Chancellor Jeremy Hunt has delivered his Budget in the House of Commons.
As well as promising an extension of support for household energy costs, he announced a major expansion of free childcare and said: “The declinists are wrong, and the optimists are right. We stick to the plan because the plan is working.”
Here’s the latest:
We’re now closing our live coverage of the 2023 Budget.
Jeremy Hunt’s Budget measures to boost employment will have a “marginal but positive” impact, the Institute for fiscal Studies (IFS) has said.
In his initial response to the Budget, IFS director Paul Johnson said the “likely doubling” of spending on child care would help “ten, but not hundreds, of thousands” of parents back into work, provided it was properly funded.
Mr Johnson said the pension tax changes were designed to encourage a relatively small number of better-off workers to stay in the workforce a bit longer and were “unlikely to have a big effect on overall employment”.
“Overall these look like a sensible set of changes which could have the sort of marginal, but positive, impact which is perhaps as much as we can expect from measures in a single Budget,” he said.
Mr Johnson also criticised the Chancellor’s decision to spend £6 billion on freeze fuel duty, rather than other priorities.
“There was no funding to be found to improve the pay offer to striking public sector workers, where £6 billion might have been enough to make an inflation-matching pay offer possible this coming year,” he said.
“That’s a political choice. Money for motorists, but not for nurses, doctors and teachers.”
Mr Jayawardena also said the Government should not dictate how many hours of free childcare parents will get.
He said: “Instead of Government dictating how many hours of free childcare and who from in the years ahead, what about moving to a system of tax reliefs so that parents can pay for the childcare they want from who they want?
“Or indeed, even a radical thought: one parent could choose to stay at home, allowing the other to work extra hours if that’s what they want to do.
“And so I would urge the Treasury … to consider reigniting the review into family taxation.
“Things may have changed since 2019, but I recall that single people in 2019 without a family paid 8% lower tax than the OECD average, but single earners, in a couple who have two children pay 26% more.
“There is an injustice in this that I hope the Government will address in the not too distant future by commissioning a family tax review.”
Any increase in corporation tax will make the UK “less competitive” and “stifle job creation”, a Conservative former cabinet minister has said.
Ranil Jayawardena, who served in the cabinet under Liz Truss and formed the Conservative Growth Group in January, said he welcomed the “full capital expensing” policy, but added: “We should still seek to revisit corporation tax in the months and years ahead, because any increase in corporation tax will make us less competitive, reduce investment in the long run, stifle job creation. All of which are required for growth.”
Mr Jayawardena added: “And you don’t have to believe me, even the IFS says that this won’t raise the expected revenue. The increase in corporate tax won’t raise expected revenue that is currently suggested by some.”
He also called on the Chancellor to look at the VAT threshold for small businesses, explaining: “Today it is £85,000. It’s been like that since 2017, (it) is planned to remain like that until at least 2026. The fiscal drag means that 60,000 extra businesses are being dragged into this threshold and it halts their growth and pushes them into the grey market.”
The UK tax burden as a percentage of Gross Domestic Product:
Public Accounts Committee chairwoman Dame Meg Hillier said changes to pensions allowances will not stop the “exodus of people leaving”.
The Labour MP for Hackney South and Shoreditch welcomed the announcement on childcare but warned: “The Chancellor is borrowing from (former prime minster Liz Truss’s) play book. She was the minister who proposed this ‘pile them high and teach them cheap’ approach to childcare.
“And I worry about the change in ratios – heartened that it’s only voluntary, but these voluntary changes creep in.”
Dame Andrea added: “I also think we need to look further at childminder regulation, and particularly one of the regulations is having to have fire doors across your house at huge expense to a childminder who is wanting to start up.”
She also welcomed plans to abolish the pensions allowance limit, telling the Commons: “This should have been done a long time ago. There is no question it has encouraged people to think ‘there is no point carrying on working, because I can’t improve my quality of life in retirement’.
“Although these sums sound a lot they don’t actually deliver a decent pension for people so I think this is essential.”
The Government should go further on childcare support by giving grandparents more incentives for looking after their grandchildren, Conservative former minister Dame Andrea Leadsom said.
She told the Commons the new childcare costs policy would be “transformational for so many families”.
She added: “I would however like to ask the Treasury team to consider going further and that is to looking at an attendance allowance for grandparents who are looking after their grandchildren.
“It is something that so many families would like to take advantage of and too many grandparents simply can’t afford it because it means they have to give up their income, and in fact it will cost them money to do it.”
The change in UK real household disposable income over the last 50 years:
Watch: Budget ‘dresses up stagnation as stability’ – Starmer
Priti Patel added: “Just on the issue of corporation tax, when it comes to the wider prospectus of the minimum rate of corporation tax … we know that the introduction of the minimum effective tax rate will be delayed in Washington and other countries, and I would just ask him again to think carefully about the timing of this. Why now?”
She said she was “delighted” by changes to pensions allowances and childcare, and also welcomed the announcement on freezing fuel duty.
Conservative former cabinet minister Priti Patel asked the Chancellor to keep the level of corporation tax “under review”.
She told the Commons: “I would like to ask the Chancellor, and he’s heard me on this and I’m very grateful… to him on this, to continue to keep the wider approach to corporation tax under review.”
But she acknowledged the “tax incentives” in the Budget, saying many businesses have been sitting on “vast levels of investment that they have not had the confidence” to release for investment, adding: “I have no doubt that today’s measures will absolutely lead to that.”
But she said changes on tax, corporation tax, and other areas related to business, “will seem attractive but obviously the devil will be in the detail”.
Marios Alexandrou, the interim president of the Transport Salaried Staffs Association said: “This was a Tory Budget which leaves a gaping black hole where transport policy should be.
“Instead of commitments to make our railways and buses front and centre of the recovery from the pandemic and the economic catastrophe of the Liz Truss era, we had a Chancellor unable to offer a single word about the future of public transport.”
Unison general secretary Christina McAnea said: “There are more holes in the Budget than on most highways.
“It’s funny how the Chancellor can lay his hands on billions when he wants.
“Ministers have sounded like a broken record, insisting the country can’t afford to pay key workers more.
“Yet, in a flourish, there’s cash for another fuel duty freeze, tax cuts for those who need them least, and no action to curb the mega-profits of the oil and gas giants. But not a dickie bird on public sector pay.”
The Musicians’ Union welcomed the announcement in the Budget that rates of theatre and orchestra tax relief will be maintained at their current levels for a further two years from April.
“The union had lobbied for the higher rates of 45% and 50% respectively to be extended to help the sector amid the pandemic fallout and cost-of-living crisis.
General secretary Naomi Pohl said: “We are grateful that the Government has listened to the MU and others in the creative sectors and extended the higher rate of tax relief for theatres and orchestras for another two years.
“The cuts announced to the BBC Orchestras and Singers last week, along with those brought in by Arts Council England in the autumn, are a stark reminder of the difficulties currently being faced by arts organisations, so this extra injection of cash is a vital lifeline for an incredibly successful sector.”
SNP economy spokesperson Stewart Hosie warned “Brexit slammed the brake on UK investment”.
He told the Commons: “What the Chancellor actually described though was a UK economy which has gone from the most robust in the G7, to one of the weakest.
“A UK economy where Brexit slammed the brake on UK investment, a UK whose performance deteriorated after the Brexit referendum both in absolute and relative terms.
“A country which unilaterally imposed trade barriers with its nearest neighbours and a country, the only one in the G7 where the economy has not returned to its pre-pandemic level.”
The Chancellor confirmed the planned increase in corporation tax to 25% will be going ahead, but 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.
Watch: UK will not enter a ‘technical recession’ this year
Labour’s shadow chancellor Rachel Reeves has said the Chancellor’s budget is “just papering over the cracks”.
Jeremy Hunt said the economy would avoid a technical recession, although the Office for Budget Responsibility (OBR) still forecast a contraction of 0.2% this year, a significant improvement on the -1.4% predicted in November.
Labour leader Sir Keir Starmer is responding, and said the Chancellor’s Budget was “dressing up stagnation as stability”, claiming it put the country “on a path of managed decline”.
Chancellor Jeremy Hunt has delivered his Budget in the Commons. Mr Hunt hit out at “declinists” as he concluded his Budget speech, and claimed the Budget delivered growth on top of the “stability” of the autumn statement.
The Chancellor also said the Government aims for all schools in England to offer wrap-around care either side of the school day for children by September 2026.
“One-third of primary schools do not offer childcare at both ends of the school day, even though for many people a job requires availability throughout the working day,” Jeremy Hunt said.
He added: “To address this, we will fund schools and local authorities to increase supply of wraparound care so all school-age parents can drop their children off between 8am and 6pm.
“Our ambition is that all schools will start to offer a wraparound offer, either on their own or in partnership with other schools, by September 2026.”
The Chancellor announced 30 hours of free childcare for all under-fives from the moment maternity care ends, where eligible.
Jeremy Hunt told the Commons: “I today announce that in eligible households where all adults are working at least 16 hours, we will introduce 30 hours of free childcare not just for three- and four-year-olds, but for every single child over the age of nine months.
“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%. Because it is such a large reform, we will introduce it in stages to ensure there is enough supply in the market.
“Working parents of two-year-olds will be able to access 15 hours of free care from April 2024, helping around half a million parents.
“From September 2024, that 15 hours will be extended to all children from nine months up, meaning a total of nearly one million parents will be eligible. And from September 2025 every single working parent of under-fives will have access to 30 hours free childcare per week.”
Breaking: Every child over the age of nine months in eligible households will be offered 30 hours per week of free care in a policy to be introduced in stages, Mr Hunt announced.
Breaking: The Government will change minimum staff-to-child ratios from 1:4 to 1:5 for two-year-olds in England but make it “optional”, the Chancellor said, as he announced an increase in funding for nurseries.
As the third part of his plans to get older people back into work, the Chancellor announced plans to abolish the lifetime allowance limit on pensions.
Jeremy Hunt told the Commons: “Finally, I have listened to the concerns of many senior NHS clinicians who say unpredictable pension tax charges are making them leave the NHS just when they are needed most. The NHS is our biggest employer, and we will shortly publish the long-term workforce plan I promised in the Autumn Statement. But ahead of that I do not want any doctor to retire early because of the way pension taxes work.”
He added: “As Chancellor I have realised the issue goes wider than doctors. No one should be pushed out of the workforce for tax reasons. So today I will increase the pensions annual tax-free allowance by 50% from £40,000 to £60,000. Some have also asked me to increase the Lifetime Allowance from its £1 million limit. But I have decided not to do that.
“Instead I will go further and abolish the Lifetime Allowance altogether.”
Mr Hunt said the changes would “stop over 80% of NHS doctors from receiving a tax charge” and incentivise “our most experienced and productive workers to stay in work for longer”.
Mr Hunt also set out plans to encourage older people back into work, telling the Commons: “Today I take three steps to make it easier for those who wish to work longer to do so.”
The Chancellor added: “First, we will increase the number of people who get the best possible financial, health and career guidance ahead of retirement by enhancing the DWP’s excellent ‘Mid-life MOTs’ Strategy.
“Second, with the Education Secretary, we will introduce a new kind of apprenticeship targeted at the over-50s who want to return to work. They will be called ‘Returnerships’, and operate alongside skills boot camps and sector-based work academies.
“They will bring together our existing skills programmes to make them more appealing for older workers, focusing on flexibility and previous experience to reduce training length.”
Breaking: The Chancellor has abolished the lifetime allowance on tax-free pensions savings, which stood at £1 million.
The Chancellor announced the “biggest change to our welfare system in a decade”, with reforms aimed at supporting more disabled people into work.
Jeremy Hunt made a nod to reforms introduced by Sir Iain Duncan Smith when he was work and pensions secretary, telling the Commons: “The number of disabled people in work has risen by two million since 2013. But even after that we could fill half the vacancies in the economy with people who say they would like to work despite being inactive due to sickness or disability.
“With Zoom, Teams and new working models that make it easier to work from home, this is more possible than ever before.
“So for that reason, the ever-diligent Work and Pensions Secretary, today takes the next step in his ground-breaking work on tackling economic inactivity. I thank him for that, and today we publish a White Paper on disability benefits reform. It is the biggest change to our welfare system in a decade.
“His plans will abolish the Work Capability Assessment in Great Britain and separate benefit entitlement from an individual’s ability to work. As a result, disabled benefit claimants will always be able to seek work without fear of losing financial support.”
Announcing “two further commitments to deliver our nuclear ambitions”, Mr Hunt: “Firstly, following representations from our energetic Energy Security Secretary, I am announcing the launch of Great British Nuclear which will bring down costs and provide opportunities across the nuclear supply chain to help provide up to one quarter of our electricity by 2050.
“And secondly, I am launching the first competition for small modular reactors. It will be completed by the end of this year and if demonstrated to be viable we will co-fund this exciting new technology.”
Jeremy Hunt confirmed nuclear power would be classed as “environmentally sustainable” to drive investment in the energy sector, and said he would launch “Great British Nuclear” to bring down costs.
The Chancellor said: “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 said he also wants to make taxes more competitive in the country’s life science and creative industry sectors.
He said: “Today I am introducing an enhanced credit which means that if a qualifying small or medium-sized business spends 40% or more of their total expenditure on R&D, they will be able to claim a credit worth £27 for every £100 they spend.
“That means an eligible cancer drug company spending £2 million on research and development will receive over £500,000 to help them develop breakthrough treatments.”
Mr Hunt said this is a £1.8 billion package of support.
Mr Hunt, on the film and TV industry, said: “To give even more momentum to this critical sector I will introduce an expenditure credit with a rate of 34% for film, high-end television and video games and 39% for the animation and children’s TV sectors. I will maintain the qualifying threshold for high-end television at £1 million.
“And because our theatres, orchestras and museums do such a brilliant job at attracting tourists to London and the UK, I will also extend for another two years their current 45% and 50% reliefs.”
The Chancellor said he would take both short and long-term measures to reduce the costs of energy for businesses.
Mr Hunt said: “I will extend the Climate Change Agreement scheme for two years to allow eligible businesses £600 million of tax relief on energy efficiency measures. But the long-term solution is not subsidy but security.
“That means investing in domestic sources of energy that fall outside Putin or any autocrat’s control. We are world leaders in renewable energy so today I want to develop another plank of our green economy, Carbon Capture Usage and Storage (CCUS).”
He added: “I am allocating up to £20 billion of support for the early development of CCUS, starting with projects from our East Coast to Merseyside to North Wales – paving the way for CCUS everywhere across the UK as we approach 2050. This will support up to 50,000 jobs, attract private sector investment and help capture 20-30 million tonnes of CO2 per year by 2030.”
Breaking: 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.
Mr Hunt also said: “For Scotland, Wales and Northern Ireland this Budget delivers not only a new investment zone but an additional £320 million for the Scottish Government, £180 million for the Welsh Government and £130 million for the Northern Ireland Executive as a result of Barnett consequentials.
“On top of which in Scotland, I can announce up to £8.6 million of targeted funding for the Edinburgh Festivals as well as £1.5 million funding to repair the Cloddach Bridge.
“I will provide £20 million of funding for the Welsh Government to restore the Holyhead Breakwater and, in Northern Ireland, I am allocating up to £3 million to extend the Tackling Paramilitarism Programme and up to £40 million to extend further and higher education participation.”
The Chancellor announced a series of levelling-up and local transport-related funding pots.
Jeremy Hunt told the Commons: “I will invest over £200 million in high-quality local regeneration projects across England including the regeneration of Tipton town centre and the Marsden New Mills Redevelopment Scheme. I am also announcing a further £161 million for regeneration projects in Mayoral Combined Authorities and the Greater London Authority.
“And I will make over £400 million available for new Levelling Up Partnerships in areas that include Redcar and Cleveland, Blackburn, Oldham, Rochdale, Mansfield, South Tyneside, and Bassetlaw.
“Having listened to the case for better local transport infrastructure from many Members, I can announce a second round of the City Region Sustainable Transport Settlements, allocating £8.8 billion over the next five-year funding period.”
Jeremy Hunt said the Government will provide a more than £30 million package to increase the capacity of the Office for Veterans’ Affairs, noting this will “support veterans with injuries returning from their service and increase the availability of veteran housing”.
Mr Hunt went on to set out the “four pillars of our industrial strategy”, which are “enterprise, employment, education and everywhere”.
The Chancellor said the Government would deliver 12 new investment zones, which he labelled “12 potential Canary Wharfs”.
He said: “In England we have identified the following areas as having the potential to host one: 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.”
The Chancellor also confirmed the Government would add £11 billion to the defence budget over the next five years.
Jeremy Hunt said: “Today, following representations from our persuasive Defence Secretary, I confirm that we will add a total of £11 billion to our defence budget over the next five years and it will be nearly 2.25% of GDP by 2025.
“We were the first large European country to commit to 2% of GDP for defence and will raise that to 2.5% as soon as fiscal and economic circumstances allow.”
The Chancellor said: “I now turn to the Prime Minister’s second priority, which is to reduce debt. Here too our plan is on track. Underlying debt is forecast to be 92.4% of GDP next year, 93.7% in 2024-25; 94.6% in 2025-26, and 94.8% in 2026-27, before falling to 94.6% in 2027-28.
“We are meeting the debt priority.”
Mr Hunt added: “And with a buffer of £6.5 billion, 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.”
On fuel duty, Jeremy Hunt said: “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.”
Breaking: Fuel duty will be frozen for the next year.
Mr Hunt said: “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.
“British ale may be warm, but the duty on a pint is frozen.”
Breaking: A “Brexit pubs guarantee” will see the duty on draught products in pubs up to 11p lower than the duty in supermarkets from August, the Chancellor said.
Chancellor Jeremy Hunt said prepayment meters currently pay more than comparable customers on direct debit, noting: “Ofgem has already agreed with suppliers a temporary suspension to forced installations of prepayment meters.
“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.”
Mr Hunt said he would provide a £63 million fund to “keep our public leisure centres and pools afloat” in response to high costs and £100 million will be given to support thousands of charities and community organisations.
Chancellor Jeremy Hunt said of the Office for Budget Responsibility: “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.”
Mr Hunt highlighted cost-of-living support, adding: “Today, we deliver the next part of our plan. A Budget for growth.
“Not just the growth that comes when you emerge from a downturn, but long-term, sustainable, healthy growth that pays for our NHS and schools, finds jobs for young people, and provides a safety net for older people all whilst making our country one of the most prosperous in the world. Prosperity with a purpose.”
Breaking: The Office for Budget Responsibility forecasts inflation to fall from 10.7% last year to 2.9% by the end of the year, Jeremy Hunt said.
The UK will not enter a “technical recession” this year, Jeremy Hunt told the Commons.
The Chancellor said: “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.
“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.”
Starting his Budget, Chancellor Jeremy Hunt said the British economy is “proving the doubters wrong” in the face of “enormous challenges”.
The Chancellor is on his feet in the Commons to deliver his 2023 Spring Budget.
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