Jeremy Hunt Overhauls Childcare And Pensions In Spring Budget As UK Avoids Recession
Jeremy Hunt delivered the Budget in the House of Commons on Wednesday (Alamy)
Chancellor Jeremy Hunt has said the UK is not entering a "technical recession" as he delivered his Spring Budget to MPs in the House of Commons on Wednesday.
Hunt said the Spring Budget comes at a time when the British economy is "on the right track" and is "proving the doubters wrong", with 10-year gilt rates falling since mid-October, debt servicing costs coming down and lower mortgage rates.
"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," he said.
"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."
The Spring Budget marks a major moment for the government, which is currently trailing behind Labour by 15 points, to prove they can kickstart the economy after a disastrous end to 2022 that saw household costs soar and major holes in the labour market.
A major overhaul of childcare support – long called for from both sides of the house – easing of restrictions on how much pension people can save tax-free, an extension of the Energy Price Guarantee and changes to pre-paid energy rates to help the poorest at likely to go a long way to boosting the government's favour with the public. A continued freeze of fuel duty will also improve household finances.
Hunt confirmed expected changes to support with domestic energy bills will be extended to the end of June, with prices for the average household remaining capped at £2,500 per year.
"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," he said.
The £2,500 cap for the typical household will remain in place when energy prices remain high, ahead of an expected fall in prices from July.
The Chancellor said the measure will save the average family a further £160 on top of the energy support measures already announced.
The Spring Budget at a glance:
- Energy price guarantee extended to July and prepayment meter rates lowered
- Fuel duty frozen
- Tobacco rates up and "Brexit pubs guarantee" that will ensure the duty on draught beer in pubs will be up to 11p lower than duty on booze in supermarkets
- £30m pledged for supporting veterans
- 12 investment zones confirmed
- £63m funding for public leisure centres and swimming pools
- £11bn added to defence budget over the next five years, to be nearly 2.25 per cent of GDP by 2025
Among other energy bill support measures, Hunt confirmed that prepayment meter charges will be brought in line with comparable direct debit charges, as it is often the poorest households who pay more than other customers for energy via prepayment meters.
Ofgem has already agreed with suppliers a temporary suspension to forced installations of prepayment meters.
"Under a Conservative government, the energy premium paid by our poorest households is coming to an end," Hunt said.
A £63m fund was also announced by the Chancellor to keep public leisure centres and swimming pools afloat.
Hunt is paying particular attention to tackling workforce shortages, with a number of measures to address the issue, including an overhaul of Universal Credit, and incentives for over-50s to come out of retirement, announced ahead of time.
Major changes to the childcare system to extend the allowance of 30 hours a week free childcare to one and two year old children were also expected, but were met with warnings from the sector that without sufficient funding the proposal could risk crashing the childcare market.
Changes to Universal Credit have already been announced to help parents and guardians with childcare costs by allowing them to receive support for childcare up front, rather than in arrears.
More Spring Budget at a glance:
- 30 hours free childcare for all under-fives
- Pension lifetime allowance dropped
- Pensions yearly tax allowance raised from 40k to 60k
- £20bn for Carbon Capture over 20 years
- Research and development funding boost
- "Great British Nuclear" launched to drive down cost of nuclear power
Workforce reforms have been called for MPs across the chamber: In November 2022, the Office for National Statistics reported that 13.3 per cent of businesses surveyed in the UK were experiencing a shortage of workers, and industry leaders from construction to healthcare have spoken out about the issues they face recruiting enough workers in their sectors.
The Budget also aimed to encourage over-50s who have retired to go back to work, including expanding the numbers of places available on "skills bootcamps" to help people retrain for industries.
This announcement follows ONS data that showed adults aged over 50 have largely driven the increase in economic inactivity. In May to July 2022 there were 386,096 more economically inactive adults aged 50 to 64 years than before the Covid-19 pandemic.
A Health and Disability White Paper will also be published on Wednesday to introduce a new system for disability benefits.
A measure was announced to protect what Hunt described "one of our most treasured community institutions, the great British pub".
"Today, 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," he said.
"British ale may be warm, but the duty on a pint is frozen."
He added that now the Windsor Framework of the Northern Ireland Protocol has been negotiated, that change will now also apply to every pub in Northern Ireland.
Addressing calls from major businesses in an attempt to boost growth, Hunt announced that corporation tax will increase as planned from 19 per cent to 25 per cent from April, a contentious policy among many of his Conservative colleagues who believe the rate should be cut.
Labour leader Keir Starmer responded to Hunt's Budget statement by accusing the Conservative government of "running down public services" and refusing to implement a "proper windfall tax" on energy companies.
"British people see their tax burden at the highlest level for 70 years," Starmer said.
"And they know it's not the govenrnment lowering inflation, it's working people earning less, enjoying less.
"It's their sacrifice that is helping to bring inflation down, and they deserve better than another cheap trick from a governement of gimmicks making them pay while trying to claim the credit."
The Labour leader also said the government lacked "real ambition" on industrial strategy, clean energy, and housebuilding.
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