Early evening summary
Jeremy Hunt has said he is “proving the doubters wrong” as he used a stronger than expected economic performance to help fund new tax breaks for business investment and a drive to get people back into the workforce. Here is our at a glance summary of what was in the budget.
Here is an analysis by the Guardian’s economics editor, Larry Elliott.
Here is an extract.
To be sure, the chancellor will be relieved that the independent Office for Budget Responsibility now thinks the economy will just about avoid the two consecutive quarters of falling output that would denote a technical recession, and that growth will be stronger in the likely pre-election year of 2024 than predicted last November at the time of his autumn statement.
But doing less badly is not the same as doing well. Hunt said he was delivering a ‘budget for growth’ – a refrain that has been heard many times by Conservative chancellors over the past 13 years. The reality is that the UK is battling against three powerful headwinds: rising interest rates, rising taxes and a cost of living crisis. It could certainly do without the added pressure of a credit crunch caused by bank failures. Despite the chancellor’s bullish performance, living standards are on course for their biggest two-year fall since the mid 1950s while taxes as a share of national income will be at their highest since the second world war by 2027-28.
And here are verdicts on the budget from a Guardian panel: Polly Toynbee, Miatta Fahnbulleh, Katy Balls, Frances Ryan, Louisa Britain, Rebecca Long-Bailey and Lucy Pasha-Robinson.
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Hunt's childcare plan includes 'one of most severe distortions' likely to be found in a tax and benefit system, says IFS
The Institute for Fiscal Studies says the childcare proposals announced today will create “one of the most severe distortions you are ever likely to see within a tax and benefit system”.
That is because the abrupt cut-off means that the generous provision being made available abruptly stops if someone starts earning more than £100,000. In a briefing, the IFS explains:
A parent with a one-year-old and a three-year-old whose childcare provider charges England’s average hourly rate for 40 hours per week would, after these reforms, find that their disposable income (ie earnings net of tax and childcare outgoings) falls by £14,500 if their pre-tax pay crosses £100,000. Disposable income would not recover its previous level until pre-tax pay reached £134,500, meaning a parent earning £130,000 would be worse off than one earning £99,000.
For those with higher childcare costs the distortions are even more absurd. A similar parent paying average London rates for childcare, using 50 hours per week, would see a £20,000 fall in disposable income when their pre-tax earnings cross £100,000. Disposable income would not recover its previous level until pre-tax pay reached £144,500.
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Welsh government criticises Hunt for putting 'potholes and petrol' ahead of pay rises for teachers and nurses
The Welsh finance minister Rebecca Evans said the chancellor made a series of deliberate choices to prioritise “petrol and potholes” over investment in public services, pay and economic growth – and suggested he was saving more dramatic announcements for nearer the next general election. She said:
Today we saw a less than bare minimum budget, which misses the big picture, at a time when people’s financial situations are worsening.
It fell short of providing meaningful support – there were sticking plasters when we needed significant action. Potholes and petrol took precedence over pay rises for teachers and NHS staff.
The UK government has spent months telling the public sector it can’t pay them a pay rise but it’s spent £6bn on fuel duty, for example.
There was nothing in this to recognise the pressure on the NHS and nothing for social care which is one of the biggest pressures we’re facing.
It does seem the chancellor has more headroom than he’s using. I would suggest he’s looking to make more dramatic announcements, bigger hand-outs closer to the election rather than grappling with the problems right now.
Responding to the chancellor’s announcement of 30 hours of free childcare for children of working parents aged nine months and over from 2025 in England, Evans said:
We are already one step ahead in our support for childcare.
What we do know is it’s taken us quite a long time to get to the point where the capacity in the sector is able to expand. We’ve invested in the skills in the sector, increased the hourly rate and been enabling investment in the physical assets the sector needs. The UK government is going to find it needs to invest in that sense to deliver on its pledge. It takes time to expand on the sector.
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Jeremy Hunt said his priority with the budget was growth. In its assessment of the impact of the budget policy measures on growth, the Office for Budget Responsibility says it has revised its growth forecast upwards more on the basis of the policy measures in this budget than it has done on the basis of policy measures in any previous budget since 2010.
But that only amounts to growth being 0.2% higher than it otherwise would have been, it says. It says:
Relative to our pre-measures forecast, our central estimate is that these policies, taken together, increase employment by 0.3 per cent (110,000) by 2027-28. But part of the employment impact on potential output is offset by lower-than-average hours and earnings among many of the new joiners, so the overall impact on GDP is around 0.2% in 2027-28. This is the largest upward revision we have made to potential output within our five-year forecast as a result of fiscal policy decisions taken by a government in any of our forecasts since 2010.
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UK net migration to settle at 245,000/year, says OBR
Migration into the UK will settle at a higher level than previously expected, the Office for Budget Responsibility says.
In its new forecasts, net migration flows settle at 245,000 a year, rather than the 205,000 assumed in its November forecast. A year ago, net migration flows were settling at 129,000.
A larger population, due to increased net migration, will add 0.5% to the UK’s potential output in 2027, the fiscal watchdog says.
The OBR’s report explains that higher recent rates of inward migration can be attributed to:
• The resumption of international travel following the pandemic, especially among foreign students, with student visas reaching a record high of 490,000 in 2022;
• The post-Brexit immigration regime that began in 2021 and issued 800,000 visas in its first year of operation (only 50,000 of which were for EU citizens who did not require a visa under the previous regime); and
• Other changes, including 129,000 British national (overseas) visas to Hong Kong nationals and 210,000 visas to Ukrainian nationals.
A stat buried in the budget documents that is raising eyebrows in Westminster - the OBR forecasts net migration to settle at 245,000 a year, up from the 205,000 a year assumed in November. The Conservatives used to pledge to cut it to tens of thousands… https://t.co/xEkNG3EfO6
— Joe Mayes (@Joe_Mayes) March 15, 2023
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OBR says latest data hasn't changed its view that Brexit will cut UK productivity by 4%
Ever since 2016 the Office for Budget Responsibility has been saying that Brexit would be bad for the economy. It has been assuming a 15% drop in imports and exports, compared to what would have happened if the UK had not left the EU, leading to a 4% fall in productivity over a 15-year period.
In today’s report the OBR says that these forecasts are still holding up and that there is nothing in the latest data to suggest it is wrong. It says:
Overall, while net migration has been higher than we anticipated, investment growth has been significantly weaker than we expected before the referendum, and our assumption about the impact of Brexit on the UK’s trade intensity is broadly on track. As a result, we have not revised our view that productivity will be 4% lower in the long run than if the UK had remained in the EU.
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The government was particularly keen to change the pension tax allowance rules because many senior doctors get to the point where, once they have reached their pension limit, they feel less incentivised to keep working. According to ITV’s political editor, Robert Peston, the Treasury considered restricting the changes to just doctors. But the savings would have been limited, he says.
The treasury looked at changing the pension rules for just doctors, and apparently it would still have cost 60% of the £800m a year, because some doctors earn considerably more than the £250k a year cut-off for the announced reform! #Budget2023
— Robert Peston (@Peston) March 15, 2023
In his speech Jeremy Hunt said:
I am launching the first competition for small modular [nuclear] reactors. It will be completed by the end of this year and if demonstrated as viable we will co-fund this exciting new technology.
In fact, this is not the first time a competition of this kind has been proposed. In 2015, when George Osborne was chancellor, his spending review and autumn statement proposed “an ambitious nuclear research and development programme” which would “include a competition to identify the best value small modular reactor design for the UK”. Arguably it is just a case of the policy arriving eight years late.
Photograph: Guy Bell/Rex/Shutterstock
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3.2m people dragged into paying basic rate tax, and 2.1m higher rate tax, due to allowance/threshold freeze, says OBR
One of George Osborne’s boasts as chancellor was that he was able to take low earners out of having to pay any income tax, by lifting the basic allowance. (It was a coalition policy, pushed originally by the Liberal Democrats, but then enthusiastically adopted by the Tories in their 2015 manifesto.) But in March 2021 Rishi Sunak, the then chancellor, announced that the allowance and higher rate threshold would be frozen for four years, and last autumn Jeremy Hunt said the freeze would be extended another two years, to 2027-28. This means, as people get annual pay rises, more and more of them clear the hurdle and get sucked into paying basic or higher rate tax. Economists call it fiscal drag.
The Office for Budget Responsibility says that by 2027-28 the six-year allowance/threshold freeze will have brought 3.2 million people into paying basic rate tax, 2.1 million people into paying higher rate tax and 400,000 people into paying the additional rate.
The IFS also says fiscal drag will mean basic rate taxpayers paying an extra £500 in 2023-24, and higher rate taxpayers paying an extra £1,000. (See 4pm.)
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IFS's Johnson: Money for motorists, but not for nurses, doctors and teachers.
Paul Johnson, director of the Institute of Fiscal Studies, has just released his verdict on the budget.
Johnson says it is “just as notable” what Jeremy Hunt didn’t announce – such as no higher pay for public sector workers, while freezing fuel duty again.
There was no funding to be found to improve the pay offer to striking public sector workers, where £6bn might have been enough to make an inflation-matching pay offer possible this coming year. That’s a political choice.
Money for motorists, but not for nurses, doctors and teachers.
Big personal tax rises planned for next month, via the freezing of income tax thresholds, will still go ahead, Johnson points out. That fiscal drag is hitting living standards:
That will mean an extra £500 in tax for basic rate taxpayers in 2023–24, and an extra £1,000 for higher rate taxpayers.
These tax rises may be necessary from a fiscal point of view, but they are an important part of the reason why household incomes are still expected to fall more over the current two-year period than at any point in living memory.
Johnson also points out that Hunt has been hemmed in by “his own poorly designed fiscal rule”, to have debt falling at the end of the forecast period.
And on childcare, the IFS says Hunt’s new funding should help “tens, but not hundreds, of thousands of parents into work” – provided that it is appropriately funded.
Johnson says:
The big expansion in the childcare offer to families with younger children, likely doubling spending on childcare, looks like it will take us close to completing a 25-year long journey during which a new arm of the welfare state has been created.
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Hunt could have done 'far more' for Scotland, says SNP's John Swinney
The Scottish government will get another £320m over the next two years following the chancellor’s spending increases in England, including his pothole fund, with arts and communities project getting £9.6m dedicated funding.
In keeping with Conservatives’ post-Brexit strategy of spending UK government money in areas controlled by the Scottish parliament, Hunt announced that Edinburgh’s cash-strapped festivals would get £8.6m, while another £1m would be shared by five community projects such as Aberfeldy sports club and a community grocery shop and cafe in Kyle of Lochalsh in the Highlands.
Jeremy Hunt’s spring budget was less generous for the UK’s devolved governments than previous Westminster budgets, with no increases for the biggest spending Westminster departments such as health and education that drive Treasury bonuses for Scotland, Wales and Northern Ireland.
He said Scotland would also be offered at least one of the 12 investment zones he plans, a proposal likely to challenge the Scottish National party-led government in Edinburgh to set aside its ideological discomfort about low-tax enclaves.
John Swinney, Scotland’s acting finance secretary, said overall the budget was a “missed opportunity” to combat rising poverty, the cost of living crisis and invest in public services. He said:
The limited additional money for the Scottish government’s budget is welcome but will not go far enough and in the long-term our capital funding will fall in real-terms.
The Scottish government is doing what it can with its limited powers to ensure people receive the help they need, but the UK government could have done far more to ease the burden affecting so many, demonstrating yet again why Scotland needs the powers of independence.
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Pension tax allowance changes 'a massive inheritance tax loophole', says thinktank
A thinktank has described the changes to the pension tax allowance rules as a “massive inheritance tax loophole”. This is from James Browne, head of work, income and inequality analysis at the Tony Blair Institute.
Chancellor just announced a massive inheritance tax loophole - put as much as you can into your pension, then take it out if you need it, if not it goes to your heirs tax-free
— James Browne (@JamesBrowneRTC) March 15, 2023
In more detail: Rationale behind the lifetime allowance was to limit the tax advantages from pension saving for the very richest. Pensions receive better than tax neutral treatment through 25% tax free lump sum, exemption from NICs for employer contributions etc.
— James Browne (@JamesBrowneRTC) March 15, 2023
Sensibly the government is also seeking to limit some of these benefits for the rich. The maximum tax free lump sum will be capped at £268,275 (25% of old lifetime allowance). This cap could be frozen or reduced over time to further limit advantages of pension saving for the rich
— James Browne (@JamesBrowneRTC) March 15, 2023
But other advantages remain. At present, if you inherit a pension that is treated like it was your own for tax purposes. The donor received tax relief on contributions, you pay tax on withdrawals. No inheritance tax is payable
— James Browne (@JamesBrowneRTC) March 15, 2023
And this is from Jeevun Sandher, head of economics at the New Economics Foundation, another thinktank.
Increasing the pension lifetime allowance is a massive giveaway to already very wealthy people. If the chancellor hopes this will help older people remain in work, it’s completely divorced from reality. Only around 1% of workers saved more than the old annual allowance and just 10% were hit by the lifetime limit of £1.1 million.
Increasing the annual and lifetime allowances won’t do much to help the vast majority of us save for retirement.
One group that are supposed to benefit from these tax changes are the GPs and NHS consultants who were forced to retire early due to pension limits. But this group is far more affected by the annual than the lifetime allowance, which is still far below its 2010 level.
Nick Macpherson, a former permanent secretary at the Treasury, has also criticised the proposal.
Tax breaks rarely increase the level of saving. They just change its allocation: in this case, towards tax privileged pensions. The cost and targeting of this measure provides an open goal for a future government to reverse it. https://t.co/9g7PAWKcMU
— Nick Macpherson (@nickmacpherson2) March 15, 2023
But the move has been welcomed by the wealth management industry. This is from Lee Clark, a financial planner at RBC Brewin Dolphin, an investment management company.
Effective retirement planning is a long-term game that requires long-term consistent pension policy from concurrent governments to reward hard working savers. Pension savers need certainty, not this see-sawing of policy. For example, would a future government reverse this move?
That said, the abolishing of the LTA [lifetime tax allowance] is fantastic news for many professionals that have had a disincentive to work and save because of the frozen lifetime pension’s allowance of £1.07m that had halved in real terms since 2012.
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Inflation isn’t actually expected to return to the Bank of England’s 2% target until 2028.
As Jeremy Hunt explained in his budget statement, the OBR expects the annual inflation rate will fall sharply to 2.9% by the end of 2023, a more rapid decline than expected in November.
That fall will be partly driven by falling household energy bills. But, “stronger domestically generated” price pressures means inflation is expected to oscillate around zero in the middle of the decade. Back in November, the OBR had forecast inflation would turn negative.
The OBR adds:
Inflation returns to target in early 2028, with the offsetting effects of lower gas prices and increased domestically generated inflation leaving the consumer price level at the end of our forecast little changed from November.
Pension tax allowance changes will cost £70,000 for every person who stays in work as result, says Labour
Labour says changing the pension tax relief rules, which it describes as “the only permanent tax cut in the budget”, will cost the taxpayer £70,000 for every person who returns to the labour market (the rationale for the move).
This figure is based on the policy costing more than £1bn towards the end of the decade (see 2.59pm), and the OBR saying in its report that it expects the policy to result in an extra 15,000 people staying in work. The OBR says:
Changes to the lifetime allowance and annual allowance on pension contributions increase employment by around 15,000 by removing some financial disincentives to continuing in employment for those with large pension pots.
Relaxing pension tax allowance rules to cost more than £1bn by 2026-27, Treasury figures show
Here are the figures from the Treasury’s red book showing how much the two changes to pension tax allowances will cost the government. The lifetime allowance on how much people can save in their pension funds tax free will be abolished, and the annual allowance (the amount that can be put in the fund tax free) will go up from £40,000 to £60,000.
There is no cost in 2022-23 (the column on the left). But by 2026-27 and 2027-28 (the two final columns on the right) it is costing more than £1bn a year.
The UK’s tax burden is on track to hit its highest level since the second world war.
The OBR forecasts that taxes, as a share of GDP, will hit 37.7% in 2027-28 – news that will not please the tax-cutting wing of the Conservative party.
That would be 4.7 percentage points above where it stood before the pandemic, which drove up government spending and borrowing.
But the OBR does point out that the UK’s tax burden is lower than the average of other advanced economies.
The corporation tax burden will be the highest since the tax was introduced in 1965 by the Labour chancellor Jim Callaghan, the OBR says, as the rate is increasing from 19% to 25% despite opposition from the Tory back benches.
The ratio of public spending to GDP is expected to settle at 43.4%, its highest sustained level since the 1970s
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The OBR has raised its forecast for how far UK house prices will fall from their peak.
The fiscal watchdog now predicts a 10% drop in prices, compared with their high in the fourth quarter of 2022. That’s one percentage point more than the 9% drop forecast in November, when the mortgage market had been rocked by the shambolic mini-budget.
Property transactions are expected to drop by 20% relative to their Q4 2022 peak.
The OBR points out that the correction has begun:
Leading indicators from Halifax and Nationwide suggest that house prices have already fallen by 3-6% between their peak in the middle of 2022 and February 2023.
Low consumer confidence, the squeeze on real incomes, and the expectation of mortgage rate rises to come are expected to contribute to continued falls in house prices and a reduction in housing market activity.
The @OBR_UK revises house price falls by an extra 1%, forecasting a 10% fall from their high in the fourth quarter of 2022. Sellers daunted by this & buyers struggling with affordability may retreat causing transactions to fall by up 20% relative to their peak in the same quarter pic.twitter.com/0lJIXFheyy
— Emma Fildes (@emmafildes) March 15, 2023
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OBR says real disposable income falling by 5.7% over two years – less than expected last autumn, but still biggest drop on record
According to the Office for Budget Responsibility, household disposable income is set to fall by almost 6% in the two years between 2022 and 2024. The OBR says this is an improvement on what it was expecting last autumn, it is still the steepest fall since records began more than 60 years ago. The OBR says:
Real household disposable income (RHDI) per person – a measure of real living standards – is expected to fall by a cumulative 5.7% over the two financial years 2022-23 and 2023-24. While this is 1.4 percentage points less than forecast in November, it would still be the largest two-year fall since records began in 1956-57. The fall in RHDI per person mainly reflects the rise in the price of energy and other tradeable goods of which the UK is a net importer, resulting in inflation being above nominal wage growth. This means that real living standards are still 0.4% lower than their pre-pandemic levels in 2027-28.
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The sharp rise in interest rates over the last year means the cost of servicing the UK’s national debt has also surged.
Interest rate have tripled over the past year across advanced economies.
The OBR forecasts that the share of revenues consumed by UK debt servicing will rise from 3.1% in 2020-21 to 6.2% in 2021-22, and hit 7.8% by 2027-28.
That is because much UK government debt is index-linked, meaning that the interest payments received by bond-holders goes up and down in line with inflation (which hit 40-year highs, over 10%, last year).
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Here are three takes on the budget from Paul Johnson, director of the Institute for Fiscal Studies.
Extending free childcare to all children over 9 months really is a big extension of the welfare state. Prob. about doubles childcare spending. We've been edging in this direction for a good 20 years. This is a new leg of the welfare state finally nearing its end point.
— Paul Johnson (@PJTheEconomist) March 15, 2023
Note what the Chancellor did not mention. Nothing on public sector pay. No mitigation of big income tax rises coming in this April. No more money for public services post 2024.
— Paul Johnson (@PJTheEconomist) March 15, 2023
OBR may be more positive about inflation and the economy. But it is still projecting that 2022 and 2023 will see the biggest ever fall in living standards.
— Paul Johnson (@PJTheEconomist) March 15, 2023
And, of course, the most interesting material is often in the Office for Budget Responsibility’s report, its economic and fiscal outlook. That’s here.
UK on track to hit debt target 'by narrowest of margins'
The UK is on track to hit the government’s target to have debt falling as a share of the economy by “the narrowest of margins in five years’ time”, the Office for Budget Responsibility said.
The OBR’s economic and fiscal outlook shows that the chancellor only has £6.5bn of headroom to achieve the target to have debt falling, as a share of GDP, in the 2027-28 financial year.
That is the smallest amount of headroom any chancellor has set aside against his primary fiscal target since the OBR was established in 2010 by George Osborne.
And that calculation assumes that the government raises fuel duty rates in future years (having frozen fuel duty at its current rate for another year today).
The OBR says:
Underlying debt – which excludes the Bank of England and is the measure targeted by the chancellor – does not peak until 2026-27 (a year later than we forecast in November) at 94.8 per cent of GDP and then falls only marginally (by 0.2 per cent of GDP) in the final year of the forecast.
That suggests Hunt may not have much more firepower for pre-election giveaways at future budgets, as he has spent around two-thirds of the improvement in today’s forecasts.
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The Treasury has now published all the budget documents on its website here. The most important one is the red book, but the policy costings and distributional impact analysis is on the website, too.
And here is the Treasury’s news release with its summary of the measures.
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Starmer ends his response by saying this is just sticking plaster politics. After 13 years of no growth, people are entitled to ask if they are better off than they were before. The answer is no, he says.
Starmer says only permanent tax cut in budget 'is for richest 1%'
Starmer says the government was right to look at a solution to the pensions problem that means some well-paid doctors are retiring early.
But he says the pensions tax allowance announcement is “a huge giveaway” to some of the wealthiest people in the country. He goes on:
The only permanent tax cut in the budget is for the richest 1% How could that possibly be a priority?
Starmer accuses Hunt of lifting ideas from Labour.
He says of course Labour welcomes more spending on childcare.
As Tory MPs jeer, he tells them they were not listening when Hunt explained how long it would take to implement.
Starmer makes a joke about the petrol station photocall that Rishi Sunak staged when he was chancellor, telling Jeremy Hunt that he should use his own car – and know how to use a debit card – when he promotes the budget.
And he says he looks forward to promoting the swimming pool policy. “At least he won’t have to borrow one of them.”
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OBR: the economic outlook has brightened somewhat
As soon as the chancellor sat down, the Office for Budget Responsibility released its new assessment of the UK economy.
The fiscal watchdog confirms that the economic and fiscal outlook has “brightened somewhat” since its previous forecast in November.
The near-term economic downturn is set to be shorter and shallower; medium-term output to be higher; and the budget deficit and public debt to be lower.
But this reverses only part of the costs of the energy crisis, which are being felt on top of larger costs from the pandemic. And persistent supply-side challenges continue to weigh on future growth prospects.
The OBR says that Hunt has spent two-thirds of the improvement in the fiscal outlook on today’s budget measures, such as maintaining the energy price guarantee at £2,500 a year and on supporting business investment in the near term, “while boosting labour supply in the medium term”.
The OBR adds:
This lowers inflation this year and, more significantly, sustainably raises employment and output in the medium term.
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Starmer accuses Tories of 'dressing up stagnation as stability' in budget response
Keir Starmer is responding to Hunt now. One of the budget traditions is that the leader of the opposition replies, not the shadow chancellor.
Starmer says this is supposed to be a budget for growth – but the figures show the economy is set to contract.
The UK “is on a path of managed decline”, and falling behind its competitors, he says.
He says the Tory cupboard is as bad as the salad aisle. The lettuce might be out, but the turnips are in.
He says the Tories are “a divided party caught between a rock of decline and a hard place of their own economic recklessness, dressing up stagnation as stability as their expiry date looms ever closer”.
Hunt says free childcare offer from age of nine months will cut childcare costs for families by nearly 60%
Hunt ends with a final childcare announcement.
He says the government will offer 30 hours of free childcare for every child from the age of nine months, where all adults in the household work.
He says this will reduce childcare costs for families by nearly 60%.
UPDATE: Hunt said:
So today I 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 3-and-4 year-olds, but for every single child over the age of 9 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 9 months up, meaning a total of nearly one million parents will be eligible.
And from September 2025 every single working parent of under 5s will have access to 30 hours free childcare per week.
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Hunt says he wants schools to offer wraparound care from 8am to 6pm by 2026
Hunt says he wants all schools to be able to offer wrap-around care from 8am to 6pm, either on their own or in partnership with other schools. He says the ambition is to have this in place by September 2026.
Hunt is now addressing childcare.
Childminders are a vital way to deliver affordable & flexible care.
— HM Treasury (@hmtreasury) March 15, 2023
To encourage more people to join the profession, new joiners will receive incentive payments of £600, rising to £1,200 for those joining through an agency. pic.twitter.com/WgpFyLETJh
Hunt says he will increase funding paid to nurseries, by £204m from this September, and rising to £288m next year. That is a 30% increase, which is what the sector, wanted, he says.
To support parents on Universal Credit move into work or increase their hours, we’re increasing the amount of UC support for childcare costs by almost 50% & will pay this upfront instead of in arrears.
— HM Treasury (@hmtreasury) March 15, 2023
Families will now be able to claim £951 for 1 child & £1,630 for 2 children. pic.twitter.com/QvSts5FOXs
Hunt says he will abolish lifetime allowance for tax-free pensions savings, and raise annual allowance to £60,000
Hunt says he is going to increase the annual pensions tax free allowance from £40,000 to £60,000.
And he says instead of just lifting the lifetime allowance (currently just over £1m), he will abolish it.
That’s an unexpected rabbit out of the budget hat – there were rumours that the pensions lifetime allowance would be raised to £1.8m.
But it’s a rabbit that will benefit high earners – such as doctors, who have long said they have been hit by a pensions trap, partly due to the freezing of the lifetime allowance.
abolishing lifetime allowance for pensions is a whopping gift to high earners (do wonder how much pension anyone ultimately...needs if the suggested £1.8m limit isn't enough)
— gabyhinsliff (@gabyhinsliff) March 15, 2023
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Hunt says he want more older people to return to work – although as someone aged 56, he prefers the term experienced, he says.
Referring to Dame Eleanor Laing, who is in the chair as deputy speaker, he says: “Madam Deputy Speaker I say this not to flatter you but older people are the most skilled and experienced people.”
If that was a joke, it did not seem to work. MPs seem to think he was being rude.
People say Hunt isn't bold but this age-related gibes are extremely risky
— Giles Wilkes (@Gilesyb) March 15, 2023
Hunt says there will be skills boot camps for people in their 50s.
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Hunt says sanctions will be applied more rigorously to people on benefits who refuse to look for work.
But the earnings threshold will be increased, from 15 hours per week to 18 hours.
Hunt says he will allocate £400m for mental health and musculoskeletal support. Occupational health is important to help people back into work.
And he says there will be a £3m pilot to help people with special needs transition into the workplace.
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Hunt says new support to help disabled people into work will be biggest change to welfare system for decade
Hunt is turning to employment.
Brexit was a vote to change the economic model, he says.
The number of disabled people in work has risen by 2 million, he says.
Today the government is publishing a white paper on disability benefits reform. The work capability assessment will be abolished. Disabled people will be able to seek work without fear of losing support, he says.
A new programme called universal support will be set up, to help disabled people get into work. Up to £4,000 will be spent per person, and the scheme could help up to 50,000 people a year, he says.
He claims this is the biggest change to the welfare system for a decade.
Updated
How full expensing can help UK firms invest
Full capital expensing, which Jeremy Hunt just announced, lets businesses deduct the cost of any eligible investment they do from their corporation tax bills straight away, rather than over several years.
Full expensing should make it more attractive for a company to invest in a new building or in new machinery. Without it, the firm can only deduct a small fraction of the cost of investment each year over the accounting lifespan of that investment.
That means that, in practice, they don’t actually get the full cost of the investment, as inflation will erode the value of the money firms can claim back in future years. So the longer the write-off time, the less of the cost of the investment you can write off.
As Hunt explained, it is “a corporation tax cut worth an average of £9bn a year for every year it is in place.” It will offset the increase in the corporation tax cut from 19% to 25%, and replaces the “super-deduction”.
Back in 2017, writer Sam Bowman described full expensing as “the best idea in politics that nobody’s ever heard of” (you can read more here).
As Bowman put it:
Full expensing sounds technical and obscure, and is unlikely to win votes on the doorstep. It is not the sort of policy to win headlines. But its effects seem like they could be very large, and could deliver the sort of jobs and wages boost that would be popular.
For a government that seems desperate to boost investment, especially investment in machinery-intensive sectors like manufacturing, it could be one of the few policy silver bullets it has left.
Tim Pitt of Flint Global, a former advisor to Philip Hammond and Sajid Javid, says it is “very good news” for the UK’s tax competitiveness.
But, there will be a ‘cliff edge’, as Hunt has only announced “full expensing” for the next three years, with an intention to make it permanent.
Lots of pre-Budget criticism from Tory right re: corp tax rise
— Tim Pitt (@TimPitt11) March 15, 2023
But they should really focus on how big a deal full expensing is. V good news on UK tax competitiveness
Challenge will be to ensure long-term solution in place well ahead of 2026 to avoid cliff edge we had this time
The IFS’s Paul Johnson says that it is ‘ridiculous’ to only make the move temporary:
Full capital expensing for next three years for corporation tax. Broadly sensible BUT:
— Paul Johnson (@PJTheEconomist) March 15, 2023
- ridiculous that had to wait til today to announce;
- ridiculous to say only for 3 years with an "aim" to make permanent.
This continual fiddling and lack of apparent strategy is damaging
Updated
Hunt announces annual £1m prize for AI research
Hunt says he wants to make the UK a better place for AI investment.
An “AI sandbox” will trial new means of promoting investment, he says.
And he says he has accepted all the recommendations from the review by Sir Patrick Vallance.
For the next 10 years, there will be an annual prize of £1m for AI research, he says.
Hunt says in the autumn statement he will return with plans to increase investment in high-growth firms.
There will be measures to make the stock exchange a more attractive place to list, he says.
He will reform the regulation of medicines, which should make it easier for drugs to get approval, he says.
Hunt says nuclear energy to qualify for same investment incentives as renewable energy
Hunt says the UK needs more nuclear power.
To encourage investment, nuclear power will be classed as “environmentally sustainable”, subject to consultation, he says. That will give it access to the same investment incentives as renewable energy.
He says the government will launch Great British Nuclear, to bring down costs.
To safeguard our energy security and resilience, the Chancellor @Jeremy_Hunt has announced Great British Nuclear.
— HM Treasury (@hmtreasury) March 15, 2023
GBN will work to:
✅ Enable nuclear projects
✅ Support the UK’s nuclear industry
✅ Provide opportunities to build and invest pic.twitter.com/y5Xt4DGynT
(The title of this is very similar to Great British Energy, the new nationalised start-up proposed by Labour.)
Hunt says there will be a competition for small nuclear reactors.
Updated
Hunt says he will allocate up to £20bn for the early development of carbon capture and storage.
Hunt says he is introducing a new tax credit for small and medium sized firms that spend 40% of their expenditure on R&D.
We're introducing additional tax support to help research & development intensive SMEs.
— HM Treasury (@hmtreasury) March 15, 2023
For every £100 spent on R&D, eligible companies will be able to claim £27 back, helping them to invest in more R&D and grow for the future. pic.twitter.com/nnhmYyxEj3
Tax reliefs for film, TV and video gaming are also being extended, he says.
Updated
Corporation tax to rise to 25% but not all firms will pay full amount – Hunt
Hunt says he wants the UK to have the most pro-business, pro-enterprise tax regime anywhere.
Even with the corporation tax rise, the UK will have the lowest headline rate in the G7.
And only 10% of firms will pay the full 25%, he says.
He says he is introducing a new investment allowance. Every pound invested in IT equipment, plant or machinery can be deducted immediately from profits. It will be worth £9bn a year. The OBR says it will increase business investment by 3% every year. He says the UK will be the only European country with full expensing like this.
Updated
Hunt says he is moving on to enterprise.
As opposition MPs jeer, Hunt says enterprise has never been of interest to Labour.
He wants to lower business taxes, reduce energy costs and support growth industries.
Hunt says he is giving communities more control of their destiny.
These trailblazer devolutions deals will:
— HM Treasury (@hmtreasury) March 15, 2023
✅ Lay the blueprint for the future of English devolution
✅ Give leaders greater control over local policies
✅ Empower local leaders to drive growth pic.twitter.com/vjaj8RDZVA
Hunt says he will invest £200m in regeneration projects in England.
And £400m is being set aside for levelling up projects.
Another £8.8bn is being set aside for sustainable transport schemes.
Another £200m will be spent dealing with potholes.
And he announces equivalent funding for Scotland, Wales and Northern Ireland.
Hunt announces 12 new investment zones
Hunt cites Canary Wharf as an example of a successful regeneration project.
He says he is announced 12 investment zones, which can be new Canary Wharfs. He says they will be in: the West Midlands, Greater Manchester, the north-east, South Yorkshire, West Yorkshire, East Midlands, Teesside, and Liverpool. There will also be at least one in Scotland, Wales and Northern Ireland.
Updated
Hunt confirms there will be extra defence spending. It will go up by £11bn over the next five years.
And another £30m is being allocated for veterans, he says.
Hunt says OBR expects economy to shrink by 0.2% this year
Hunt says the OBR expects the UK will not enter a recession this year, with a contraction of just 0.2%.
That’s an upgrade on the 1.4% contraction forecast last November, when the UK was forecast to drop into recession.
And after this year, the UK economy will grow in every single year in the forecast period, the chancellor says.
But, growth is still relatively anaemic through the forecast period, here’s the details:
2024: GDP up by 1.8%, up from the 1.3% growth forecast last November
2025: +2.5%, down from 2.6% growth forecast last November
2026: +2.1%, down from 2.7% growth forecast last November
2027: +1.9%, down from 2.2% growth forecast last November
Our March 2023 GDP forecast. Full forecast published after the Chancellor’s #SpringBudget speech pic.twitter.com/LarSBvUcmD
— Office for Budget Responsibility (@OBR_UK) March 15, 2023
They also expect the unemployment rate to rise by less than one percentage point, to 4.4% with 170,000 fewer people out of work, compared to their autumn forecast.
Updated
Paul Johnson, director of the Institute for Fiscal Studies, says that the expected fall in inflation this year will be good news – but “giving public sector workers a bit more” would not have significantly pushed up the cost of living.
Inflation projected to be down to 2.9% by end of this year. That would be good news.
— Paul Johnson (@PJTheEconomist) March 15, 2023
It is not true, though, that giving public sector workers a bit more would significantly raise inflation.
Hunt says growth is the focus of the budget.
Thirteeen years ago the government inherited an economy that had crashed, he says.
He says people can now earn £1,000 a month without paying a penny of tax or national insurance. Labour opposed those moves. But they have helped to lift 2 million people out of absolute poverty, he says.
He says the World Bank says the UK is the best big country to do business in.
Declinists are wrong about the UK for another reason, he says.
After the US and China, the UK is the third largest tech economy, he says.
We built the largest life sciences sector in Europe, producing a Covid vaccine that saved 6 million lives and a treatment that saved a million more.
Our film and TV industry has become Europe’s largest, while the creative industry is growing at twice the rate of the economy.
Our advanced manufacturing industries produce around half the world’s largest civil aircraft wings.
And thanks to a clean energy miracle we have become a world leader in offshore wind.
Updated
Hunt says today’s measures lead to a slightly lower tax burden by the end of this parliament.
The government is on track to halve inflation, get debt falling, and grow the economy, he says.
Hunt is now reading out the debt forecasts.
He says underlying debt is forecast to be 92.4% of GDP next year, then 97.3%, then 94.6%, 94.8%, before falling to 94.6% in 27-28.
Hunt confirms fuel duty remains frozen
Hunt confirms fuel duty will be frozen. And he mocks Labour claims they called for this first. Labour has opposed previous moves to freeze it, he says.
Hunt says draught relief for pubs will amount to 'Brexit pubs guarantee'
Hunt says he is giving £100m to allow charities to continue their fantastic work.
He will assign an extra £10m over the next two years to charities that address suicide.
And he will help “the great British pub”. Draught relief will be made more generous. It will by up to 11p lower than the relief for supermarkets. This is only possible because of Brexit. It amounts to a “Brexit pubs guarantee”, he says. He says British ale is warm, but duty is frozen.
Updated
Hunt confirms that the energy price guarantee is being extended.
And he says over 4m households on pre-payment meters will get help. Their charges will be aligned with direct debit charges. (Until now, they have had to pay more.)
He says he has listened to representations from MPs about the risk to swimming pools posted by high costs.
That provokes very loud Labour jeering – by MPs making a point about Rishi Sunak’s Yorkshire heated swimming pool.
Hunt says he has a £63m fund to keep these pools afloat.
Updated
Hunt says OBR expects inflation to fall to 2.9% by end of 2023
Hunt starts with the OBR forecasts.
The PM wants to halve inflation, he says.
The government supports the Bank of England’s independence on monetary policy, Hunt says (this is the setting of interest rates by the BoE).
The OBR expects inflation to fall from 10.7% to 2.9% by the end of 2023, he says.
Inflation, Hunt adds, has been the “root cause” of the strikes seen in recent months.
Antonia Bance of the TUC tweets, though, that the strikes are also about the erosion of public sector pay since the financial crisis 15 years ago:
The strikes aren’t just about inflation. They are about wages in the public sector still being lower than they were in 2008 #Budget2023
— Antonia Bance (@antoniabance) March 15, 2023
Updated
Hunt says the government has protected families, with measures worth £94bn this year and next. That is one of the biggest support packages in Europe.
It is worth £3,300 per household, he says.
He says the government is committed to growth, to “prosperity with a purpose”.
Growth is one of the priorities for the PM.
Updated
Hunt tells MPs OBR now saying UK will avoid technical recession this year
Hunt start by saying the British economy “is proving the doubters wrong”.
He took difficult decisions in the autumn, he says.
The IMF says the UK is on the right track. But the government remains vigilant.
He says the OBR now forecasts the UK will not enter a technical recession this year.
A technical recession is two quarters of negative growth in a row.
Hunt tells MPs that the UK will not “technically” go into recession.
— Pippa Crerar (@PippaCrerar) March 15, 2023
Last November, the OBR had predicted that Britain would fall into a recession lasting just over a year from the third quarter of 2022 (with a peak-to-trough fall in GDP of 2 per cent).
Updated
Jeremy Hunt delivers budget statement
Jeremy Hunt is about to start his statement.
Sir Bob Neill (Con) says motorists in outer London will be hit by the extension of the Ulez zone. He says these charges should only be imposed on outer London with the consent of those boroughs.
Sunak says his government will be on the side of the people.
PMQs is over.
Graham Stringer (Lab) says the first Japanese bullet train travelled 30 years after the country was defeated in the second world war. But in the UK, even after 24 years, HS2 will not link Birmingham, Manchester and London.
Sunak says the government is delivering the biggest rail investment since the Victorians.
His response prompts jeering from Labour.
Updated
Rupa Huq (Lab) says 7 million people in the UK are functionally illiterate. Will the government address this?
Sunak says the best way to solve this problem is to ensure children get a proper education. Because of the government’s reforms with phonics, the UK is moving up international tables for reading.
Caroline Ansell (Con) asks about a constituent unable to sit her school exams because she has cancer. Yet she won’t be able to get the exam grades she needs, in the way pupils could during Covid, when exams did not happen. Why can’t that happen?
Sunak says he will look at this to find a resolution.
Updated
Joanna Cherry (SNP) says female judges and prosecutors in Afghanistan stood up for a fairer nation, with UK support. Now they are at risk. Will the PM meet with her to discuss what can be done to help?
Sunak says he will meet Cherry to discuss this. He says the UK is conscious of its obligations, and has schemes to help.
Nickie Aiken (Con) says Labour-led Westminster has increased council tax, while putting up allowances for councillors by up to 45%.
Sunak says it is disappointing that Westminster council is putting councillors’ pay above everything else. Only Tory councils deliver for their residents, he claims.
Karen Buck (Lab) says at a hosptial in her constituency the building is failing, but management are waiting for funding. Will they get it?
Sunak says the government has committed record sums for NHS capital. Conversations are continuing.
Daisy Cooper (Lib Dem) asks if Sunak is still committed to building 40 new hospitals.
Sunak says the government is committed to upgrading dozens of hospitals, including the 40 new ones.
Bob Blackman (Con) says today is the 135th day of strikes under Sadiq Khan, the Labour mayor of London.
Sunak says Blackman is right about the misery being inflicted on Londoners. Labour voted against minimum service levels, he says. And Khan has had £6bn, he says. So services should be running.
Stephen Farry (Alliance) says the Northern Ireland executive is facing budget cuts. Will the government work with the Northern Irish parties on a package to transform Northern Ireland?
Sunak says the Northern Ireland secretary is working with the parties on these issues.
Stephen Flynn, the SNP leader at Westminster, says on Monday Scots learned the electricity grid had been upgraded to deal with the heating for the pool at Sunak’s constituency home. Was it while swimming the PM decided not to cut fuel bills.
Sunak says the government has protected people.
Flynn says in Scotland the average heating bill is not £2,500, but closer to £3,500. The Tories are not freezing energy bills. They are looking to freeze households, he says.
Sunak says all parts of the UK benefit. But he says we now know that under the SNP the trains don’t run on time, and other service don’t work. That is not his assessment, he says. It is an SNP one, from their leadership debate.
Updated
Angela Richardson (Con) asks Sunak to welcome a space investment in her constituency, Guildford. Sunak says the government is continuing to invest in space.
Starmer describes Tory MPs as “playground bullies” and “cancel culture additcts”.
Sunak says he won’t take lectures from Labour on cancel culture. He says Starmer is avoiding the issue. The only thing that happened this week was that Labour did not vote for the illegal migration bill. He has been delivering for Britain, he says.
Starmer asks if the PM has had assurances that no one with links to the Tory party was involved in the decision to cancel Match of the Day.
Sunak says it is right the BBC takes its obligations to impartiality seriously. That applies to the civil service too, he says.
He is referring to Sue Gray.
Starmer says Sharp is not ordinary Tory donor. He has been called Sunak’s mentor. And he organised a £800,000 credit line for Boris Johnson. Is his position still tenable?
Sunak says this appointment is being reviewed. He will await the outcome of that.
Starmer says Tory MPs don’t understand you can disagree with what someone says but defend their right to say it. The government put a Tory donor with no broadcasting experience in charge of the BBC.
Sunak says Richard Sharp was appointed as BBC chair before he was PM. There was a rigorous process, and the select committee backed it too. That process is being reviewed by the office of the commissioner for public appointments.
Starmer says the sight of Tory MP “howling with rage” should have been laughable. Why won’t he stand up to his “snowflake MP”.
Sunak says this is the “usual opportunism” from Starmer. Shadow ministers criticised Gary Lineker’s language too, he says.
Keir Starmer says last year the PM said he wanted to protect free speech and end no-platforming. So how concerned was he by Tory MP trying to cancel a broadcaster.
Sunak says that is a matter for the BBC.
Updated
Danny Kruger (Con) says Labour MPs howled on Monday when the home secretary said immigration had been too high. Does the PM agree we need to train our own labour?
Sunak agrees. He says there will be more on this in the budget. There is a “dramatic rebooting of our skills system”, he says.
Updated
Jess Phillips (Lab) says she has worked with women brought to the UK as sex slaves. Last week the PM said people coming to the UK would be denied access to modern slavery protection. How will Phillips be able to help the next woman she meets from being repeatedly raped.
Rishi Sunak says a minority of people in the modern slavery system are from the UK. That was not the intention when the system was set up, he says.
Rishi Sunak chaired a cabinet meeting this morning, where Jeremy Hunt outlined what would be in his budget. In its readout, No 10 said Sunak told cabinet “it was no mistake that three of the government’s five priorities were focused on the economy. He said the budget will deliver on all three, with a particular focus on growth.”
As for what Hunt said about the budget, No 10 said:
The chancellor began by thanking cabinet colleagues for their support over recent weeks. He set out the improved economic picture following his autumn statement, explaining it paved the way for this growth budget.
He referenced plans for deregulation with Brexit freedoms, plans to invest billions in carbon capture and storage and develop nuclear energy, a boost to levelling up through 12 investment zones across the UK and a significant package to help people get into work, ranging from support for the over-50s, those on benefits, parents, and those with long-term health conditions.
Updated
Rishi Sunak has left No 10 for PMQs.
Here is the list of MPs down to ask a question.
One of the big tests for a budget is whether it can have a material impact on the opinion polls. Most of them don’t – and when they do, the effect is as likely to be negative as postive.
Two polls are out this morning showing what the baseline position is. YouGov has Labour 22 points ahead of the Conservatives.
Latest Westminster voting intention (7-8 March)
— YouGov (@YouGov) March 15, 2023
Con: 23% (-2 from 28 Feb-1 March)
Lab: 45% (-2)
Lib Dem: 10% (=)
Reform UK: 7% (+1)
Green: 7% (+2)
SNP: 4% (=)https://t.co/MFykpXNkz1 pic.twitter.com/loIQy5uOZV
And Savanta has Labour 15 points ahead.
🚨NEW Westminster Voting Intention
— Savanta UK (@Savanta_UK) March 15, 2023
📈15pt Labour lead
🌹Lab 45 (+2)
🌳Con 30 (-2)
🔶LD 9 (=)
➡️Reform 5 (=)
🎗️SNP 3 (-1)
🌍Green 3 (=)
⬜️Other 5 (=)
2,093 UK adults, 10-12 March
(chg from 3-5 March) pic.twitter.com/u08X9fFSNQ
Savanta is something of an outlier in the polling industry, in that most firms have been giving Labour much bigger leads. Politico publishes a poll of polls, aggregating what all polls are saying, and this suggests Labour’s lead has been relatively constant since the early days of Rishi Sunak’s premiership.
Updated
Steven Swinford from the Times says he is hearing that parents might have to wait a while for the extension of free childcare being announced by the chancellor today.
Several big unanswered questions on Jeremy Hunt's free childcare offer for one and two year olds
— Steven Swinford (@Steven_Swinford) March 15, 2023
First, when will it kick in? Hearing suggestions it may not be for some time
Second, how will it be funded and what will happen to funding for three and four year olds?
These are from Ed Conway, economics editor at Sky News.
As Chancellor @Jeremy_Hunt gears up for his first Budget there are fresh fears for the financial system.
— Ed Conway (@EdConwaySky) March 15, 2023
Credit Suisse shares have collapsed after the Saudi National Bank said they wouldn’t be putting any more funds in.
Down 18% today. Down 97% from their all time high… pic.twitter.com/9Uy0Y6Cx70
FTSE down 2.2%. Financials (chart👇) down 4.2%.
— Ed Conway (@EdConwaySky) March 15, 2023
Not the happiest backdrop for the Budget. On the bright side, this time around the financial turbulence isn’t being caused BY UK policy… pic.twitter.com/Svg5Z1hEHQ
According to the Telegraph, Jeremy Hunt faces a Tory backlash over his decision to press ahead with the rise in corporation tax from 19% to 25% in the budget. This will take effect from April this year. The increase was first announced by Rishi Sunak when he was chancellor, in his spring budget two years ago.
In theory Hunt could have abandoned the rise, but for the last two years (apart from when Kwasi Kwarteng scrapped the increase during his short-lived time as chancellor) Treasury spending plans have been based on the assumption of extra revenue coming from 25%, and so junking it would have been hard.
In their Telegraph story Ben Riley-Smith and Daniel Martin report:
Mr Hunt will also try to take the sting out of the rise [to 25%] by unveiling a multi-billion pound scheme allowing businesses to reduce their tax bills by investing in the UK.
But there is already a growing backlash, as Conservative MPs warned that the tax increase would have a “chilling effect on the whole economy” if not abandoned …
Simon Clarke, the Tory MP and former Truss cabinet minister who helped set up the pro-tax cuts Conservative Growth Group, issued a warning shot on Tuesday night.
Mr Clarke told The Telegraph: “There are some very welcome policies in this Budget, but it is also the case that there is real concern about the corporation tax rise in particular.
“This is a tax on jobs and growth. It is very hard to see how it doesn’t have a chilling effect on the whole economy in a way which will cost every family in the country.”
Riley-Smith and Martin also says Boris Johnson is among the Tories who have called for the 25% increase to be abandoned “even though it was initially announced when he was prime minister”.
In its budget polling (see 9.55am), YouGov found that voters are more likely to think the increase will be good for the economy than bad for the economy.
With #Budget2023 reportedly set to raise Corporation Tax to 25%, Britons are split on how good such a move will be for the economy
— YouGov (@YouGov) March 14, 2023
Very/fairly good: 38%
Very/fairly bad: 28%
No difference: 11%https://t.co/3gaZL8uFxw pic.twitter.com/YGJ9nI14zh
Updated
Jeremy Hunt has now left Downing Street for the House of Commons. On his way, he posed for the traditional photographs with his budget red box, and his ministerial team.
Although policy specialists have welcomed the news that the budget will include a £4bn expansion of free childcare for one- and two-year-olds in England (see 9.08am), some experts are sceptical.
The Labour MP Stella Creasy says £4bn will not be enough to fund the scheme.
🚨🚨If this is true, it's asking childcare providers to offer more hours at a loss as it’s only half the money needed to deliver this promise. Would be the same as help to buy scheme which pushed up house prices because it didn’t increase supply 🚨🚨https://t.co/nPwRI8HfZy
— stellacreasy (@stellacreasy) March 14, 2023
And the Sutton Trust, the social mobility charity, has sent out a briefing note pointing out that poorer families have less access to the current 30 hours of free childcare available for three- and four-year-olds (which is conditional on both parents working at least 16 hours a week) than wealthier ones. It wants to know if the same problem will apply to the new provision for one- and two-year-olds.
The Sutton Trust also says Hunt will have to assure the industry that that this pledge is properly funded. It says:
If not, the expansion will likely exacerbate provider financial problems and risk the sustainability of many. Many providers currently cross-subsidise underfunded “free” hours with hours charged at higher prices to parents elsewhere. With an expansion of free hours to one- and two year-olds, there will be fewer places where providers can make up these costs.
Updated
Some budgets measures show Labour 'setting the agenda', says Pat McFadden
Pat McFadden, the shadow chief secretary to the Treasury, has said today’s budget shows that Labour is “setting the agenda”.
In an interview with GB News, he cited action on childcare, extending the energy price guarantee and freezing fuel duty as policies in the budget that Labour was already advocating. He said:
I do think we’ve set the agenda for some of this. We called for example, for an extension of the cap on energy prices for another few months.
We called for the freeze in fuel duty to be carried over for another year and we’ve been talking about childcare for quite a long time.
So I’m quite pleased that Labour is setting the agenda. If the government wants to follow our lead, I don’t mind that.
It does mean the next time you hear a government spokesperson saying Labour is not fit to run the country, then maybe we should question that, because if they’re adopting so many of our policies, then it suggests that we’re not as reckless as they sometimes suggest.
But McFadden also suggested the government was not doing enough on growth. He said:
If you look, first and foremost, at the green transition, this is what’s powering growth in the United States right now, with President Biden’s Inflation Reduction Act, we’re just not on the pitch in the UK compared to what they’re doing in the United States right now.
Updated
Only one voter in 10 is confident that the budget will provide them with enough help with the cost of living, according to new polling from YouGov.
Ahead of tomorrow's Budget, few Britons are confident its measures will provide people like them with enough help on the cost of living
— YouGov (@YouGov) March 14, 2023
Not confident at all: 45%
Not very confident: 32%
Fairly confident: 9%
Very confident: 1%https://t.co/hCJ4uLK7Lp #Budget2023 pic.twitter.com/i2H36zeC7T
But almost four out of five people said extending the energy support guarantee, which is happening, would be helpful.
Almost eight in ten Britons say it would be helpful for them if the government extended the Energy Bills Support Scheme past 1 April
— YouGov (@YouGov) March 14, 2023
Very helpful: 53%
Fairly helpful: 26%
Not very helpful: 8%
Not helpful at all: 4%https://t.co/UoxzRyaDlj #Budget2023 pic.twitter.com/oTP0srkNvn
Earlier I said in a post that the Treasury did not release the normal pre-budget photograph last night of the chancellor working on his speech with aides. I’ve taken it down, because it turned out they did; it was just hard to find them, because they weren’t in the usual place. Here’s one. The caption does not say what Jeremy Hunt and his aides were looking at on the phone, but perhaps it was the news that the Guardian was splashing their big announcement.
Updated
Overnight the Treasury released an extract from Jeremy Hunt’s budget speech. He will say:
In the autumn we took difficult decisions to deliver stability and sound money.
Today, we deliver the next part of our plan: a budget for growth.
Not just growth from emerging out of a downturn.
But long term, sustainable, healthy growth that pays for our NHS and schools, finds good jobs for young people, provides a safety net for older people.
…all whilst making our country one of the most prosperous in the world.
Today I deliver that by…
… removing the obstacles that stop businesses investing;
… tackling the labour shortages that stop them recruiting;
… breaking down the barriers that stop people working;
…and harnessing British ingenuity to make us a science and tech superpower.
Hundreds of thousands of workers are on strike today in what threatens to be the biggest strike since the current wave of industrial action started last year, PA Media reports. PA says:
Members of several trade unions will take action, mounting hundreds of picket lines across the country amid continuing anger over issues including pay, jobs, pensions and conditions.
Those striking include teachers, university lecturers, civil servants, junior doctors, London Underground drivers and BBC journalists.
Despite talks being held between unions and the Westminster government, the public sector strikes remain deadlocked.
Some of the strikes, such as those by teachers, will only be held in England as progress has been made in Wales and Scotland.
Updated
Treasury extends energy price guarantee for three months, but opposition parties say bills should be cut instead
The SNP and the Liberal Democrats have both issued statements this morning saying the Treasury’s decision to extend the energy price guarantee at its current rate for another three months does not go far enough.
Stewart Hosie, the SNP’s economy spokesperson, said:
It’s truly pathetic that the chancellor has failed to cut energy bills, despite having ample resources to do so. The Tories are ripping families off by keeping bills at such exorbitantly sky-high levels, with many families forced to pay three times what they paid a year ago.
With energy companies making record profits, and the wholesale price of gas falling, there is no excuse for this shameful Tory decision, which will hammer household incomes and push even more families into poverty, hardship and debt.
And Sarah Olney, the Lib Dem Treasury spokesperson, said:
This does not go far enough. Instead of a sticking plaster for another three months, we need meaningful action now.
The Liberal Democrats are calling on the chancellor to cut energy bills by £500 per household. This would make a significant difference to households and the government can afford to do it, they are choosing not to.
In three months time families will once again be facing a cliff edge of unaffordable heating bills.
Updated
Jeremy Hunt prepares to unveil budget as experts welcome plan for £4bn expansion of free childcare
Good morning. Last year we had a series of huge fiscal announcements from the Treasury, as well as perhaps the most consequential “mini-budget” of all time (it brought down a PM), but we never an actual, proper budget. Today’s will be the first real once since autumn 2022. Jeremy Hunt will deliver it at 12.30pm.
Rather, deliver what is left of it. The Treasury itself has already briefed many of the significant measures in it. It sent out at least eight budget-related press notices in recent days, and another one arrived this morning, confirming that under the energy price guarantee energy unit costs will be capped for another three months, so that the average household faces an annual bill of £2,500. The cap was due to rise at the end of April, pushing an average bill up to £3,000. There is more coverage of this on our business live blog.
Chancellors always pre-announce some of the second-order budget announcement, because otherwise they will get no coverage on the day, but they like to save up something popular for the day itself. Conventionally, this is described as the “rabbit” being pulled out of the hat. Yesterday the Guardian got hold of the rabbit, and we yanked it out ourselves. Hunt is going to announce a £4bn expansion of free childcare for one- and two-year-olds in England. You can read the details here.
Magicians pull rabbits out of hats by means of an illusion; it’s fake. Budget announcements are meant to be a bit more credible, and so far the reaction to the childcare news has been positive.
James Bowen, director of policy for school and nursery at NAHT, the union for headteachers, said:
While we will need to look closely at the detail, if the government does increase the hourly funding rates to early years providers this will be welcome news. We know that the funding settings currently receive from government is woefully inadequate and many providers simply cannot afford to operate at those levels.
Paul Johnson, director of the Institute for Fiscal Studies, said the news was welcome, but that a wider review in this area was needed.
Many will welcome extension of free childcare.
— Paul Johnson (@PJTheEconomist) March 14, 2023
Look for funding though - funding current entitlement has been cut 13% since 2017.
As universal support has expanded, targeted support for children most in need has contracted.
Whole system is hugely complex. Needs proper review https://t.co/yFoHnrW55b
Abby Jitendra, a family policy expert at the Joseph Rowntree Foundation, also applauded the announcement, while saying wider change was needed.
Very good news on childcare!🐇🎩
— Abby Jitendra (@abbyabhaya) March 14, 2023
Expanding free childcare for 1 and 2 year olds should have a big impact on women's likelihood of working post-pregnancy. Positive signs that per-hour funding will increase too (or else fees would go up elsewhere). https://t.co/DE2crEcgK6
Hope this (& UC costs announcement already trailed) helps drive up take-up of support from low income households, who we know are excluded from formal childcare:
— Abby Jitendra (@abbyabhaya) March 14, 2023
📈 Universal free hours takeup - 90%+
😐 Low income 2 years support takeup - 72%
😵 UC costs takeup - 13%
Now we need to change the system itself...
— Abby Jitendra (@abbyabhaya) March 14, 2023
It's dysfunctional, with serious gaps in availability for parents working irregular hours or additional needs. There's poor financial oversight of extractive private providers & there's little incentive to shape good local systems.
Sebastian Payne, who runs Onward, a right-leaning thinktank, also praised the announcement.
This will be utterly fantastic news - a critical step for helping mothers back to work and providing necessary early years support - backing up @ukonward's recent research 🎉 https://t.co/PQPWHlOhWj
— Sebastian Payne (@SebastianEPayne) March 14, 2023
And this is from Justine Roberts, founder of the Mumsnet website.
After 23 years of banging on about how childcare is infrastructure they’ve finally listened to us 🎉 https://t.co/yyUQZpmPHM
— Justine Roberts (@Justine_Roberts) March 14, 2023
If you will forgive the mangling of two hackneyed political cliches, Hunt may be pulling out a rabbit, but shooting the fox. Labour has made it clear that it wants to make a big childcare promise part of its “retail offer” to voters at the next election. Hunt is now making that harder. In an initial response to the story, Rachel Reeves, the shadow chancellor, told LBC last night.
If it’s a serious package that’s going to make a difference to working parents, we’ll back it.
I will be covering the budget announcement with my colleague Graeme Wearden, who normally writes the business live blog, and bringing you analysis and reaction afterwards. Here are the key times for the day.
12pm: Rishi Sunak faces Keir Starmer at PMQs.
12.30pm: Jeremy Hunt delivers the budget.
2.30pm: Richard Hughes, chair of the Office for Budget Responsibility, holds a press conference.
I’ll try to monitor the comments below the line (BTL) but it is impossible to read them all. If you have a direct question, do include “Andrew” in it somewhere and I’m more likely to find it. I do try to answer questions, and if they are of general interest I will post the question and reply above the line (ATL), although I can’t promise to do this for everyone.
If you want to attract my attention quickly, it is probably better to use Twitter. I’m on @AndrewSparrow.
Alternatively, you can email me at andrew.sparrow@theguardian.com.
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