The Chancellor delivered his Spring Budget today, announcing a wave of major economic and financial changes for households all across the country.
Jeremy Hunt highlighted that the focus of this Budget was to bring in growth measures and help reignite the economy while encouraging people to re-enter the workforce following the effects of the Covid-19 pandemic.
For most of the public, it means a wide range of new support packages and money changes that could affect you, especially if you receive any kind of benefits or depend on the Energy Price Guarantee.
Read more: Energy price guarantee to be extended at £2,500 - what the change means for you
Introducing his fiscal statement and discussing the growth it will bring, Mr Hunt said: "I deliver that today by removing obstacles that stop businesses investing; by tackling labour shortages that stop them recruiting; by breaking down barriers that stop people working; and by harnessing British ingenuity to make us a science and technology superpower.”
He also claimed the UK would not now enter a recession.
He said: “Let’s turn now to what the OBR say about our growth prospects. In November, they expected that the UK economy would enter recession in 2022 and contract by 1.4% in 2023. That left many families feeling concerned about the future.
“But today, the OBR forecast we will not enter a recession at all this year with a contraction of just 0.2%. And after this year the UK economy will grow in every single year of the forecast period: by 1.8% in 2024; 2.5% in 2025; 2.1% in 2026; and 1.9% in 2027.”
Here is a breakdown of what was announced today and what it means for you...
Public funding investment
The Chancellor announced £63 million fund to keep public pools and leisure centres "afloat". £100 million will also be given to support charity work that helps struggling families.
Meanwhile, £10 million in extra funding will be given over the next two years to help the voluntary sector "play an even bigger role" in preventing suicide. In a nod to Sajid Javid, Mr Hunt went on: “I also note the personal courage of one of my predecessors (Mr Javid) in talking about the tragedy of suicide and the importance of preventing it.
“We already invest a lot in this area, but I will assign an extra £10 million over the next two years to help the voluntary sector play an even bigger role in stopping more families experiencing such intolerable heartache.”
Duty on draught products and fuel
Duty will be made 11 pence lower in pubs compared to supermarkets. It's part of a new "Brexit pubs guarantee", according to the Chancellor.
The change will also apply to pubs in Northern Ireland due to negotiations from the Windsor Framework. Fuel duty will also not be uprated over the next 12-month period, saving the average driver around £100 each year, the Chancellor said.
Mr Hunt explained: “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.”
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.”
Back to work budget and disability reforms
Mr Hunt announced a new back-to-work package which will aim to encourage those over 50, the long-term sick and disabled and benefit claimants to go back into the workforce in an attempt to recover from the effects of the pandemic. As part of the new plans, the system used to assess eligibility for sickness benefits will be axed.
In England and Wales, a new programme known as Universal Support will provide support for disabled people to find work if they want to. A £400m plan will be provided for mental health and other resources for those who are unable to work due to medical issues.
Mr Hunt said: "This is a new, voluntary employment scheme for disabled people where the Government will spend up to £4,000 per person to help them find appropriate jobs and put in place the support they need. It will fund 50,000 places every single year.”
He added: "I am also announcing a £400 million plan to increase the availability of mental health and musculoskeletal resources and expand the individual placement and support scheme.”
Universal Credit reforms
Universal Credit claimants will be subjected to higher sanctions if they turned down job offers. Mr Hunt said: “There are more than two million jobseekers in this group, more than enough to fill every single vacancy in the economy.”
After claiming that “independence is always better than dependence” to jeers from the SNP, Mr Hunt added: “Sanctions will be applied more rigorously to those who fail to meet strict work-search requirements or choose not to take up a reasonable job offer.
“For those working low hours, we will increase the Administrative Earnings Threshold from the equivalent of 15 hours to 18 hours at National Living Wage for an individual claimant, meaning that anyone working below this level will receive more work coach support alongside a more intensive conditionality regime.”
New investment zones and levelling up funds
The Chancellor highlighted 12 new investment zones, including in Greater Manchester, that will provide access to £80 million of support for raising skills and infrastructure. Meanwhile, over £200 million will be interested in local regeneration projects.
The Chancellor said the Government would deliver 12 new investment zones, which he labelled “12 potential Canary Wharfs”. Mr Hunt added: “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.”
Energy Price Guarantee rise axed
The government has announced its plans to axe a proposed increase to the Energy Price Guarantee. The cap will remain at £2,500 for an additional three months to help 'bridge' the gap as companies wait for wholesale prices to fall below Ofgem's energy cap in July.
Chancellor Jeremy Hunt, who included the measure in his Budget being unveiled today, said: “High energy bills are one of the biggest worries for families, which is why we’re maintaining the energy price guarantee at its current level. With energy bills set to fall from July onwards, this temporary change will bridge the gap and ease the pressure on families, while also helping to lower inflation too.”
Business tax reforms
Jeremy Hunt announced corporation tax rise to 25 per cent. He also 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.”
Pension changes
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”.
Boost to the defence budget
As the war in Ukraine continues to rage on, the government will now invest an extra £5 billion towards the military over a two-year period - accompanied by an extra £1.98 billion this year and £2.97 billion next year.
A total of £11 billion will be added to the defence budget over the next five years. Mr Hunt also noted that 2.5 per cent of Britain's GDP will be allocated to defence when the economy stabilises.
Mr Hunt said: “Today, following representations from our persuasive Defence Secretary, I confirm that we will add a total of £11bn 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.”
A £30 million package will also be allocated to support veterans and increase veteran housing.
Extension to free childcare
Mr Hunt announced a significant expansion to free childcare. This includes a new investment which will allow up to 30 hours a week of free childcare to be extended to nine months and two-year-olds.
The funding paid to nurseries will also be increased by £200 million in December rising to £288 million next year while more flexibility will be provided as the ratio changes from 1-4 to 1-5.
Mr 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 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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