Spring Budget 2023 – as it happened: Childcare costs, Brexit pub guarantee and plan for ’12 Canary Wharfs’
As Jeremy Hunt unveils his first full Spring Budget, we bring you all the latest news, opinion, analysis and reaction.
Budget day – Live feed
Support for parents with young children:
Jeremy Hunt announced a series of reforms, starting “with the supply of childcare.”
“We have seen a significant decline in childminders over recent years – down 9% in England in just one year. But childminders are a vital way to deliver affordable and flexible care and we need more of them.
“I have listened to representations from my hon friend from Stroud and decided to address this by piloting incentive payments of £600 for childminders who sign up to the profession, rising to £1,200 for those who join through an agency.”
“I want to help the 700,000 parents on universal credit who, until the reforms I announced today had limited requirements to look for work.
“Many remain out of work because they cannot afford the upfront payment necessary to access subsidised childcare. So for any parents who are moving into work or wants to increase their hours, we will pay their childcare costs upfront.
“And we will increase the maximum they can claim to £951 for one child and £1,630 for two children, an increase of almost 50”.
He added that “today’s childcare reforms will increase the availability of childcare, reduce costs and increase the number of parents able to use it.
“Taken together with earlier Conservative reforms, they amount to the most significant improvements to childcare provision in a decade. But if we really want to remove the barriers to work we need to go further for parents who have a child under 3. For them childcare remains just too expensive”.
Jeremy Hunt said “we want the UK to be the best place in Europe for companies to locate, invest and grow so today’s enterprise measures strengthen our technology and life science sectors, invest in energy security and for three years – but I hope permanently – cut corporation tax by £9bn a year to give us the best investment incentives of any advanced economy.”
“An enterprise economy can only grow if it can hire the people it needs, which brings me to my third pillar after ‘Everywhere’ and ‘Enterprise’, the ‘E’ of Employment.”
12 Canary Wharfs
Jeremy Hunt announced regeneration projects with the deliverer of 12 investment zones.
“Canary Wharf and the Liverpool Docks were two outstanding regeneration projects that happened under a previous Conservative government.
“They showed what’s possible when entrepreneurs, government and local communities come together. So today I announce that we will deliver 12 new Investment Zones, 12 potential Canary Wharfs.
Jeremy Hunt announced a three-year policy of “full expensing” for businesses will mean every pound a company invests in IT equipment, plant or machinery can be deducted “in full and immediately” from taxable profits, a move worth £9 billion a year, the Chancellor said.
Paul Heywood, Chief Data & Analytics Officer, Equifax UK, commented: “The Chancellor’s ‘Back-to-Work’ budget looks to return the nation to business as usual after the upheaval of the Autumn budget last year, though many are likely tackling very similar challenges to those they faced last November.
“Businesses certainly will welcome plans to restore tax relief for those reinvesting into research and development; however, there is little in the Chancellor’s plan to tackle high borrowing costs for consumers and businesses. Attention will quickly shift to the Bank of England’s base rate decision next week, though there seems little chance of an easing of climbing borrowing costs, as the Bank continues to tackle inflation.
Brexit pub guarantee
Beer and other draught products in pubs will be 11p cheaper than in supermarkets, Jeremy Hunt has announced, calling the tax relief a “Brexit pub guarantee” which will come in from April 1.
Jeremy Hunt said: “I will do something that was not possible when we were in the EU and significantly increase the generosity of Draught Relief, so that from 1 August the duty on draught products in pubs will be up to 11p lower than the duty in supermarkets, a differential we will maintain as part of a new Brexit pubs guarantee.
“British ale may be warm, but the duty on a pint is frozen.”
Meeting fiscal targets
by Jack Barnett
The Chancellor also confirmed the OBR thinks he will meet both his fiscal targets, namely, getting debt as a share of the economy down and capping borrowing at three per cent of GDP in five years.
“Underlying debt is forecast to be 92.4 per cent of GDP next year, 93.7 per cent in 2024-25; 94.6 per cent in 2025-26, and 94.8 per cent in 2026-27, before falling to 94.6 per cent in 2027-28,” Hunt said.
The deficit is actually projected fall in each year of the entire OBR forecast period.
On top of forecasting the country will swerve a recession this year, the OBR reckons the economy will grow each year between 2023- 2027:
- 2023: -0.2% (vs -1.4%)
- 2024: +1.8% (vs +1.3%)
- 2025: +2.5% (vs +2.6%)
- 2026: +2.1% (vs 2.7%)
- 2027: +1.9% (vs 2.2%)
Jeremy Hunt said he will focus reducing debt.
“Our plan is on track. Underlying debt is forecast to be 92.4 per cent of GDP next year, 93.7 per cent in 2024-25; 94.6 per cent in 2025-26, and 94.8 per cent in 2026-27, before falling to 94.6 per cent in 2027-28.”
“And with a buffer of £6.5bn, it means we are meeting our fiscal rule to have debt falling as a percentage of GDP by the fifth year of the forecast.
“As a proportion of GDP our debt remains lower than the USA, Canada, France, Italy and Japan. And because of the decisions I take today, and the improved outlook for the public finances, underlying debt in five years’ time is now forecast to be nearly three percentage points lower than it was in the Autumn.
“That means more money for our public services and a lower burden on future generations – deeply-held Conservative values which we put into practice today.
“At the Autumn Statement I also announced that public sector net borrowing must be below 3% of GDP over the same period. The OBR confirm today that we are meeting that rule with a buffer of £39.2 bn.”
Hunt abolishes pension lifetime allowance
Chancellor Jeremy Hunt has abolished the pension lifetime allowance and increased the annual tax free pension allowance by 50 per cent to £60,000 a year.
The Chancellor has abolished the lifetime allowance on tax-free pensions savings, which stood at £1 million.
The measure was one of several unveiled in the Budget and aimed at encouraging an estimated 3.5m people of pre retirement age back into the workforce.
Speaking on the struggling hospitality sector, Hunt said that he will introduce a ‘Brexit pub guarantee’ that will be introduced from 1 April to make draught products in pubs 11p cheaper than supermarkets.
Chancellor Jeremy Hunt said his “penultimate cost of living measure concerns one of our other most treasured community institutions, the great British pub.
“In December, I extended the alcohol duty freeze until 1 August, after which duties will go up in line with inflation in the usual way.”
Jeremy Hunt has confirmed that the support package for households will be maintained at current levels for another three months.
This means the Energy Price Guarantee will remain at £2,500 per year until the end of July.
Energy bills are expected to drop sharply in the second half of the year as the drop in gas prices is reflected in long-term contracts bought by suppliers.
Martin Lewis also got a shout out, with Jeremy Hunt saying: “After listening to representations from Martin Lewis and other experts, I today confirm that the Energy Price Guarantee will remain at £2,500 for the next three months.”
BIG WIN for nuclear power – which will now be classed as environmentally sustainable will giving it access to same incentives as renewable energy.
“We have increased the proportion of electricity generated from renewables from under 10% to nearly 40%. But because the wind doesn’t always blow and the sun doesn’t always shine – even under a Conservative government.
“We will need another critical source of cheap and reliable energy. And that is nuclear.
“To encourage the private sector investment into our nuclear programme, I today confirm that subject to consultation nuclear power will be classed as “environmentally sustainable” in our green taxonomy, giving it access to the same investment incentives as renewable energy. Alongside that will come more public investment.”
Jeremy Hunt describes the ramp up in offshore wind as a “clean energy miracle” – labelling the UK as a “world leader”
He then says the 90 per cent boost in solar power installed over last 13 years means the government ‘fixed the roof while the sun is shining’
Jeremy Hunt reflected on “the impact on motorists of the planned 11p rise in fuel duty. I notice the party opposite called for a freeze on this duty.
Somehow they forgot to tell the British people they have voted against every single fuel duty freeze for the last 12 years. Because inflation remains high, I have decided now is not the right time to uprate fuel duty with inflation or increase the duty.”
Paul Johnson, director of the Institute for Fiscal Studies (IFS), has described aspects of the Chancellor’s approach to fuel duty as “absurd” and the plan for overall spending to increase by just 1% post-election as “unlikely to be met”.
“‘Not the right time to increase fuel duty with inflation’. It never is! Not undoing the ‘temporary’ 5p cut either,” Mr Johnson tweeted.
“But still pretending it will be undone and increased with inflation next year. Absurd. This continued pretence aimed to flatter future public finances is ludicrous.
“Departmental spending still supposed to increase by just 1% a year post election. That remains a very tough set of plans which are unlikely to be met.”
RAC head of roads policy Nicholas Lyes said: “We welcome the Government’s decision to keep the 5p fuel duty cut in place for another 12 months.
“The cut has given drivers some much-needed relief in what has been the most torrid year ever at the pumps, with price records being broken even after duty was cut. Given the importance of driving for consumers and businesses, duty should be kept low to help fight inflation.”
12.39 pm – OBR forecast’s UK will avoid a recession
by Jack Barnett
Britain is on track to avoid a much-tipped recession, a huge turnaround from a big contraction forecast at the turn of the year.
Chancellor Jeremy Hunt confirmed today the Office for Budget Responsibility now thinks the country’s economy will perform much better this year.
It is big upgrade from the 1.4 per cent contraction projected at Hunt’s autumn statement in November.
Also in November, the Bank of England suspected the country was on course for the longest recession in a century which would wipe about three per cent off of GDP. Now the central bank thinks that hit will be closer to one per cent
“Part of the fall in inflation predicted by the OBR happens because of additional measures I take today,” Hunt said, referencing keeping the energy price cap at £2,500 for further three months until the end of £2,500.
“A budget for growth”
Jeremy Hunt presents his case for a ‘budget for growth’, as one of PM Rishi Sunak’s five priorities, looking at “removing obstacles that stop businesses investing, tackling labour shortages that stop them recruiting, by breaking down barriers that stop people working, and by harnessing British ingenuity to make us a science and technology superpower.”
I start with the forecasts produced by Richard Hughes and his team at the independent Office for Budget Responsibility whom I thank for their diligent work. They have looked in detail at the Prime Minister’s economic priorities.
“The first of those is to halve inflation. Inflation destroys the value of hard-earned pay, deters investment and foments industrial strife. This government remains steadfast in its support for the independent Monetary Policy Committee at the Bank of England as it takes action to return inflation to the 2% target. Despite continuing global instability, the OBR report today that inflation in the UK will fall from 10.7% in the final quarter of last year to 2.9% by the end of 2023.
“”They forecast we will meet the Prime Minister’s priorities to halve inflation, reduce debt and get the economy growing. We are following the plan and the plan is working. But that’s not all we’ve done.”
“In the face of a cost-of-living crisis we have demonstrated our values by protecting struggling families with a £2,500 Energy Price Guarantee, one-off support and the uprating of benefits with inflation. Taken together, these measures are worth £94 bn over this year and next – one of the largest support packages in Europe.”
Jeremy Hunt takes to the despatch box:
“I report today on a British economy which is proving the doubters wrong. In the autumn we took difficult decisions to deliver stability and sound money. Since mid-October, 10-year gilt rates have fallen, debt servicing costs are down, mortgage rates are lower and inflation has peaked. The International Monetary Fund says our approach means the UK economy is on the right track.”
“But we remain vigilant, and will not hesitate to take whatever steps are necessary for economic stability. Today the Office for Budget Responsibility forecast that because of changing international factors and the measures I take, the UK will not now enter a technical recession this year.
9.30am – Hunt expected to splash £4bn on childcare expansion – by Jessica Frank-Keyes
Chancellor Jeremy Hunt is expected to spend £4bn on childcare expansion for one and two-year-olds in today’s Budget as part of a drive to get Brits into work and boost growth.
9am – FTSE 100 muted ahead of Jeremy Hunt March budge – by Jack Barnett
London’s FTSE 100 edged lower this morning as investors brace for Chancellor Jeremy Hunt’s first budget around 12.30pm today.
The capital’s premier index lost 0.52 per cent to drop to 7,597.09 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, shed 0.42 per cent to trade at 19,048.77 points.
London markets were broadly tame during opening exchanges today, reflecting what has been an already highly trailed and is likely to be a tame budget by the Chancellor today.
7am – Jeremy Hunt confirms extension of energy price guarantee – by Nick Earl
Chancellor Jeremy Hunt confirmed that the Energy Price Guarantee will be extended at its current level, easing pressure on millions of vulnerable energy users.
The support package, which caps average household bills at £2,500 – will now remain at its current rate from April to June.
It had been due to rise to £3,000 next month, raising concerns Brits would face a potential £900 hike to their energy bills with the £400 discount expiring and the subsidy package tapering off to £3,000.
What has Rishi Sunak been doing this morning?
By Jessica Frank Keyes
Ahead of prime minister’s questions, which will take place at midday in the Commons as usual, Sunak led the weekly cabinet meeting in Downing Street.
He told ministers it was no mistake three of the government’s five priorities were focused on the economy and said the budget today would deliver on all three, with emphasis on growth.
Sunak thanked Chancellor Jeremy Hunt and the treasury for their work securing the sale of the UK arm of the Silicon Valley Bank to HSBC.
Hunt also outlined some of his budget plans to cabinet colleagues, and said the autumn statement had paved the way for what he claims will be a “growth budget”.
He highlighted customs changes post-Brexit, investment in carbon capture and nuclear energy, levelling up zones and plans to get Brits back into work via support packages.
These measures have all been previously confirmed by the treasury – but MPs, businesses and voters will be keen to see if Hunt has managed to keep any major reveals up his sleeve.