Rishi Sunak’s last two Spring Statements were dominated by vast spending and multi-billion pound bailout programmes to help businesses and workers through the pandemic.
But this time the Chancellor faces a new challenge: the cost of living crisis. Mr Sunak is under immense pressure to soften the impact of rising bills, at the same time as reducing a massive public debt pile and nursing the country to economic recovery. So what can we expect?
When is the Spring Statement?
The Chancellor has asked the official forecaster, the Office for Budget Responsibility, to produce an economic and fiscal forecast to be published on March 23.
In line with tradition, the Spring Statement should follow later on that day, with Rishi Sunak to make an address to the House of Commons around lunchtime.
How does it differ from the Budget?
The Spring Statement is an opportunity for the Chancellor to provide an update on the overall health of the economy.
It does not include major tax or spending changes, which are made once a year at the Budget.
Rather the Spring Statement, which can be seen as more of a “mini Budget”, tends to include the launch of a number of consultations on potential new policies.
It also provides the Chancellor the opportunity to update the public on policies announced at previous Budgets, or to tweak or extend them.
At the 2021 Spring Statement, for example, the Chancellor extended the emergency state support schemes such as furlough, help for the self-employed and the stamp duty holiday. He also increased the National Living Wage by £345 a year.
The Spring Statement has also previously included smaller funding pledges and policies, such as additional police funding.
What is likely to be included?
The Chancellor is expected to address the spiralling cost of living crisis with plans such as a cut to fuel duty to take the sting out of rising petrol prices on the table.
Hopes that the levy could be reduced by 5p a litre were raised after the Chancellor pledged to “stand by” hard-pressed householders facing “prohibitively expensive” petrol prices and the Prime Minister was said to be “pushing” for a cut for motorists.
Ministers are also understood to be considering plans to soften the 1.25 percentage point National Insurance tax rise for low earners by raising the threshold above which it is paid, having ruled out scrapping the tax rise, due in April, altogether.
Currently National Insurance kicks in at earnings of more than £9,568, despite a pledge in the 2019 Conservative party manifesto that promised eventually no worker would pay tax on earnings of less than £12,000.
There was speculation at the weekend that officials have been studying similar changes to income tax thresholds and allowances.
The Chancellor was also being urged to raise working age and pensioner benefits by a further five percentage points to 8.1 per cent.
With public borrowing expected to come in under previous forecasts for the year, there is also hope of more targeted support, which could include the uprating of certain benefits, such as child benefit, to help families keep up with rising bills.
Families are facing soaring energy bills, as well as soaring inflation and bigger taxes.
The Government has already said it will push ahead with plans to expand the eligibility criteria for the Warm Home Discount scheme, increasing the number of people who can apply by close to a third. On top of this the value of the benefit will rise by £10 to £150 from October.
In February the Chancellor announced a package of support measures in response, including a £150 council tax rebate for homes in bands A to D, as well as a £200 credit on energy bills to be repaid over the next five years.