps back to where they were just a few days ago. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

Introducing his Spring Statement in the House of Commons Mr Sunak said: “the government will support the British people as they deal with the rising costs of energy.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

“People should know that we will stand by them, as we have throughout the last two years.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

He said, “today I can announce for only the second time in 20 years, fuel duty will be cut.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

“Not by 1, not even by 2, but by 5 pence per litre.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

‘The biggest cut to all fuel duty rates – ever.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

“And while some have called for the cut to last until August, I have decided it will be in place until March next year – a full 12 months.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

Nicholas Lyes, the head of policy at motoring organisation The RAC said: “With petrol and diesel prices breaking records almost daily, and the cost to fill up a petrol car at over £92 and a diesel at nearly £100, we’re pleased to see the Chancellor has given drivers some much-needed relief at the pumps, but the reality is that a 5p cut in duty is something of a drop in the ocean. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

“In reality, reducing it by 5p will only take prices back to where they were just over a week ago.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

Mr Lyes said: “With the cut taking effect at 6pm tonight drivers will only notice the difference at the pumps once retailers have bought new fuel in at the lower rate.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

“There’s also a very real risk retailers could just absorb some or all of the duty cut themselves by not lowering their prices.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

“If this proves to be the case it will be dire for drivers. It also wouldn’t be totally unexpected based on the biggest retailers not reducing their prices late last year when the oil price fell sharply.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

The RAC head of policy said: “Temporarily reducing VAT would have been a more progressive way of helping drivers as the tax is applied at the point the fuel is sold.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

“It’s also the case that the Treasury is benefitting hugely from the high fuel prices because of greater VAT revenue.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

“The Chancellor is currently getting 28p a litre VAT on petrol and 30p on diesel – this of course comes on top of fuel duty as VAT is a tax on a tax.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

Mr Sunak announced a number of other measures some aimed at helping households with the cost of living crisis. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

He said sanctions against Russia will not be cost-free for people at home, and that “Putin’s invasion presents a risk to our economic recovery – as it does to countries all around the world.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

He said that global supply chain issues following the pandemic, as well as Russia’s invasion of Ukraine, “are driving up the cost of living for families across the UK.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

Mr Sunak also announced that National Insurance starting thresholds will rise to £12,570 from July, meaning people across the UK will keep more of what they earn before they start paying personal taxes. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

The cut, worth over £6 billion, will benefit almost 30 million working people with a typical employee saving over £330 in the year from July. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

He announced the doubling of the Household Support Fund to £1 billion to “help those families most in need.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

He also pledged to cut the basic rate of income tax by 1p in the pound in 2024, when the OBR expect inflation to be back under control, debt falling sustainably and the economy growing. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

The cut is worth £5 billion for workers, savers and pensioners and will be the first cut to the basic rate in 16 years. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

And the scrapping of VAT on renewable energy sources to help homeowners to reduce their energy costs, saving £1,000 in tax and £300 in energy costs per year. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

Spring Statement has let down people. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

Welsh Government Finance Minister Rebecca Evans has said the Spring Statement has let down people struggling with the rising costs of living. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

The Welsh Government had called for measures including increasing welfare benefits, a windfall tax on big energy companies, and introducing a low income energy tariff to better target support to lower income households. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

Despite the OBR almost doubling its inflation forecast to 7.4% from 4% for this year, the Chancellor limited the uplift in benefits to just 3.1% – after a below inflation increase of 0.5% last year. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

April will see more pressure on household budgets, with energy bills and National Insurance contributions both rising. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

Rebecca Evans, Minister for Finance and Local Government, said: ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

“People will be right to feel let down by today’s threadbare statement. Bills are rising rapidly and disposable income is falling, but there is not enough in today’s statement that recognises the struggle many are facing. It’s an ideological, regressive statement from the Chancellor that lacks practical measures to help those who need help the most – there is nothing for those who cannot work and those on lower incomes.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

“The UK Government has squandered the opportunity to provide meaningful support. It exposes an out-of-touch Chancellor and exacerbates the fairness gap running through Westminster’s lacklustre approach to the cost of living crisis.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

Last month the Welsh Government confirmed a £330m cost of living support package, included extended £200 winter fuel payments, a £150 cost of living payment and more money through the Discretionary Assistance Fund. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

The Minister added: ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

“In Wales we provided a cost of living support package worth nearly double the equivalent support provided in England. We encourage everyone to familiarise themselves with what is available and to take advantage of the support on offer. But we also recognise it doesn’t provide all the answers, and that many of the key levers such as welfare support lie in Westminster. We will continue to call on the UK Government to join us in providing a full crisis response to help people with the rising cost of living.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

Tinkering around the edges. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

Plaid Cymru’s Treasury spokesperson, Ben Lake MP, criticised the Chancellor for “tinkering around the edges of a broken strategy” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

He said: “Today‘s statement finally acknowledges that families are facing a cost of living crisis, but it is disappointing the Chancellor failed to bring forward measures to actually address the scale of the problem. The seriousness of the crisis called for a fundamental change of approach, not further tinkering around the edges a broken strategy. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

 “Plaid Cymru have long called for targeted support for people and businesses who are struggling with fuel costs. A 5p cut to fuel duty, while welcome, will still leave people in rural areas struggling to shoulder the cost of essential journeys, whilst giving a subsidy to the Chelsea tractors that pollute the cities. A targeted approach would have been fairer for both the public and the planet. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

 “We welcome the cut to VAT on energy efficiency measures. The UK Government now needs to outline how it will work with the devolved governments and local authorities to deliver the widescale energy efficiency investment we need to have a real impact on people’s bills. Wales has the leakiest, least energy efficient housing stock of any UK nation. A coordinated programme must be delivered according to need.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

 “The Chancellor wants us to welcome his measures on National Insurance today. But the fundamental facts remain – the Conservative Government is increasing National Insurance in the middle of a cost-of-living crisis, which is a monumental error on Rishi Sunak’s part.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

 “Finally, it is regrettable that the Chancellor failed to announce an increase to benefits in line with inflation today. It will mean that 9 million low-income households will experience a real-terms cut of £500 a year, just months after the Chancellor scrapped the £20 uplift to Universal Credit. It is inexcusable that he is inflicting additional hardship on people who are already suffering.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

Welsh Conservatives claim victory campaign. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

Welsh Conservatives welcomed the cut in fuel duty “after leading the campaign in Wales for the Chancellor to take action as prices at the pump continue to rise.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

Welsh Conservative Shadow Minister for Finance, Peter Fox MS, said: ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

“The Chancellor has made it clear today he has a clear plan to tackle the cost of living by protecting jobs, growing the economy and leaving more money in people’s pockets to support family budgets. I particularly welcome the action by the Chancellor to cut fuel duty after our campaign to support hard-working Welsh families. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

“However, whilst the UK Conservative Government is taking steps to support families, Labour minister in Cardiff Bay continue to play politics with the cost of living. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

“We need to see more action and less words from them. If Labour in Wales were serious about easing the financial pressures on Welsh families, Labour ministers would use devolved levers and cut income tax in Wales. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

“In stark contrast to Rishi Sunak in cutting the cost of politics, Labour and their nationalist coalition partners are looking to increase the number of unknown politicians in the Cardiff Bay bubble. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

“The additional £12 million a year would be better spent on hundreds of extra nurses and doctors a year to tackle Wales’ NHS waiting time crises and ambulance responses times. ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

“Once again, Labour ministers have their priorities wrong.” ‌​‌‌‌​‌‌‍‌​‌‌‌​‌​‍‌​‌‌‌​‌​

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