Chancellor Jeremy Hunt has delivered the Spring Budget in the midst of a cost of living crisis and his solution to fixing the UK’s current economic crisis is growth.
In his speech on Wednesday, Mr Hunt 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 people into work by removing barriers preventing them from finding employment.
The Spring Budget produced some clear ‘winners’ who could get a boost or see the pressure on their financial situation eased, as well as ‘losers’ who will feel more of a squeeze on their household spending. While the political commentators are still talking about the implications of the announcements and analysing the raft of new reports published we take a look at the key points and how they might impact you.
How the Budget will affect people and households
Energy bills
Plans to increase the £2,500 Energy Price Guarantee (EPG) to £3,000 rom April 1 have been scrapped which will ease some of the pressure on households.
However, the £400 Energy Bills Support Scheme, which has seen some 29 million households receive a £66/£67 monthly discount since October 2022, will end this month and will not be extended.
This means households will needs to prepare for a £67 increase on their energy bills from April.
Some four million households using a prepayment meter will see costs cut from July 1 when changes come into effect bringing usage charges into line with Direct Debit charges.
Some people on benefits
Amid efforts to encourage people into the workplace, there will be a ramping up of sanctions for claimants who do not look for or take up employment.
Budget documents said that the UK Government is strengthening the way the sanctions regime is applied, including ensuring that work coaches have the tools and training to implement sanctions as effectively as possible, including for failing to take up a job.
Savers
Annual subscription limits for tax-free ISAas will remain frozen at £20,000, at a time when surging inflation has been eroding the real value of people's savings.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: "It is disappointing that the Chancellor has opted not to reform the Lifetime ISA regime. The 25% penalty on early LISA withdrawals penalises people who have tried to build their financial resilience but then need to access their money during difficult times.
"People may benefit from a 25% bonus on the way in, but the 25% penalty not only takes away this bonus, it also takes a chunk of their hard-earned savings too. Reducing it to 20% as it was during the pandemic would negate this and make LISAs a more attractive product for people looking to build up retirement savings."
People with higher pension pots
Wealthier pension savers with significant sums to put away will be boosted by an increase to the pensions annual allowance - the limit on how much money people can build up in their pension in any one tax year while still benefiting from tax relief - from £40,000 to £60,000.
The lifetime pensions allowance meanwhile will be abolished - it has stood at £1.07 million, with savers incurring tax after that personal pension pot threshold was exceeded.
The move could particularly help people in senior roles, such as those working in the NHS, to remain in the workplace.
Parents with young children - England only (for now)
Chancellor Jeremy Hunt announced an expansion of free childcare for children over the age of nine months.
Plans include providing 30 hours a week of childcare for eligible working parents in England with children as young as nine months old.
The state will also pay the childcare costs of parents on Universal Credit moving into work or increasing their hours upfront, rather than in arrears, removing a major barrier to work for people receiving benefits.
Scottish Conservative finance spokeswoman, Liz Smith, has demanded that the SNP follow the Chancellor’s lead on childcare support.
Ms Smith said: “It’s essential that the SNP Government follow suit on this now they’ve been given the funding.
“The cost of childcare is a major impediment to new parents returning to work, so this measure will really stimulate economic growth.”
Fuel prices
A planned 11p rise in fuel duty will be cancelled, maintaining last year's 5p cut for another 12.
The UK Government said this will save a typical driver another £100 on top of the £100 saved so far since last year's cut.
Homeowners and renters
Some commentators have urged more action to support the housing and rental markets.
Nick Leeming, chairman of estate agent Jackson-Stops said: "Measures such as offering a tax break incentive for downsizers - or indeed right-sizers - to find a home that suits their changing lifestyle, would free up much needed housing stock at the middle and upper end of the market, and one that could be well received amongst older homeowners who are suffering most with high energy costs."
Polly Neate, chief executive of Shelter, said: "The Chancellor could have put an end to spiralling homelessness, but instead he's stuck his head in the sand."
She added: "Yet again we have a Budget that does nothing to help struggling renters who are drowning in debt and rapidly rising rents."
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