Jeremy Hunt’s first Budget included announcements on free childcare, pensions reforms and an extending of energy bills support:
Many of the key policies had been heavily trailed in advance, such as a widening of free childcare policies, extended energy support and welfare reforms to get people back to work.
Other details from his statement, such as the scrapping of the pensions lifetime allowance limit came as more of a surprise – here is a summary of everything you need to know.
Recession and inflation
- The Chancellor said the Office for Budget Responsibility (OBR) now forecasts that the UK will not enter a technical recession this year and that the Government “will meet the Prime Minister’s priorities to halve inflation, reduce debt and get the economy growing”.
- Despite “continuing global instability”, Mr Hunt said, the OBR expects inflation in the UK will fall from 10.7 per cent in the final quarter of last year to 2.9 per cent by the end of 2023.
Energy bills support
- The Chancellor confirmed the energy price guarantee will be extended for another three months.
- Households on prepayment meters will also get help, as their charges will be aligned with direct debit charges.
Taxes on alcohol, petrol and cigarettes
- Mr Hunt announced increased draught relief for pubs – a “Brexit pubs guarantee” which will see the duty on draught products in pubs up to 11p lower than the duty in supermarkets from August.
- He confirmed fuel duty will remain frozen and a 5p reduction will be maintained for a further year.
- The Chancellor added that the Government will “uprate tobacco duty” and “freeze the gross gaming duty yield bands”.
The Chancellor delivers his 2023 Budget on 15 March (Photo: AFP/Getty Images)
Pensions changes
- Mr Hunt announced he will abolish the lifetime allowance limit on pensions in a surprise move
- He also confirmed that he will increase the pensions annual tax-free allowance from £40,000 to £60,000.
Free childcare boost
- The Chancellor announced 30 hours of free childcare for all under-fives from the moment maternity care ends, where eligible.
- He also announced a boost for childcare suppliers, with the Government piloting incentive payments of £600 for childminders joining the profession – £1,200 if they join through an agency.
- Mr Hunt said he will also increase funding paid to nurseries providing free childcare under the hours offer by £204 million from this September, rising to £288 million next year.
- The minimum staff-to-child ratio will change from 1:4 to 1:5 for two-year-olds in England, though this will remain optional.
- Mr Hunt also said he wants all schools to be able to offer wraparound care either side of the school day by September 2026.
Benefits changes
- Mr Hunt promised the “biggest change to our welfare system in a decade”, with reforms aimed at supporting more disabled people into work.
- The Government will fund a new programme called “universal support” in England and Wales, which could help up to 50,000 people per year.
- Mr Hunt added that he will allocate £400 million for mental health and muscular skeletal support and there will also be a £3 million pilot to help people with special needs transition into the workplace.
- The Chancellor also revealed sanctions reforms aimed at getting people on universal credit benefits into work, but for those working low hours the Government will increase the earnings threshold from the equivalent of 15 hours to 18 hours.
Corporation tax
- The Chancellor confirmed the planned increase in corporation tax to 25 per cent will be going ahead.
- However, he announced a new policy of “full capital expensing” over the next three years, which will mean every pound invested in IT equipment, plant, or machinery can be deducted immediately from profits.
- Mr Hunt also said he will introduce a new tax credit for small and medium-sized firms that spend 40 pre cent of their expenditure on research and development. Tax reliefs for film, TV and video gaming will also be extended, he said.
Defence spending
- Mr Hunt confirmed the Government will add £11 billion to the defence budget over the next five years.
- Another £30 million of funding is being allocated for veterans.
Levelling up
- There will be 12 new investment zones, Mr Hunt announced. These will potentially be in the West Midlands, Greater Manchester, the North East, South Yorkshire, West Yorkshire, East Midlands, Teesside and Liverpool.
- There will also be at least one in each of Scotland, Wales and Northern Ireland.
- Mr Hunt also announced a series of levelling-up and local transport-related funding pots.
Public funding
- Mr Hunt announced he will provide a £63 million fund to “keep our public leisure centres and pools afloat” in response to high costs.
- An additional £100 million will be given to support thousands of charities and community organisations.
- The Chancellor also said that he will assign an extra £10 million to the third sector for suicide prevention.
Energy and research
- Up to £20 billion will be allocated for the early development of carbon capture and storage.
- Mr Hunt said that, subject to consultation, nuclear power will qualify for the same investment incentives as renewable energy and alongside that “will come more public investment”.
- The Chancellor announced an annual £1 million prize for AI research over the next 10 years, called the “Manchester Prize”.
