With the recent unveiling of the Spring Budget 2024, there's a lot to discuss and several key updates that directly impact us. A lot of economic progress has been made, particularly over the past year, and it is fair to say the economy is turning a corner. This has meant the Treasury is in the position now to afford tax cuts as part of the plan to reward work and grow the economy. I know these changes will make a meaningful difference to all across Rochester and Strood in one way or another, and I welcome the progress announced today by the Chancellor.
Inflation
The issue of inflation has been a concern for many, when the Prime Minister took office inflation was at an alarming 11.1%, it is pleasing to see that inflation has now reduced to 4%, with a forecast predicting a fall below the 2% target in a few months’ time.
National Insurance Cuts
I welcome that the Chancellor has announced a further 2p cut to National Insurance Contributions again for 29 million working people, reducing NICs from 12% to 8% since last November. This change represents a £900 tax cut for an average worker earning £35,400, putting money back into the pockets of many hardworking people, across the country and in Rochester and Strood.
Fuel Duty Freeze
Continuing the trend of providing relief where it's needed most, fuel duty has been frozen for the 14th consecutive year. In the lead up to the budget, I added my signature to Jonathan Gullis MP’s letter to the Chancellor advocating for this to happen and to stop the an 5p increase in fuel duty. This will save the average car driver, £50 next year. I am pleased the Government is still supporting motorists and the logistics industry through ensuring driving remains affordable for everyone and eases the financial pressures on households.
Windfall Tax
Similarly, the extension of the Energy Profits Levy ensures that the windfall profits of oil and gas companies are taxed appropriately. This means a tax rate of 75% on profits from oil and gas production, is extended for a further year until 2029, which is expected to raise an additional £1.5 billion. This will ensure a greater contribution from these energy companies, as it is only fair that companies that have made genuine windfall profits contribute more to fund the Government’s cost of living support.
NHS Productivity
The significant investment in the NHS £2.45 billion for next year and a new £3.4 billion over three years through a productivity plan. This plan is aimed at expanding AI use for quicker cancer diagnosis, cutting admin, freeing up capacity, and transforming access and services for patients, so clinicians can focus on delivering care. This investment not only promises better patient outcomes but embraces digital transformation in modernising our health services. This also means NHS funding has gone up by 13% in real terms since the start of this Parliament.
Extending the Household Support Fund
The Household Support Fund allows local councils to help families via food banks, warm spaces and food vouchers. This has been extended beyond 31st of March. It will continue for six months, with an extra £500 million allocated, this takes the total support from the Household Support Fund to near £3 billion.
Tax on Vapes and Tobacco Duty
The increase in vaping, especially among children, is a concern that has not gone unnoticed. Statistics showing a tripling in usage over the past three years. This is a concerning trend that we must address. The introduction of a new vaping tax, coupled with an increase in tobacco duty, aims to address this issue head-on, with the dual benefit of raising revenue and promoting public health.
Alcohol Duty
The extension of the alcohol duty freeze until the 1st of February 2025, will provide stability for many businesses in the hospitality sector. The significance of the hospitality sector to the UK economy cannot be overstated. In Rochester and Strood alone, the 277 establishments employ 6,454 people, generating a turnover of £327 million and contributing an economic value of £162 million. This freeze in alcohol duty is a welcome measure from the Chancellor.
Changes to Non-Dom Status
The scrapping of the non-dom tax status will ensure that those living in the UK contribute their fair share. There were 68,800 people claiming non-dom status in 2022, so this change will eventually raise a £2.7 billion per year.
Supporting Small Businesses Through VAT Changes
The decision to raise the VAT registration threshold from £85,000 to £90,000 will be welcomed news from small businesses in Rochester and Strood. This change will reduce the tax burden on the businesses that form the backbone of the economy. This adjustment will boost our local economy and secure even more jobs.
Child Benefit
Significant changes to the Child Benefit system were also announced. Namely, the increase the High Income Child Benefit Charge (HICBC) threshold to £60,000, offering nearly half a million families an extra £1,260 on average. This update tackles the unfairness faced by single-earner families at the £50,000 mark, ensuring a more equitable system that supports hard-working families in balancing work and childcare more effectively.
These measures offer financial relief, nurture economic growth, and deliver equitable tax contributions, while prioritising public health, support for families, and investments in future productivity. I am pleased to see this for my constituency and look forward to the growth this will bring to the country.
A full copy of the Spring Budget 2024 can be found here:
https://www.gov.uk/government/publications/spring-budget-2024/spring-budget-2024-html
