Chancellor Jeremy Hunt has delivered the Spring Budget in the midst of a cost of living crisis and nis solution to fixing the UK’s current economic crisis is growth.
In a speech that lasted over an hour, Mr Hunt went on to set out the “four pillars of our industrial strategy”, which are “enterprise, employment, education and everywhere”. He shared details of how there will be the “biggest change to our welfare system in a decade”, with reforms aimed at supporting more disabled and unemployed into work by removing barriers preventing them from finding employment.
While the commentators are still talking about the implications of the announcements and analysing the raft of new reports published - including a Disability White Paper - we take a look at the key points and how they might impact you.
Energy
There was good news in the Budget for those struggling with high energy bills.
“Millions of people across the UK will be heaving a sigh of relief at the news that the energy price guarantee has been extended by a further three months,” says Sarah Pennells, consumer finance specialist at Royal London.
“The Chancellor’s announcement means that energy bills for households with typical gas and electricity use, paying by direct debit, will be limited to £2,500 a year, instead of the £3,000 ceiling which was scheduled to begin on April 1.
“Without the government’s energy price guarantee, a typical household would be facing energy bills of £3,280 a year, which is the energy regulator Ofgem’s current energy price cap,” she explains.
Mt Hunt also mentioned the Martin Lewis-led campaign to freeze the Energy Price Guarantee, indicating that it played a crucial role in his decision to delay the increase until June.
On top of this, prepayment meters - which often cost more - will change.
“There has been a longstanding criticism of the fact that some of the poorest families have to pay more for their energy through a prepayment meter,” says Pennells.
Ofgem has agreed with suppliers a temporary suspension to forced installations of prepayment meters, and Mr Hunt said he will “bring their charges in line with comparable Direct Debit charges”.
Benefits
The Chancellor also revealed sanctions reforms aimed at getting people on Universal Credit and benefits into work, but for those working low hours the UK Government will increase the earnings threshold from the equivalent of 15 hours to 18 hours.
Pensions
Mr Hunt has introduced measures to allow people to continue working for longer, but he did not address recent reports speculating that the State Pension age will increase to 68 earlier than planned.
But he did increase the annual tax-free allowances by 50 per cent from £40,000 to £60,000.
However, Karen Bennett CBE, CEO of Enterprise Credit Union, suggests this might not make a huge difference to lower-paid workers.
“We recognise the increase in the amount workers can accumulate in their pension savings before paying extra tax might be beneficial for some people, but what does it mean to the average person, those who are already struggling? Where are they going to get the funds from to increase their pension pots?” she asks.
Childcare
Mr Hunt announced 30 hours a week of free care would be available for children in England aged between nine months and four years, in a policy to be introduced in stages.
The changes announced on Wednesday could also prompt changes north of the border.
Parents claiming Universal Credit will be able to get childcare costs upfront to help them into employment.
Fuel
Drivers were despairing last year as fuel prices soared and shortages were widespread.
In the Budget, Mr 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.”
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