Today, the Chancellor delivered the Spring Budget, setting out the Government’s plan to drive forward economic growth and support households.
At the Autumn Statement last year, the difficult but necessary decisions on tax and spending were taken in order to restore economic stability, support public services, and lay the foundation for long-term growth. As a result of these decisions, the Chancellor announced today that we have avoided recession and that growth is forecast to return.
The Spring Budget builds on this strong foundation and introduces a clear and fully-costed plan to deliver on three of the five key priorities set out by the Prime Minister in January: to halve inflation; grow the economy; and get debt falling.
In order to achieve this, the Budget centres on facilitating growth by focusing efforts on four key pillars – Enterprise, Employment, Education, and Everywhere – which will:
- remove the obstacles that stop businesses investing;
- tackle the labour shortages that stop them recruiting;
- break down the barriers that stop people working; and
- harness British ingenuity to make us a science and technology superpower.
The Chancellor also took the opportunity to roll out additional support for households to help further mitigate cost of living pressures.
I hope that the following summary of the Chancellor's key announcements is helpful to local residents.
Cost of Living Support
The Government will deliver a £94 billion cost of living package, which will include:
- Capping the Energy Price Guarantee (EPG) for all households and adjusting it to end the premium paid by those on prepayment meters. For the next three months, the price households pay for their energy will continue to be capped at £2,500. The EPG will then increase to £3,000 from 1st July and remain in place until 31st March 2024. The EPG will also be adjusted from 1st July 2023 so that the over four million households using prepayment meters will no longer pay a premium for their energy, saving customers £45 a year.
- Freezing fuel duty for the thirteenth consecutive year at current levels for the next 12 months, delivering a saving of around £200 for the average driver since the record 5p cut was introduced.
Growing the Economy
- Cutting taxes for businesses and rewarding them for every pound they invest in the UK. Full-expensing will offer 100% first-year relief on new qualifying investments in main rate plant and machinery from 1st April 2023 until 31st March 2026. For every pound a company invests, their taxes will be cut by up to 25p.
- Increasing support for the R&D sector to cement the UK’s position as a science superpower to grow the economy. From 1st April 2023, a higher rate of relief for loss-making R&D intensive SMEs will be introduced. SMEs for which qualifying R&D expenditure constitutes at least 40% of total expenditure will be able to claim a higher payable credit rate of 14.5% for that expenditure.
- Simplifying the tax system for SMEs. A systematic review into taxes paid by SMEs and a consultation to expand the ‘cash basis’ – a simplified way for four million sole traders to calculate and pay their Income Tax - will be held. A range of measures to simplify customs import and export processes for SMEs will also be introduced.
- Launching a competition to build Small Modular Reactors (SMRs). The state-owned body, Great British Nuclear, will launch a competition to build SMRs in the UK and include nuclear energy in the green taxonomy.
- Providing up to £20 billion for early deployment of carbon capture usage and storage. This is particularly focused on the East Coast, North West of England and North Wales, but additional clusters will be selected through a Track 2 process, with details announced shortly.
- Launching 12 Investment Zones. A re-focused Investment Zone programme will be launched to catalyse twelve new zones to boost economic growth and new jobs. England based Investment Zones will have access to up to £80 million over five years.
- Introducing 30 free hours of childcare per week for children from 9 months to 4 years. Free childcare will be expanded so that working parents will be able to access 30 hours of free childcare per week from when their child is 9 months old to when they start school, worth £6,500 per year per child from 2025.
- Paying Universal Credit childcare costs up front rather than in arrears to encourage more Universal Credit claimants to take up more work.
- Increasing the Universal Credit childcare cost maximum. The Universal Credit childcare cost maximum amounts will be increased to £950 for one child and £1,629 for two children to encourage more Universal Credit claimants to take up work.
- Increasing the hourly rates paid to providers of free childcare. £204 million will be paid next year, increasing to £288 million by 2024-25, with further uplifts to follow each year, to support the sector to meet rising costs and facilitate the expansion of new free hours and improve quality of provision.
- Introducing market reforms to the childcare sector. The minimum staff-to-child ratio for 2 year olds will be changed from 1:4 to 1:5 to allow providers more flexibility and bring England’s requirements more closely in line with international norms.
- Introducing grants for childminders to support them with start-up costs. The grant will amount to £600 for individual applicants and up to £1,200 for applicants who apply through a childminder agency.
- Increasing the annual pension allowance to £60,000 and abolishing the Lifetime Allowance. The effect of the lifetime allowances for pensions will be removed from April 2023, before being completely abolished. The annual allowance for pensions will be increased to £60,000 to encourage older workers, especially doctors, to stay in work.
- Increasing the Administrative Earnings Threshold from 15 to 18 hours. Over 100,000 Universal Credit claimants, including those in-work and on lower earnings and non-working or low earning partners on Universal Credit, will receive more regular support from a Work Coach to help them take active steps to move into work or increase their earnings.
- Strengthening the Universal Credit sanctions regime. Parts of the process will be automated to reduce error rates and additional training for Work Coaches will be provided so that they can apply sanctions more effectively, including for claimants who do not look for or take up employment.
- Launching a new Universal Support programme. Disabled and long-term sick individuals who want to work will be matched with existing job vacancies and will be supported by tailored mental health services and an ambitious programme of digitation for the management of long-term health conditions.
- Abolishing the Work Capability Assessment. A timetable will be set to abolish the Work Capability Assessment and remove the distinction between capable and not capable for work to make the system better for disabled people and ensure they find the job that is right for them.
The Government announced a number of specific measures to support the East Midlands, including:
- An additional £250,000 through the Community Ownership Fund for the Loughborough Generator Project, which is transforming the former generator hall in Loughborough into an arts and culture hub with workspace for creative industries, a multi-media arts space for live performances, a venue for exhibitions and corporate events, space for use by local arts organisations and community groups, and a café. This funding comes alongside the crowdfunding campaign to help double the money being provided to the Project by the Architectural Heritage Fund.
- Draught Relief from 1st August, which will freeze the duty charged on a typical pint of beer in the pub and ensure that it will always be lower than in a supermarket. This will benefit 3,140 public houses and bars in the region, helping the hospitality sector with higher costs.
- £22.9 million to fix potholes, including £3.1 million for Leicestershire, which will fix the equivalent of 460,000 potholes.
- A new devolution deal with local authorities, empowering local leaders and equipping them with deeper and additional policy levers to deliver on local priorities.
This comes alongside a number of other national initiatives, including:
- Confirming the Levelling Up Fund Round 3. Following the success of the £3.8 billion already invested across the UK in Rounds 1 and 2, there will be a third round of the fund with details announced shortly.
- Providing £60 million to the Swimming Pool Support Fund to support public swimming pools address immediate cost-pressures and invest in energy efficiency measures.
- Investing an extra £5 billion in defence and national security over the next two years. Of this, £1.98 billion will be spent in 2023-24 and £2.97 billion will be spent in 2024-25. Spending will then be at £2 billion for the three years after 2024, bringing the total spend to £11 billion by 2028.
- Investing £3 billion across the defence nuclear enterprise to support areas such as the construction of industrial infrastructure to enhance nuclear skills and support the delivery of AUKUS, the trilateral security pact between Australia, the United Kingdom, and the United States.
- Investing £1.9 billion in replenishing and bolstering UK munitions stockpiles to replace items donated to Ukraine, building on the £560 million provided at the Autumn Statement.
- Providing an additional £33 million to support veterans. The £33 million will be invested over the next three years and split between three projects: World Class Veteran Support Infrastructure; Veterans’ Mobility Fund; and Veteran Capital Housing Fund.
- Setting an ambition to spend 2.5% of GDP on defence. The Integrated Review Refresh has set a new ambition to reach 2.5% of GDP when the fiscal and economic situation allows.
If you would like to read the Budget documents, they can be found here.
You can watch the Chancellor’s speech here.
If you would like any further information about anything I have mentioned above, please do send me an email at: email@example.com