Budget 2023: Pension lifetime allowance cap abolished
Jeremy Hunt has promised a major expansion in state-funded childcare and tax breaks for businesses in Budget measures aimed at boosting economic growth.
The Chancellor said a recession would be avoided and inflation would fall dramatically as the economy was “proving the doubters wrong” in his statement to the Commons on Wednesday.
In an effort to remove barriers to work, he promised up to 30 hours a week of free childcare for eligible households in England with children as young as nine months.
Mr Hunt resisted demands from Tory MPs to scrap April’s increase in corporation tax from 19% to 25%, but he instead promised a set of reliefs to help firms reduce their bills.
And as part of a package aimed at helping with the cost of living, the Chancellor said the energy price guarantee will be extended at its current level from April to June.
However, fiscal watchdog the Office for Budget Responsibility forecast the biggest fall in living standards on record.
The OBR upgraded its growth forecast for 2024 from 1.3% to 1.8%, but downgraded predictions for the following years to 2.5% in 2025, 2.1% in 2026 and 1.9% in 2027.
Budget at a glance
- Inflation is expected to fall to 2.9% by the end of the year
- Lifetime allowance limit on pensions axed and pensions annual tax-free allowance rises to £60,000
- Incentive payments of £600 for childminders joining the profession will be tried out
- Minimum staff-to-child ratio will change from 1:4 to 1:5 for two-year-olds in England
- 30 hours of free childcare for all under-fives
- Plan for schools to offer wrap-around care either side of the school day by September 2026
- Energy price guarantee will be extended for three months
- Welfare reforms will be designed to support more disabled people into work
- Sanctions reforms will be aimed at getting people on Universal Credit benefits into work
- Another £11 billion will be added to the defence budget over five years
- 12 new investment zones and at least one in each of Scotland, Wales and Northern Ireland
- Up to £20bn will be allocated for carbon capture and storage
- Nuclear power will qualify for the same investment incentives as renewable energy
- The Chancellor announced an annual £1 million prize for AI research over the next 10 years, called the “Manchester Prize”
- Tax on draught products in pubs will be up to 11p lower than in supermarkets
Sam Rkaina15 March 2023 15:59
Welcome to our liveblog where we will keep you updated with the latest ahead of the chancellor’s Budget tomorrow.
Maryam Zakir-Hussain14 March 2023 16:29
What to expect from Jeremy Hunt’s Spring Budget 2023
The Budget comes in the wake of the autumn statement last November, which saw the chancellor hike taxes as he and Rishi Sunak sought to restore UK financial credibility after Liz Truss’ short-lived premiership.
This time, the chancellor is expected to focus on measures that will get various cohorts back to work as part of a wider push to boost growth.
Here’s what we know so far and what we can likely expect in the Budget this week.
Maryam Zakir-Hussain14 March 2023 16:35
Record number of workers on long-term sickness ahead of Hunt’s ‘back-to-work’ Budget
The number of Britons off work due to long-term sickness has reached record levels the latest official figures show, ramping up pressure on the Chancellor ahead of his “back-to-work Budget” on Wednesday.
Data from the Office for National Statistics (ONS) revealed that there were 2.52 million people off work due to long-term sickness in the three months to January – up 2.6% quarter-on-quarter and 7.9% year-on-year and the highest since record began in 1993.
Maryam Zakir-Hussain14 March 2023 16:36
How the price of alcohol will be hit by Jeremy Hunt’s Budget
Jeremy Hunt, the chancellor, is primed to hike alcohol duty in line with inflation – currently running at an eye-watering 10.1 per cent.
And a separate tax targetting higher strength drinks is due to come into force despite the biggest cost of living squeeze for a generation.
Some drink-makers have already increased the price of their products due to inflationary pressures and any further tax hikes would likely be passed on to consumers.
Maryam Zakir-Hussain14 March 2023 16:37
Child Trust Fund: How to check if you are one of millions sitting on share of £2bn government money
Young adults could be entitled to a free sum of £1,900 if they access money amassed in unclaimed child trust funds (CFTs).
The National Audit Office (NAO) has warned that people are losing track of long-term tax free savings accounts set up under a Labour government for children born between 1 September 2002 and 2 January 2011, with more than a quarter of CFTs remaining untouched for a year or more after their owners turned 18.
Parents of the 6.3 million children born during the period were sent a £250 voucher shortly after their child was born, to open a fund. If they failed to do this before the child’s first birthday, HMRC opened an account on the child’s behalf.
Maryam Zakir-Hussain14 March 2023 16:45
All of the benefits, pensions and cost of living payments going out in March
This month many in the UK will still be looking anxiously at their energy bills and thinking twice about switching the heating on.
Ofgem has announced that its cap on the amount suppliers can charge for energy for average dual fuel, direct debit customers will fall by 23 per cent for the three months from 1 April to £3,280, from £4,279 for the January to March quarter. But campaigners warn that imminent changes to the government support measures, introduced last year to tackle soaring domestic energy costs, mean many could actually end up paying more.
Chancellor Jeremy Hunt has announced that the energy price guarantee – introduced by Liz Truss last September to ensure households paid no more than £2,500 for their electricity and gas, with the government subsidising the remainder permitted by the cap – would be increased to £3,000 from next month.
Maryam Zakir-Hussain14 March 2023 17:00
UK top stocks claw back losses after Silicon Valley collapse
The UK’s top stocks have clawed back some of the losses suffered on Monday after the collapse of Silicon Valley Bank prompted a global sell-off of banking stocks.
The FTSE 100 jumped by more than 1% on Tuesday afternoon, marking a rollercoaster session for the stock exchange which started the day firmly in the red.
But London’s top index did not manage to fully offset the 2.6% decline on Monday, which saw more than £50 billion wiped off its total value.
The failure of the tech-focused lender in the US sparked fears that the national’s financial system was beginning to buckle under the weight of a relentless series of interest rate rises.
It led some analysts to predict the Federal Reserve could leave the base rate unchanged at the next monetary policy meeting in efforts to stabilise the global economy.
But President Joe Biden sought to reassure Americans that the banking system was sound and people’s deposits were safe.
Nevertheless, he promised to look at new banking regulations to make it less likely that such a large bank failure can happen again.
Sam Rkaina14 March 2023 17:34
‘Distinct feeling of confidence’ contagion won’t spread
London’s top banking stocks like Standard Chartered, Barclays and HSBC had returned to growth on Tuesday after sinking into the red at the start of the week.
The FTSE 100 closed 88.48 points higher, or 1.17%, at 7,637.11.
Other European stocks managed to rebound after seeing even greater declines than the UK, with the German Dax moving 1.83% higher and the French Cac up 1.86%.
US investors started the day’s trading on a positive note, with the S&P 500 up 1.2% and Dow Jones up 0.65% when European markets closed.
Joshua Mahony, senior market analyst at online trading platform IG, said: “Market sentiment appears to have a turn for the better today, with equities throughout Europe and the US moving higher despite ongoing concerns over the health of the banking sector.
“The demise of Silicon Valley Bank brought concerns of further contagion throughout regional banks, leading to widespread calls over who could be the next to fall.
“However, while there are likely to be others which will have to write down bond market investments, parallels to the global financial crisis should be limited.
“With US banking stocks seeing widespread gains, there is distinct feeling of confidence that we will not see widespread issues arise throughout the financial sector.”
The pound slipped on Tuesday and was down by around 0.3% to 1.215 against the US dollar and down 0.1% to 1.1341 euros by the time markets closed.
Sam Rkaina14 March 2023 18:00
Plea for Hunt to support charities in Budget as ‘majority fear for their survival’
Pressure is mounting on Jeremy Hunt to provide targeted support for charities in his upcoming Budget, as new data revealed the extent to which falling donations are failing to keep up with soaring demand.
The chancellor was warned just days ago that half of charities fear they will not survive as the inflation crisis sees the cost of energy, rent and supplies skyrocket.
A group of more than 30 organisations wrote to Mr Hunt last week urging him to issue targeted funding for charities to support with energy costs and to increase payment for governmnet contracts in line with inflation.
Andy Gregory14 March 2023 18:58