All The Major Announcements In The Spring Budget: Childcare, Energy and Pensions Boost
Jeremy Hunt announced his Spring Budget on Wednesday (Alamy)
11 min read
Chancellor Jeremy Hunt delivered a confident Spring Budget to MPs in the House of Commons on Wednesday with measures intended to boost the UK's workforce as he confirmed the UK was no longer in "technical recession".
Hunt insisted the British economy had been “proving the doubters wrong” and that inflation had been halved.
He had faced significant pressure from Conservative MPs to cut taxes in order to allow people struggling with the cost of living crisis to hold onto more money, but had previously warned that the government should be prudent in tackling record inflation and mitigating the fall-out from former prime minister Liz Truss's disastrous "mini-Budget" last autumn.
But Hunt told MPs assembled in the House of Commons for the major statement that “we are following the plan and the plan is working”.
Here are the key measures introduced in Hunt's Spring Budget:
30 hours free childcare extended to all children over nine-months-old
Hunt announced a huge overhaul of the childcare system, with the extension of 30 hours a week free childcare to all children over the age of nine-months old in England, a scheme which is currently only available to three and four year olds.
All eligibile households where all adults are working will be able to claim 30 hours from September 2025, with the policy being rolled out in stages until then.
Hunt told the Commons: "The 30 hours offer will now start from the moment maternity or paternity leave ends.
"It’s a package worth on average £6,500 every year for a family with a two-year-old child using 35 hours of childcare every week, and reduces their childcare costs by nearly 60 per cent."
From April 2024, working parents and carers of two-year-olds will be able to claim 15 hours of free care per week, which will be extended to children aged nine months and up.
"From September 2025 every single working parent of under 5s will have access to 30 hours free childcare per week," Hunt added.
There will also be an increase in funding to schools and local authorities to help fund wraparound care to assist parents and carers who are in work. Hunt said it is his ambition that all schools will have a wraparound offer, meaning pupils can be dropped off between 8am and 6pm, by September 2026.
MPs on both sides of the Commons have been urging the government to alleviate some of the pressures of the expensive childcare system.
PoliticsHome previously reported that Conservative MP Siobhan Baillie was urging the Chancellor to consider “positive and practical” childcare measures ahead of today's statement.
Changes to Universal Credit to help with childcare costs
Parents and carers on Universal Credit will get their childcare costs paid upfront, following changes announced by Hunt today.
He told the Commons that "many remain out of work because they cannot afford the upfront payment necessary to access subsidised childcare."
And added: "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 per cent."
Speaking on the Sophy Ridge on Sky programme on Sunday, Hunt said: “There are 700,000 parents on low pay on Universal Credit if you have a child under 12 and they aren't able to work because of the high cost of childcare.
“We're looking at whether we can remove some of those barriers, for example, by paying them their childcare in advance not in arrears, looking at the level of support that we give them, and those are families that would really benefit if the mum or the dad was able to get back into work.”
Energy Price Guarantee to remain at current cap until June
Hunt confirmed ahead of the speech that support with energy bills will be extended until the end of June, with prices for the average household remaining capped at £2,500 per year.
The energy price guarantee had been due to rise to £3,000 from April, but the Chancellor tweeted that "with energy bills set to fall from July, extending the Energy Price Guarantee will bridge the gap, easing the pressure on families."
Speaking in the House of Commons, he explained: "Some people remain in real distress and we should always stand ready to help where we can. So 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.”
However, the Liberal Democrats had said the extension "does not go far enough".
Treasury spokesperson Sarah Olney said ahead of the Budget: "Instead of a sticking plaster for another three months, we need meaningful action now."
The system protects households from having to meet the costs they would face if bills were restricted by the Ofgem price cap, which is influenced by suppliers’ costs, and reached over £4,000 per year in the autumn.
Energy pre-payment meter users to pay same cheaper rate as direct debit customers
Households that use energy pre-payment meters will not pay more for their energy than those on direct debits.
Those on pre-payment meters previously paid more on average compared to direct debit customers due energy companies passing the extra costs of managing meters on to users.
“Ofgem has already agreed with suppliers a temporary suspension to forced installations of prepayment meters," Hunt said.
“But today I go further, and confirm we will bring their charges in line with comparable direct debit charges. Under a Conservative government, the energy premium paid by our poorest households is coming to an end.”
Pensions lifetime allowance scrapped to encourage over-50s who have retired back to work
As part of what the Treasury ihas called the ‘back to work Budget’, there were also a series of measures to help get over-50s who have dropped out of the labour market back into the workplace, as ministers try to reduce the number of people who are “economically inactive”.
The pensions lifetime allowance will be abolished, having been set at £1million, as Hunt said that "no one should be pushed out of the workforce for tax reasons".
The annual tax-free allowance will also increase from £40,000 to £60,000, in changes that Hunt said will "incentivise our most experienced and productive workers to stay in work for longer."
An expansion of "mid-life MOTs" will also help people assess their job and finances, and a new kind of apprenticeship called a "returnership" are designed to help keep people in the workforce.
Hunt told the Commons that "older people are the most skilled and experienced people we have. No country can thrive if it turns its back on such a wealth of talent and ability".
Disability benefits will be reformed to allow people to work without losing support
A Disability White Paper has been published, that gives details on plans to scrap the existing work capability assessment.
Hunt also announced a new programme called "Universal Support", a voluntary employment scheme for disabled people, where the government will spent up to £4,000 per person to help them find appropriate work. There will be 50,000 places funded every year, the Chancellor said.
£400 million has also been earmarked to increase the availability of mental health and musculoskeletal resources, to help those who leave work for issues such as pain or mental health issues.
Ahead of the Budget, the Treasury said that under the current system work capability assessment system, disabled people need to be found entirely incapable of work to receive additional income support, but the new system will mean that disabled people who feel they can work some hours, will be able to do so without fear of losing their benefits.
Local leisure services will receive £63 million to curb closures
Hunt promised £63 million for local facilities, such as swimming pools, following concerns raised by MPs about the risk to them caused by rising bills.
He told the Commons: “When times are tough, such facilities matter even more. So today I am providing a £63m fund to keep our public leisure centres and pools afloat.”
Fuel duty frozen again
Fuel duty will remain frozen for the 13th year in a row, Hunt confirmed, and the 5p cut announced by Rishi Sunak last year when he was Chancellor will also be maintained.
Hunt told MPs: “Because inflation remains high, I have decided now is not the right time to uprate fuel duty with inflation or increase the duty.
“So here’s what I am going to do: for a further 12 months I’m going to maintain the 5p cut and I’m going to freeze fuel duty too.
“That saves the average driver £100 next year and around £200 since the 5p cut was introduced.”
“Brexit pubs guarantee” that pubs will face lower booze duty than retail
Hunt announced that he will “significantly increase the generosity of Draught Relief” with a change that will see drinks in pubs face lower duty than those bought in shops and supermarkets.
He told MPs: “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'.”
The changes will also now be able to be applied to pubs in Northern Ireland, as a result of the Windsor Framework deal struck at the end of February meaning GB and NI tax arrangements can be aligned, Hunt added.
Promise of 12 new Investment Zones for £80million of support
Hunt has promised new Investment Zones across the UK, to encourage regeneration.
Areas identified in England as having the potential to host an Investment Zone are the West Midlands, Greater Manchester, the North-East, South Yorkshire, West Yorkshire, East Midlands, Teesside and, once again, Liverpool.
"There will also be at least one in each of Scotland, Wales and Northern Ireland," Hunt promised.
"To be chosen, each area must identify a location where they can offer a bold and imaginative partnership between local government and a university or research institute in a way that catalyses new innovation clusters," Hunt told the Commons.
"If the application is successful, they will have access to £80million of support for a range of interventions including skills, infrastructure, tax reliefs and business rates retention."
Investment zones had first been tabled by Liz Truss during her time as Prime Minister last autumn, however they were watered down significantly when Rishi Sunak came into office, with all existing expressions of interest effectively scrapped.
Defence spending up by £11billion over the next five years
Following on from Monday's announcement that defence spending will increase by £5billion over the next two years, Hunt confirmed that ministers will "add a total of £11 billion to our defence budget over the next five years".
By 2025, that will mean nearly 2.25 per cent of GDP is spent on defence.
Nuclear to be classed as "environmentally sustainable" to encourage investment
Nuclear energy will be classed as "environmentally sustainable", Hunt confirmed this afternoon, which will give the sector the same access to investments as renewable energy projects.
He announced the change as he said the country "will need another critical source of cheap and reliable energy", with the nation's energy security having come under scrutiny since Russia's invasion of Ukraine last year.
The Chancellor also announced the launch of "Great British Nuclear" in an attempt to support the nuclear supply chain to provide 25 per cent of the country's electricity by 2050.
Corporation Tax will increase to 25 per cent from April
Hunt has potentially risked a backlash from within his own party, as he confirmed that corporation tax would rise to 25 per cent for firms with profits over £250,000.
He said that only 10 per cent of companies will pay that full top rate, and suggestd that even with the rise, the UK will still have "the lowest headline rate in the G7".
Keeping the rate at the current 19 per cent had been part of Liz Truss' mini-Budget plans, and was popular with sections of the party who back tax cuts. However, the 19 per cent policy was scrapped when Truss sacked her Chancellor, Kwasi Kwarteng.
PoliticsHome provides the most comprehensive coverage of UK politics anywhere on the web, offering high quality original reporting and analysis: Subscribe