A recap of the spring budget 2023
The UK will avoid entering a recession Jeremy Hunt said as he hailed an economy “proving the doubters wrong”, although growth remains sluggish.
The Chancellor used the improved economic picture to promise an extension of support for household energy costs and he is also expected to promise a major expansion of free childcare.
He said the economy would avoid a technical recession, although the Office for Budget Responsibility (OBR) still forecast a contraction of 0.2% this year, a significant improvement on the -1.4% predicted in November.
Cost of living support
The three-month extension of the energy price guarantee (EPG) at its current £2,500 level will save a typical household around £160, the Government said.
Prime Minister Rishi Sunak said: “We know people are worried about their bills rising in April, so to give people some peace of mind, we’re keeping the energy price guarantee at its current level until the summer when gas prices are expected to fall.
“Continuing to hold down energy bills is part of our plan to help hardworking families with the cost of living and halve inflation this year.”
The EPG had been due to rise to £3,000 in April, but falling energy prices mean that the current level can be extended to “bridge the gap” until costs fall below the cap.
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.”
Major expansion in state-funded childcare
The Chancellor announced 30 hours of free childcare for all under-5s from the moment maternity care ends, where eligible.
Jeremy 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.”
Increased draught relief for pubs
Mr Hunt said: “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.”
Levelling-up funding
The Chancellor announced a series of levelling-up and local transport-related funding pots.
Jeremy Hunt told the Commons: “I will invest over £200m in high-quality local regeneration projects across England including the regeneration of Tipton town centre and the Marsden New Mills Redevelopment Scheme. I am also announcing a further £161m for regeneration projects in Mayoral Combined Authorities and the Greater London Authority.
“And I will make over £400m available for new Levelling Up Partnerships in areas that include Redcar and Cleveland, Blackburn, Oldham, Rochdale, Mansfield, South Tyneside, and Bassetlaw.
“Having listened to the case for better local transport infrastructure from many Members, I can announce a second round of the City Region Sustainable Transport Settlements, allocating £8.8 billion over the next five-year funding period.”
Forecasts for the future
Chancellor Jeremy Hunt said of the Office for Budget Responsibility: “They forecast we will meet the Prime Minister’s priorities to halve inflation, reduce debt and get the economy growing. We are following the plan and the plan is working.”
Mr Hunt highlighted cost-of-living support, adding: “Today, we deliver the next part of our plan. A Budget for growth.
“Not just the growth that comes when you emerge from a downturn, but long-term, sustainable, healthy growth that pays for our NHS and schools, finds jobs for young people, and provides a safety net for older people all whilst making our country one of the most prosperous in the world. Prosperity with a purpose.”
The Chancellor summarised his plans to deliver a growth for the UK economy.
Jeremy 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.”
Hunt claims the UK will 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.”