Budget 2023: All The Key Points And What It Means For You

Jeremy Hunt has unveiled his plan for growth with new measures on childcare, energy bills and pensions.
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Jeremy Hunt unveiled what he branded “growth Budget” on Wednesday, which he said was designed to get more people back into work. 

Here are all the main announcements from the chancellor.

Childcare

Parents will be given extra 30 hours a week free childcare for every single child over the age of 9 months, starting the moment maternity or paternity leave ends.

The chancellor said the package would be worth on average £6,500 every year for a family with a two-year-old child using 35 hours of childcare every week, reducing childcare costs by nearly 60%.

But the measure will be introduced in stages.

Working parents of two-year-olds will be able to access 15 hours of free care from April 2024.

From September 2024, that 15 hours will be extended to all children from 9 months up.

From September 2025 every single working parent of under 5s will have access to 30 hours free childcare per week.

For parents on universal credit, help will be given up front instead in arrears.

The minimum staff-to-child ratios in nurseries will also be changed from 1:4 to 1:5 for two-year-olds in England as happens in Scotland.

Energy Bills

The energy price guarantee, which caps average household bills at £2,500, will be extended at its current level until June. It had been due to rise to £3,000 in April. Hunt said the measure will save the average family a further £160.

Prepayment meter customers - usually those on low incomes - will also no longer be charged more for energy that people who pay by direct debit. More than four million households are expected to now save around £45 a year on their bills.

Benefits

The work capability assessment, which determines whether a person is able to work, will be scrapped.

But sanctions will be applied “more rigorously” to those who fail to meet strict work-search requirements or choose not to take up a reasonable job offer

Hunt also announced a new programme called Universal Support, a voluntary employment scheme for disabled people. The government will spend up to £4,000 per person to help them find “appropriate” jobs and will fund 50,000 places every single year.

Pensions

Workers will be allowed to put more money into their pension pot before being taxed by lifting the lifetime pension allowance. The current £40,000 cap has been increased to £60,000.

The Lifetime Allowance - the total amount of money you can build up in a pension scheme - has been abolished. It previously was set at £1.07m.

Fuel

The 5p cut in the price of petrol and diesel will be kept along with the freeze on fuel duty for another 12 months. Hunt said this will save the average driver £100 next year, around £200 since the 5p cut was introduced.

Beer and wine

A new ”Brexit pubs guarantee” will see the tax on draught beer served in pubs will be up to 11p lower than the duty in supermarkets.

But Hunt confirmed alcohol duties will rise with inflation - currently running at around 10% - from August 1, bringing to an end the current freeze. The price hike will coincide with the introduction of a new system which will see alcoholic drinks taxed based on their strength. The changes will see the price of wine jump by about 44p a bottle

Corporation tax

Despite Tory MPs demanding it be scrapped, Hunt confirmed corporation tax - the rate companies pay on their profits - will rise from 19% to 25%.

Hunt also announced a new “full expensing” policy - at a cost of £9bn - for the next three years. It means money a company invests in IT equipment, plant or machinery can be deducted in full and immediately from taxable profits.

Defence

The Ministry of Defence will be given extra £5bn over two years and a total of £11bn over the next five years.

The extra funding is expected to take spending from 2% of GDP in 2020 to 2.5% “as soon as fiscal and economic circumstances allow”. But Hunt and Sunak have rejected demands that spending rise to 3% of GDP. 

 

The measures came as the the Office for Budget Responsibility (OBR) forecast the UK would now avoid a recession.

The independent financial watchdog also said inflation looks set to fall from 10.7% in the final quarter of last year to 2.9% by the end of 2023.