- Childcare revolution to expand 30 hours free childcare for children over the age of nine months, alongside boosts to subsidised childcare for parents on Universal Credit including upfront support.
- A £27 billion tax cut for business through radical ‘full expensing’ policy and capital allowances reform which will drive investment and growth.
- Measures to ease cost-of-living burden will help more than halve inflation, with extension of Energy Price Guarantee and duties on fuel and a pub pint both frozen.
- Major set of reforms to support people into work, removing barriers that stop those on benefits, older workers, and those with health conditions who want to work from working.
- Inflation falling, debt down and growth up in Chancellor’s Spring Budget for Growth that delivers upon the Prime Minister’s economic priorities.
Aimed at achieving long-term, sustainable economic growth that delivers prosperity for the people of the United Kingdom, the Spring Budget breaks down barriers to work, unshackles business investment and tackles labour shortages head on.
Chancellor of the Exchequer, Jeremy Hunt said:
“Our plan is working – inflation falling, debt down and a growing economy.
“Britain is on a lasting path to growth with a revolution in childcare support, the biggest ever employment package and the best investment incentives in Europe.”
The Chancellor announced 30 hours of free childcare for every child over the age of 9 months, with support being phased in until every single eligible working parent of under 5s gets this support by September 2025.
The government 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 those who are on benefits. The maximum they can claim will also be boosted to £951 for one child and £1,630 for two children – an increase of around 50%.
The Chancellor went on to set out plans to continue to support households with cost-of-living pressures including keeping the Energy Price Guarantee at £2,500 for the next three months and ending the premium that over 4 million households pay on their prepayment meter, bringing their charges into line with comparable customers who pay by direct debit. Taken together with all the government’s efforts to help households with higher costs, these measures bring the total support to an average of £3,300 per UK household over 2022-23 and 2023-24.
To help household budgets further, the planned 11 pence rise in fuel duty will be cancelled, maintaining last year’s 5p cut for another twelve months, saving a typical driver another £100 on top of the £100 saved so far since last year’s cut.
The generosity of Draught Relief has also been significantly extended from 5% to 9.2%, so that the duty on an average draught pint of beer served in a pub both does not increase from August and will be up to 11 pence lower than the duty in supermarkets. The commitment to duty on a pub pint being lower than the supermarket has been termed the “Brexit Pubs Guarantee” by the Chancellor, and this change will also be enjoyed by every pub in Northern Ireland thanks to the Windsor Framework.
The Chancellor also set out a comprehensive plan to remove the barriers to work facing those on benefits, those with health conditions and older workers. An increase in the pensions Annual Allowance from £40,000 to £60,000 and the abolition of the Lifetime Allowance will remove the disincentives to working for longer. A new ‘Returnerships’ skills offer for older workers and more stringent Universal Credit job search requirements also feature in the plan that will boost the UK’s workforce, fill vacancies and support economic growth.
In line with the government’s vision for the UK to be the best place in Europe for companies to locate, invest and grow, a new policy of ‘full expensing’ will be introduced for the next three years to boost business investment in an effective cut to corporation tax of £9 billion per year. This makes the UK the joint most competitive capital allowances regime in the OECD and the only major European economy to have such a policy. The independent Office for Budget Responsibility (OBR) forecast that this will increase business investment by 3% for every year it is in place. Mr Hunt signalled an intention to make this scheme – which covers equipment for factories, computers and other machinery - permanent when responsible to do so.
Accompanying forecasts by the OBR confirm that with the package of measures Mr Hunt set out today, the economy is on track to grow with inflation halved this year and debt falling – meeting all of Prime Minister Rishi Sunak’s economic priorities. This comes alongside the confirmation that there are no new tax rises within the Spring Budget.
Significant reforms to childcare will remove barriers to work for nearly half a million parents with a child under 3 in England not working due to caring responsibilities, reducing discrimination against women and benefitting the wider economy in the process.
- 30 hours of free childcare for every child over the age of 9 months with working parents by September 2025, where eligibility will match the existing 3-4 year-old 30 hours offer.
- This will be introduced in phases, with 15 hours of free childcare for working parents of 2-year-olds coming into effect in April 2024 and 15 hours of free childcare for working parents of 9 months – 3 years old in September 2024.
- The funding paid to nurseries for the existing free hours offers will also be increased by £204 million from this September rising to £288 million next year.
- Schools and local authorities will be funded to increase the supply of wraparound care, so that parents of school age children can drop their children off between 8am and 6pm – tackling the barriers to working caused by limited availability of wraparound care.
- Childcare costs of parents moving into work or increasing their hours on Universal Credit paid upfront rather than in arrears, with maximum claim boosted to £951 for one child and £1,630 for two children – an increase of around 50%.
- In recognition of both the importance and short supply of childminders, incentive payments of £600 will be piloted from Autumn of this year for those who sign up to the profession (rising to £1,200 for those who join through an agency) to increase the number available and increase choice and affordability for parents.
The Chancellor set out a comprehensive plan to help people move into work, increase their hours, and extend their working lives, including for those on benefits.
- The Lifetime Allowance charge will be removed before being abolished altogether, removing barriers to remaining in work and simplifying the tax system by taking thousands out of the complexity of pension tax.
- The Annual Allowance will be increased from £40,000 to £60,000, incentivising highly-skilled workers to remain in the labour market. As a result of the pensions tax measures announced today, an estimated 80% of NHS doctors will not receive a tax charge with respect to accruals under the 2015 NHS career average scheme.
- A new ‘Returnerships’ apprenticeship targeted at the over 50s will refine existing skills programmes to make them more accessible to older workers, giving them the skills and support they need to find a recognisable path back into work.
- The midlife MOT offer will be expanded and improved to ensure people get the best possible financial, health and career guidance well ahead of retirement. There will be an enhanced digital midlife MOT tool and an expansion of DWP’s in person midlife MOTs for 50+ Universal Credit claimants, aiming to reach 40,000 per year.
- A DWP White Paper on disability benefits reform will herald the biggest change to the welfare system in the past ten years, to make sure it better meets the needs of disabled people in Great Britain. This includes removing the Work Capability Assessment, meaning the majority of claimants will now have to do one health assessment rather than two. Reforms will also support claimants to try work without fear of losing their financial support.
- A new voluntary employment scheme for disabled people and those with health conditions called Universal Support will be funded in England and Wales. The government will spend up to £4,000 per person to find them a suitable role and cater to their needs, supporting 50,000 places per year once fully rolled out.
- A £406 million plan to tackle the leading health causes keeping people out of work, with investment targeted at services for mental health, musculoskeletal conditions, and cardiovascular disease.
- Strengthening work search and work preparation requirements for around 700,000 lead carers of children aged 1-12 claiming Universal Credit in Great Britain.
- Increasing the Administrative Earnings Threshold (AET) - which determines how much support and Work Coach time a claimant will receive based on their earnings - for an individual claimant, from the equivalent of 15 to 18 hours at National Living Wage and removing the couples AET in Great Britain. Over 100,000 non-working or low-earning individuals will be asked to meet more regularly with their Work Coach for support to move into work or increase their earnings.
- The application and enforcement of the Universal Credit sanctions regime will be strengthened, by providing additional training for Work Coaches to apply sanctions effectively, including for claimants who do not look for or take up employment, and automating administrative elements of the sanctions process to reduce error rates and free up Work Coach time.
- Elsewhere, international talent will be attracted through a new migration package that includes adding five construction occupations to the Shortage Occupation List and expanding the range of short-term business activities that are covered under the UK’s six-month business visit visa offer.
The Chancellor put forward a plan to boost innovation, drive business investment and hold down energy costs.
- A ‘full expensing’ policy introduced from 1 April 2023 until 31 March 2026 and an extension to the 50% first-year allowance in the same period – a transformation in capital allowances worth £27 billion to businesses over three years.
- A £500 million per year package of support for 20,000 research and development (R&D) intensive businesses through changes to R&D tax credits.
- Generous reforms to tax reliefs for the creative sectors will ensure theatres, orchestras, museums and galleries are protected against ongoing economic pressures and even more world-class productions are made in the UK.
- The Medicines and Healthcare products Regulatory Agency (MHRA) will receive £10 million extra funding over two years to maximise its use of Brexit freedoms and accelerate patient access to treatments. This will allow, from 2024, the MHRA to introduce new, swift approvals systems, speeding up access to treatments already approved by trusted international partners and ground-breaking technologies such as cancer vaccines and AI therapeutics for mental health.
- All of the recommendations from Sir Patrick Vallance’s review into pro-innovation regulation of digital technologies, published alongside Spring Budget today, are to be accepted.
- £900 million of funding for an AI Research Resource and an exascale computer – making the UK one of only a handful of countries to have one – and a commitment to £2.5 billion ten-year quantum research and innovation programme through the government’s new Quantum Strategy.
To level up growth across the UK and spread opportunity everywhere, local communities will be empowered to command their economic destiny.
- Greater responsibility for local leaders to grow their local economy.
- Over £200 million for high quality local regeneration projects in areas of need, from the transformation of Ashington Town Centre to a skills and education campus in Blackburn.
- Over £400 million for new Levelling Up Partnerships for twenty areas in England most in need of levelling up, such as Rochdale and Mansfield.
- Business rates retention expanded to more areas in the next Parliament.
- Delivering trailblazer devolution deals for the West Midlands and Greater Manchester Combined Authorities that include single multi-year settlements for the next Spending Review, alongside a commitment to negotiate further devolution deals in England.
- 12 Investment Zones across the UK including 4 across Scotland, Wales and Northern Ireland
- £8.8 billion over the next five-year funding period for a second round of the City Region Sustainable Transport Settlements.
Many of today’s decisions on tax and spending apply in Scotland, Wales and Northern Ireland. As a result of decisions that do not apply UK-wide, the Scottish Government will receive around an additional £320 million over 2023-24 and 2024-25, the Welsh Government will receive £180 million, and the Northern Ireland Executive will receive £130 million.
- The Chancellor’s speech can be found here later this afternoon.
- Business taxes factsheet
- Labour market factsheet
- Health and Disability White Paper factsheet
- Other documents published alongside the Spring Budget today can be found here.
- The OBR’s Economic and Fiscal Outlook verifies that the two fiscal rules outlined by the Chancellor at the Autumn Statement – that underlying debt must fall as a percentage of GDP by the fifth year of the forecast and that public sector borrowing must be below 3% of GDP over the same period – are met with buffers of £6.5 billion and £39.2 billion respectively.