What should we expect in the spring 2023 budget?
The Chancellor will today unveil his budget, battling with a country facing a cost-of-living crisis and a stalling economy.
Jeremy Hunt’s fiscal package comes in the wake of the autumn statement last November, which saw the Chancellor hike taxes as he and Prime Minister Rishi Sunak sought to restore UK financial credibility after Liz Truss’ short-lived premiership.
With the UK narrowly avoiding a recession since and the latest economic figures giving reason for optimism, the Chancellor is expected to focus his Budget on growth measures as he seeks to reignite the economy and encourage people back to the workforce after the COVID-19 pandemic.
Here is what has been briefed already and what we can likely expect in Hunt’s first Budget since being appointed by Truss last year.
Back to work
Efforts to encourage the over-50s, the long-term sick and disabled, and benefits claimants back into the workplace are likely to form a key plank of Hunt’s plans.
Key details will include the axing of the system used to assess eligibility for sickness benefits, paying parents on universal credit childcare support upfront and increasing the amount they can claim by several hundred pounds.
The axing of the eligibility system will mark the biggest reform to the welfare system in a decade and will mean claimants can continue to receive the payments after they return to employment. There will also be efforts to tackle expensive childcare costs.
These efforts come as official figures showed a fall in vacancies and an increase in redundancies.
Cost of living
The Tory Chancellor is expected to cancel the planned £500 hike in the UK Government’s ceiling for energy bill support which was due to come into force next month. For the average household that means bills will stay at around £2,500, instead of going up to £3,000 as was previously announced.
On fuel duty, some Tory backbenchers have urged the Chancellor to act to support motorists facing a 12p-per-litre hike in fuel duty in March. A 23% increase in the duty is pencilled in for this month, but chancellors have repeatedly frozen the levy in the past.
There has been no suggestions made publicly regarding financial support for most businesses.
After months of strikes across transport, the NHS and other sectors, there has been some hope in recent weeks that rows over pay can be brought to an end.
Unions representing ambulance workers, physiotherapists, nurses and midwives remain locked in talks with the Department of Health. But Hunt could potentially use his Budget speech to offer details of some sort of pay settlement to end the industrial action.
Among the measures to be announced will be plans to give the UK’s 363,000 international traders a more streamlined customs process.
The changes will likely give traders six additional days to submit forms after border crossings, reducing admin burdens for business, as well as fewer authorisations and financial guarantees.
Conservative MPs have been pushing for tax cuts, even if Hunt has so far appeared to be resistant to those calls, particularly on the issue of the planned corporation tax rise.
The business tax is due to go up from 19% to 25% in April, under plans agreed during Boris Johnson’s premiership and Rishi Sunak’s tenure as chancellor.
All eyes will be on the Chancellor to see if he offers any tax relief initiatives for businesses when he stands up in the Commons on Wednesday. He has already made a pre-speech announcement reflecting his desire to shock the economy into growth.
The Treasury chief will announce 12 new investment zones to “supercharge” growth in hi-tech industries.
Officials said the scheme – backed by £80 million of investment over five years in each of the new high-growth zones – is designed to accelerate research and development in the UK’s “most budding industries”.
The Treasury said each of the new investment zones will be clustered around a university or other research institution, bringing growth to areas which have traditionally underperformed economically.