With much of the detail of the latest Government tax and spending plans leaked over the past week or so, today’s Budget Statement from Chancellor Jeremy Hunt (pictured) to the House of Commons has has many in the advice profession looking for confirmations about the shape of the economy, the outlook for growth and, of course, any changes to pensions legislation much talked about in the run up today’s statement – where there was a shock announcement of the abolition of the LTA not an increase to it as had been anticipated.
Early out of the traps this morning, HM Treasury confirmed that the Energy Price Guarantee will remain at £2500 for a typical household until the end of June. The current arrangement was due to expire at the end of March, so will continue for a further three months. It means that typical household bills will not increase to the £3,000 level which was previously announced.
Once Hunt got to his feet, he has announced the following:
His speech started by saying that the OBR forecast is that the UK will now not enter a technical recession this year and will return to growth in 24, 25, 26 and 27 with a fall of 0.2% this year compared with November forecasts of 1.3% for 2024, 2.6% for 2025 and 2.7% for the year after.
Also from the OBR, he announced that with regard to inflation, the OBR report forecasts that UK inflation will fall to 2.9% by the end of 2023 from 10.7% in Q4 2022.
As well as confirming the energy price guarantee news of which was released earlier, there was help announced for those on pre-payment meters, bringing them into line with comparable direct debit charges.
There were changes announced to the duty on charges of alcoholic drinks on draught in pubs around the UK with the11p a pint hike cancelled. On fuel duty he will maintain the 5p cut and freeze fuel duty for the next twelve months.
He announced falls in Government borrowing are planned for the next few years too but borrowing will be for investment and not day to day spending.
He then went on to categorise four pillars of growth, focused around five “E”s of Education, Enterprise, Employment and Everywhere.
‘Everywhere’ was the first one, with some local re-generation projects highlighted as well as funding for new Investment Zones, with a boost for business investment in the regions as Hunt confirmed he is going to create 12 investment zones in eight areas. The aim of these is in ‘driving business investment and level up’ the country, with increased tax breaks for investments made in these so-called ‘investment zones’.
On Enterprise, he is announcing measures on business taxation to be ‘pro business’. He reminds that the super deduction which was to end later this month, so he announced a new policy for firms paying 19% CT that there will be full capital expensing for firms for the next 3 years in full and can be deducted immediately from taxable profits. Firms making a profit of more than £250,000 will pay 25% CT on profits from April. The small business investment allowance is increased to £1m. There were also tax reliefs for creative sectors amongst others including funding to support carbon capture and storage projects. Nuclear power is now classed as ‘environmentally sustainable’.
On Employment, he talked first of the HSBC deal to take over SVB UK. There were measures to strengthen UK’s position in AI and quantum computing. He has accepted Sir PAtrick Vallance’s conclusions from his review last autumn and committed some funding. He says he wants to remove barriers to people working, starting with those inactive due to sickness or disability. So Govt is publishing a white paper on the subject today to allow those with long term conditions to seek work without losing right to financial support. There’ll be new Universal Support with Govt spending up to £4000 per person to help them find work as well as support for those in work to stay in work. He increased placement and support scheme as well as occupational health reviews. Children in care were also identified as needing extra help so he doubled the care relief threshold from £10k to £18k from next year for foster carers.
There is also support for workers over 50 years of age. To encourage more back into the labour force, Hunt announced changes regarding the ‘cliff edge of retirement’ with three steps to make it easier for those who wish to to work longer. Firstly increase the DWP mid life MOT Strategy, they’ll increase 5 fold to 40k a year. SEcond, a new kind of apprenticeship – returnerships – for those who want to return to work focusing on flexibility and previous experience.
Finally, and although changes had been widely leaked, the details differ dramatically to:
In a bid to encourage more older workers to remain in the workplace – especially Doctors – Hunt has announced he abolishing the pensions Iifetime allowance (LTA) currently £1,073,100 .
He also announced a large rise in the annual allowance, from £40,000 to £60,000 per annum as well as other changes to pensions legislation, notably that the Money Purchase Annual Allowance goes up from £4,000 to £10,000 and the minimum Tapered Annual Allowance goes from £4,000 to £10,000 from 6 April 2023.
Finally there were measures announced to support childcare – under the education tab. There were measures to boost the supply of child minders and to support cost pressures of child care providers. He has increased their funding from Sept 2023 and changed child to staff ratios to 1:5 although optional.
In measures designed to help people – young parents in particular – to get back to work, Hunt announced an extension of 30 hours of free childcare for children over the age of nine months and up to 4 years which will be phased in over the next few years to be fully in place by Sept 2025. There were also changes to childcare costs for those across Britain who are entitled to claim Universal Credit, with payments switching to an upfront rather than in-arrears basis – which had been widely reported beforehand. The maximum they can claim has been increased by almost 50%.
Hunt sat down at 13.33pm, to be followed by words from Labour leader Sir Keir Starmer.