Budget 2023 – live updates: Pension lifetime allowance and childcare changes at a glance
OBR forecasts biggest fall in living standards on record as Labour’s Sir Keir Starmer accuses chancellor Jeremy Hunt of ‘permanent tax cut for wealthy’
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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.
Key points at a glance
From the economy to alcohol and tobacco, and from tax and benefits changes to defence, here are the key points Jeremy Hunt announced:
Budget key points: All you need to know about Jeremy Hunt’s spring statement
Everything you need to know about the chancellor’s ‘Budget for growth’
Corporation tax hiked despite Tory rebel warning
Jeremy Hunt faces a backbench Tory rebellion over the rise in corporation tax in the Budget. Influential MPs on the right have warned that raising the rate from 19 to 25 per cent would “hammer” businesses and curb growth:
Corporation tax hiked – despite Tory rebel warning on ‘hammer’ blow
Jeremy Hunt warned his hike will have ‘chilling effect on whole economy’
Budget ‘does not come close to legal climate and nature goals’
Conservationists say the budget did not “come close to delivering on the UK’s legally binding climate and nature goals”.
“We need to see policies that drive down emissions, restore nature and provide meaningful support for the public in the cost-of-living crisis,” said Kate Norgrove, WWF’s executive director of advocacy and campaigns.
“At every Budget we need to see the Government publish a net-zero tracker, showing whether public spending is in line with their legal climate and nature commitments.
“Until the government take the meaningful steps to rewire our economy to deliver on climate and nature action, we will continue to see budgets that fail to meet the challenge to save our wild isles.”
Pensions changes permanent tax cut for wealthy, says Labour leader
Labour leader Sir Keir Starmer described the generous tax-free pensions allowances in the Budget as a “permanent tax cut” for the wealthy.
Sir Keir told the Commons: “We needed a fix for doctors, but the announcement today is a huge giveaway to some of the very wealthiest.
“The only permanent tax cut in the Budget is for the richest 1%. How can that possibly be a priority for this Government?
“The truth is our labour market is the cast-iron example of an economy with weak foundations. Our crisis in participation simply hasn’t happened elsewhere, not to this extent; it is a feature of Tory Britain and global excuses simply won’t wash.”
Nuclear energy reclassed as ‘environmentally sustainable'
Nuclear energy is to be reclassified as “environmentally sustainable” to give it the same access to investment incentives as renewables, the Chancellor has said.
In his spring Budget, Jeremy Hunt said the Government will launch a Great British Nuclear scheme to “bring down costs” and “provide opportunities” in the supply chain with a view to nuclear power providing a quarter of the UK’s electricity generation by 2050.
He also launched a competition for small modular reactors (SMRs), which will be funded if the technology is proven to be viable.
Mr Hunt also said that he wanted to invest up to £20bn to help develop carbon capture usage and storage (CCUS) technologies, designed to suck up carbon emissions from major polluting industries.
However, none of the new money for CCUS that Mr Hunt has promised will come before the next election.
The Chancellor set out what he called the four Es - enterprise, education, employment and everywhere - as priorities.
Caroline Lucas, Green Party MP, said he had “utterly failed” to mention a fifth - environment.
She said: “Just when we needed a solar rooftop revolution, an unblocking and upscaling of renewables, a major street-by-street mass insulation programme, and a commitment to invest in our totally neglected, sewage-filled rivers and seas, we get too slow, too expensive and too dangerous nuclear white elephants.”
Most householders eligible for extended energy bill support
The cancellation of the energy price hike announced in the Budget does not apply to those on a fixed-term energy deal, so some customers will be locked in at higher prices than the current cap.
Similarly, some standard variable green energy tariffs have been exempted from the cap by Ofgem.
But the vast majority of customers are eligible, including those on pre-payment meters:
Who is eligible for Jeremy Hunt’s extended energy bill support?
The Treasury confirmed it is capping average annual household bills at £2,500
House prices to fall 10%, say forecasters
The OBR has predicted that house prices will fall by 10 per cent from their high in the last three months of 2022 – a 1 per cent point larger fall than in the November forecast.
And the number of property transactions is expected to drop by 20 per cent from its peak at the end of last year.
The OBR said low consumer confidence, the squeeze on real incomes and the expectation of mortgage rate rises to come are set to lead to house prices continuing to fall.
GDP forecast to grow
Gross domestic product (GDP) is forecast to start growing next year but underlying debt is also forecast to rise by comparison for up to four years.
It is predicted to be 92.4% of GDP next year, 93.7% in 2024-25; 94.6% in 2025-26, and 94.8% in 2026-27, before falling to 94.6% in 2027-28.
The deficit falls from 5.1% of GDP in 2023-24, to 3.2% in 2024-25, 2.8% in 2025-26, 2.2% in 2026-27 and 1.7% in 2027-28.
Watchdog forecasts biggest fall in living standards on record
The UK economy is set to avoid a recession but people are still expected to face the biggest fall in living standards on record, according to the fiscal watchdog.
The Office for Budget Responsibility (OBR) projected that the economy would shrink by less than expected and inflation will fall more sharply than previous forecasts, in an improved economic outlook in the near term.
Declining wholesale energy prices and cooling global inflation have improved the position of the Treasury compared with the last budget statement in November.
Previously, the OBR said the UK was due to enter a recession in 2022 and shrink by 1.4% in 2023.
However, the fresh projections show that the economy is set to avoid a technical recession - which means two consecutive quarters of decline - and shrink by 0.2% this year as whole.
What benefits reforms mean for sick, jobseekers and parents on welfare
The chancellor announced the system used to assess eligibility for sickness benefits will be scrapped, while parents on universal credit will be paid childcare support upfront, and there will be reforms to jobseekers on universal credit:
What are Jeremy Hunt’s benefits changes and when do they start?
The chancellor aimed the Budget at boosting employment by getting people back into work
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