Colchester households may still struggle after tax cut

Mike Beckett, the chief officer at Colchester Foodbank, and Paula Goddard, the Christians Against Poverty Debt Centre manager, said cuts in income tax were a positive for many of their clients.

But they also warned that the continued rise of energy and food costs could still signal some tough times ahead for low-income households in Colchester with inflation – which affects the cost of food and energy – expected to rise yet further.

Mr Sunak addressed the House of Commons yesterday and announced a string of measures in response to the cost of living crisis, which has seen households pay more money for basic necessities.

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The key points of his Spring Statement were the reduction in fuel duty, meaning a litre of diesel or unleaded now costs 5p less than previously, and the promise to make a cut in income tax from 20p to 19p by 2024.

Other important elements included an increase in funding for councils to support vulnerable households, and the increase in the National Insurance threshold – meaning people can earn £12,570 before paying National Insurance contributions, £3,000 more than the £9,570 they had to earn previously.

However, Mr Sunak warned people could still struggle over the coming months as prices rose by 6.2 per cent in the 12 months to February - the fastest for 30 years.

And inflation is predicted to rise still further and economic growth is expected to fall.

He said: “We should be prepared for the economy and public finances to worsen – potentially significantly.”

But he added the new tax plan put together by the Treasury would allow for improved economic growth longer term.

“We will take a principled response to cutting taxes, we will help families with cost of living, we will create the conditions for higher growth, and we will share the proceeds of growth fairly.

“It is this Conservative government delivering for hard working families and delivering for the cost of living. 

“We can only afford to provide this extra support because of our stronger economy and the tough but responsible decisions we’ve taken to rebuild our fiscal resilience.”

In response to the Spring Statement, chief officer of Colchester Foodbank Mike Beckett said there were positives in Mr Sunak’s plan but added the spiralling cost of living was still a major concern.

He said: “Taking people out of paying National Insurance is a welcome thing for our clients and will help people not to need us so much.

“But if energy prices are going up by £100 per month, then it’s not tackling that.

“Yes, we welcome the positive things about National Insurance and income tax, but [Mr Sunak] hasn’t done enough on bills and our big concern is now people have to choose between heating and eating.

“We had a mild winter this year. If we have a cold one into next year, then this will bite.”

Chief officer at Colchester Foodbank said the Spring Statement may not help households already struggling with the cost of living

Meanwhile, the Christians Against Poverty Debt Centre manager Paula Goddard said we are unlikely to see an immediate impact from parts of the Spring Statement.

She said: “Across the country, and as an organisation we are seeing energy, fuel, and food prices rise.

“I’m not sure these announcements are going to make a huge difference immediately.

“It means we will see an increase in people coming to us because the cost of living is just way too high for the majority of people.”

When asked how much of a difference the cut in fuel duty would make for them, Gazette readers were forthright.

Mark Butler wrote:” None – petrol went up by 40p a litre over the last few weeks.

“The 5p still makes it 35p more than it was before.”