A revolution in childcare, a £27 billion tax cut for business and a trio of freezes to help families with the cost-of-living headlined the Chancellor Jeremy Hunt's Spring Budget today, Wednesday 15 March.
The Chancellor's speech is available to read in full here.
Key announcements
- Childcare: including an extension to younger children of the 30-hours a week of free childcare currently available to many working families with three and four year olds.
- Benefits: a range of measures to support and encourage people into work. These include:
- Work coach support will be extended to more people who are long-term scik and disabled. Work coaches gives advice, coaching and support to people, to help them secure a job.
- People claiming Universal Credit will be required to agree and meet intensive work related conditions as part of their claim, by increasing the amount they need to earn before they have “light touch” requirements
- Work search requirements for lead carers of children who are on Universal Credit will be expanded, expecting them to look for work or increase their working hours, with additional work coach support.
- The application of sanctions for claimants who do not meet conditions agreed to as part of their claim will be strengthened.
- A Transforming Support: The Health and Disability White Paper was also published alongside the Budget. This provides further details of plans for disability employment support announced in the Budget.
- Energy support: the energy price guarantee will remain at its current level until the end of June 2023. Under the Energy Price Guarantee, the Government sets maximum prices per unit of gas and electricity for households.
- Defence: the Government will spend an additional £2 billion per year between 2023/24 and 2027/28 (£3 billion in 2024/25) on defence and national security priorities.
- Taxation of pensions: the amount which can be saved tax free in private pensions in a single year and across a lifetime will increase
- Fuel duty: the fuel duty rate will be frozen for 12 months. Last year’s temporary 5p cut will be maintained and duty will not be increased with inflation.
- Capital allowance: from April, and for the next three years, businesses will be able to deduct 100% of all plant and machinery investment spending immediately when calculating taxable profits.
Further details
👉🏽 Childcare
Significant reforms to childcare will remove barriers to work for nearly half a million parents with a child under 3 in England not working due to caring responsibilities, reducing discrimination against women and benefitting the wider economy in the process.
- 30 hours of free childcare for every child over the age of 9 months with working parents by September 2025, where eligibility will match the existing 3-4 year-old 30 hours offer.
- This will be introduced in phases, with 15 hours of free childcare for working parents of 2-year-olds coming into effect in April 2024 and 15 hours of free childcare for working parents of 9 months – 3 years old in September 2024.
- The funding paid to nurseries for the existing free hours offers will also be increased by £204 million from this September rising to £288 million next year.
- Schools and local authorities will be funded to increase the supply of wraparound care, so that parents of school age children can drop their children off between 8am and 6pm – tackling the barriers to working caused by limited availability of wraparound care.
- Childcare costs of parents moving into work or increasing their hours on Universal Credit paid upfront rather than in arrears, with maximum claim boosted to £951 for one child and £1,630 for two children – an increase of around 50%.
- In recognition of both the importance and short supply of childminders, incentive payments of £600 will be piloted from Autumn of this year for those who sign up to the profession (rising to £1,200 for those who join through an agency) to increase the number available and increase choice and affordability for parents.
👉🏽 Employment
The Chancellor set out a comprehensive plan to help people move into work, increase their hours, and extend their working lives, including for those on benefits.
- The Lifetime Allowance charge will be removed before being abolished altogether, removing barriers to remaining in work and simplifying the tax system by taking thousands out of the complexity of pension tax.
- The Annual Allowance will be increased from £40,000 to £60,000, incentivising highly-skilled workers to remain in the labour market. As a result of the pensions tax measures announced today, an estimated 80% of NHS doctors will not receive a tax charge with respect to accruals under the 2015 NHS career average scheme.
- A new ‘Returnerships’ apprenticeship targeted at the over 50s will refine existing skills programmes to make them more accessible to older workers, giving them the skills and support they need to find a recognisable path back into work.
- The midlife MOT offer will be expanded and improved to ensure people get the best possible financial, health and career guidance well ahead of retirement. There will be an enhanced digital midlife MOT tool and an expansion of DWP’s in person midlife MOTs for 50+ Universal Credit claimants, aiming to reach 40,000 per year.
- A DWP White Paper on disability benefits reform will herald the biggest change to the welfare system in the past ten years, to make sure it better meets the needs of disabled people in Great Britain. This includes removing the Work Capability Assessment, meaning the majority of claimants will now have to do one health assessment rather than two. Reforms will also support claimants to try work without fear of losing their financial support.
- A new voluntary employment scheme for disabled people and those with health conditions called Universal Support will be funded in England and Wales. The government will spend up to £4,000 per person to find them a suitable role and cater to their needs, supporting 50,000 places per year once fully rolled out.
- A £406 million plan to tackle the leading health causes keeping people out of work, with investment targeted at services for mental health, musculoskeletal conditions, and cardiovascular disease.
- Strengthening work search and work preparation requirements for around 700,000 lead carers of children aged 1-12 claiming Universal Credit in Great Britain.
- Increasing the Administrative Earnings Threshold (AET) - which determines how much support and Work Coach time a claimant will receive based on their earnings - for an individual claimant, from the equivalent of 15 to 18 hours at National Living Wage and removing the couples AET in Great Britain. Over 100,000 non-working or low-earning individuals will be asked to meet more regularly with their Work Coach for support to move into work or increase their earnings.
- The application and enforcement of the Universal Credit sanctions regime will be strengthened, by providing additional training for Work Coaches to apply sanctions effectively, including for claimants who do not look for or take up employment, and automating administrative elements of the sanctions process to reduce error rates and free up Work Coach time.
- Elsewhere, international talent will be attracted through a new migration package that includes adding five construction occupations to the Shortage Occupation List and expanding the range of short-term business activities that are covered under the UK’s six-month business visit visa offer.
👉🏽 Enterprise
The Chancellor put forward a plan to boost innovation, drive business investment and hold down energy costs.
- A ‘full expensing’ policy introduced from 1 April 2023 until 31 March 2026 and an extension to the 50% first-year allowance in the same period – a transformation in capital allowances worth £27 billion to businesses over three years.
- A £500 million per year package of support for 20,000 research and development (R&D) intensive businesses through changes to R&D tax credits.
- Generous reforms to tax reliefs for the creative sectors will ensure theatres, orchestras, museums and galleries are protected against ongoing economic pressures and even more world-class productions are made in the UK.
- The Medicines and Healthcare products Regulatory Agency (MHRA) will receive £10 million extra funding over two years to maximise its use of Brexit freedoms and accelerate patient access to treatments. This will allow, from 2024, the MHRA to introduce new, swift approvals systems, speeding up access to treatments already approved by trusted international partners and ground-breaking technologies such as cancer vaccines and AI therapeutics for mental health.
- All of the recommendations from Sir Patrick Vallance’s review into pro-innovation regulation of digital technologies, published alongside Spring Budget today, are to be accepted.
- £900 million of funding for an AI Research Resource and an exascale computer – making the UK one of only a handful of countries to have one – and a commitment to £2.5 billion ten-year quantum research and innovation programme through the government’s new Quantum Strategy.
👉🏽 Levelling Up
To level up growth across the UK and spread opportunity everywhere, local communities will be empowered to command their economic destiny.
- Greater responsibility for local leaders to grow their local economy.
- Over £200 million for high quality local regeneration projects in areas of need, from the transformation of Ashington Town Centre to a skills and education campus in Blackburn.
- Over £400 million for new Levelling Up Partnerships for twenty areas in England most in need of levelling up, such as Rochdale and Mansfield.
- Business rates retention expanded to more areas in the next Parliament.
- Delivering trailblazer devolution deals for the West Midlands and Greater Manchester Combined Authorities that include single multi-year settlements for the next Spending Review, alongside a commitment to negotiate further devolution deals in England.
- 12 Investment Zones across the UK including 4 across Scotland, Wales and Northern Ireland
- £8.8 billion over the next five-year funding period for a second round of the City Region Sustainable Transport Settlements.
Many of today’s decisions on tax and spending apply in Scotland, Wales and Northern Ireland. As a result of decisions that do not apply UK-wide, the Scottish Government will receive around an additional £320 million over 2023-24 and 2024-25, the Welsh Government will receive £180 million, and the Northern Ireland Executive will receive £130 million.
