What are we likely to see in today’s Spring Statement?

Around midday today Rishi Sunak will deliver the Spring Statement, which is an opportunity for the Chancellor to announce new policies or modify those already in the works.

The Spring Statement is usually more of a low-key affair than the Autumn Budget, and today’s announcement comes off the back of multibillion spending programs launched to protect people from the pandemic over the past two years.

Last week Pantheon Macroeconomics predicted an underwhelming Spring Statement thanks to where we are in the election cycle, as the government would prefer to announce tax cuts in 2023/24 before the general election.


Cost of living crisis

However Sunak is under pressure to announce measures to alleviate the cost-of-living crisis, as it’s predicted that inflation could rise to double digits by the end of the year.

The energy price cap is set to rise by 54% next month, as Money Saving Expert founder Martin Lewis hit the headlines by saying he was ‘out of tools’ to help people struggling with rising inflation last week.

Arguably the Chancellor has more room to maneuver, as he received a boost to the country’s finances ahead of the Spring Statement.

Figures from the Office for National Statistics show the budget deficit – the gap between spending an income – was £26 billion better than forecasts from the in the first 11 months of the fiscal year.

Borrowing was £138.4 billion, 52% below the record £290.9 billion from April 2020 to February 2021.

Tomer Aboody, director of property lender MT Finance, said: ‘With global concerns such as Covid and the situation in Ukraine having a direct impact on western economies, Rishi Sunak must use his Spring Statement to look at ways to help curb soaring inflation and manage the rising cost of living.’

Fuel duty and tax cuts

A cut to fuel duty has been hinted at by both Boris Johnson and the Chancellor in the past week, and given how much the cost-of-living crisis is hitting the headlines you’d expect the government to make a change.

Rishi Sunak has pledged to “stand by” people facing “prohibitively expensive” petrol prices, as filling up a tank now costs almost £90, an increase of £33 from May 2020.

It’s thought the government will make a fuel duty tax cut of 5p, which would save £3.30 per tank.

So far the government has only made small changes to help those struggling with rising bills.

In February the Chancellor announced that families will receive a £150 council tax rebate in bands A to D, as well as £200 credit on energy bills to be repaid over the next five years.

It remains to be seen whether further measures are unveiled to deal with rising costs facing everyday people.

Heat pumps

Some housing commentators think heat pumps will be on the agenda in today’s speech.

Last year the government announced that it would provide landlords with a £5,000 heat pump incentive in April, but many have questioned whether this goes far enough.

The cost of air source heat pumps can cost between £6,000 and £18,000, putting off even green energy enthusiasts from installing heat pumps due to the cost of doing so.

Indeed, James Tanner and his wife Tatiana have urged the government to make installing heat pumps tax deductible, to encourage more landlords to use them.

Improving EPC ratings should have tax benefits

Jeremy Leaf, north London estate agent and a former RICS residential chairman, seems to think the government needs to shift its focus to how heat pumps will be maintained.

He said: “There is likely to be a focus on heat pumps, with subsidies almost certain but there is no point in doing this unless there is sufficient consumer buy-in and confidence in the product, which isn’t there at the moment.

“Consumers worry about the maintenance and servicing of heat pumps and there needs to be more confidence around their operation.”

From 2025 gas boilers will be banned from new builds, so the government needs to be active to prompt this switchover.

Stamp duty surcharge jitters

Last week headlines surfaced that the government could up the stamp duty surcharge on landlords to 4%.

This was a policy originally planned for the Autumn Budget in October 2021, but it was scrapped at the 11th hour.

It’s unclear whether the Chancellor could bring this back.

The property industry has previously blamed the harsher environment facing landlords on investors pulling out of the market, causing rents to rise as the gap widens between supply and demand.

Industry worried the stamp duty surcharge could go up to 4% in Spring statement

Jeremy leaf said: “We don’t want to see further deterrents for landlords because as we have already witnessed, this accelerates the selling up of properties, negatively impacts supply and means higher rents.”

Instead, he would like some assistance to ease the backlog in the courts system in terms of possession and anti-social behaviour, so landlords can properly deal with rogue tenants.

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