What are the Highlights from the Spring Budget?

The Chancellor, Jeremy Hunt, has just presented the Spring Budget to the House of commons, here are a few of the highlights that have caught our eye.

 Changes to Childcare

The chancellor has announced he wants to reform the childcare system and believes the new changes could get 11 million more women into work.

Parents of children aged nine months to three years will be offered 30 hours a week of free childcare in term time – as long as both parents are working at least 16 hours a week.

The change will be phased in gradually, by September 2025 – to allow for new provision to be available.

Universal credit claimants will be able to receive childcare funding upfront, instead of in arrears, with the £646-a-month per child cap raised to £951

A new £600 “incentive payments” will be offered for those becoming childminders, and rules in England to be relaxed to let childminders look after more children.

Local authorities will be given more funding for wraparound care, from 8am-6pm, with an ambition that all schools will offer it by September 2026.

The chancellor will increase the funding for free nursery places, by £204m from September, and £280m next year – an average increase of 30%.

There will be tougher requirements to look for work and increased job support for lead child carers on universal credit.

Employment changes

The Chancellor has announced the scrapping of the work capability assessment – though details of its replacement are not yet clear.

The government will be introducing a new voluntary employment scheme for disabled people, universal support, worth £4,000 for up to 50,000 people.

Additionally, it was announced that a £400m scheme to make more support for mental and physical health available to workers with health problems.

More places on “skills boot camps” to encourage over-50s who have left their jobs to return to the workplace.

Pension

In a major move, Jeremey Hunt is scrapping the lifetime allowance on tax-free pension contributions, which is currently £1.07m.

In addition, the annual tax-free pension allowance will rise to £60,000 from the current rate of £40,000.

Energy and Fuel prices

Fuel duty has been frozen and the 5p cut to fuel duty on petrol and diesel, due to end in April 2023, will be kept for another year.

The government help with energy bills, limiting the typical household energy bills to £2,500 a year, is also being extended for another three months to the end of June 2023.

Inflation and the cost of living

The government’s independent forecaster, the Office for Budget Responsibility (OBR), now expects the inflation rate – which charts the rising cost of living – to drop to 2.9% by the end of the year, having peaked at over 11%. The target set for inflation is 2%. 

Our Summary

The Chancellor has introduced the spring budget policies and changes as a budget for ‘growth’ (that follows his Autumn budget for ‘stability’) so we will see how the markets respond over the days and weeks ahead.

Whilst some policies are more likely to grab the headlines than others, it is worth mentioning that many of the changes will not be implemented until 2024 and beyond – just as we all head towards the next general election.