2023 Budget UK

The new Chancellor's Budget highlights the UK government's efforts to support the growth and stability of the country's economy. It is encouraging to see that despite global challenges, the government is taking proactive measures to ensure that the economy remains resilient and continues to create opportunities for better-paying jobs and future generations.

The Budget for Growth focuses on key pillars of enterprise, employment, education, and everywhere, which is a positive step towards addressing the challenges businesses and individuals face. Introducing measures such as extending childcare hours and paying Universal Credit childcare costs upfront will provide much-needed support to working parents.

Furthermore, the reforms in the childcare sector, the three-year tax cut for business investment, and the increase in the annual pension allowance will encourage businesses to invest and create more job opportunities. Establishing a new Universal Support programme for disabled people and the long-term sick is also a welcome move towards creating a more inclusive and supportive society.

The government's commitment to abolishing the Work Capability Assessment and increasing the Administrative Earning Threshold will help break down the barriers that prevent people from working and ensure that more individuals can access employment opportunities.

Overall, the government's efforts to support the growth and stability of the UK economy through the Budget for Growth are commendable. These measures are geared towards removing obstacles to business investment, tackling labour shortages, and harnessing British ingenuity to make the country a science and technology superpower.

A BUDGET FOR GROWTH

Text from Chancellor of Exchequer Rt Hon. Jeremy Hunt MP

Despite enormous global challenges, the UK economy is proving the doubters wrong. The difficult decisions we have taken to restore stability mean that we have avoided recession and growth is forecast to return.

We are working hard to deliver on the government’s priorities to halve inflation, grow the economy and reduce debt so we can create better-paid jobs and opportunities across the United Kingdom, guaranteeing a better future for the next generation.

Today we deliver our Budget for Growth by focusing on the Chancellor’s four pillars of Enterprise, Employment, Education and Everywhere:

• Extending 30 hours of childcare a week to working parents of children aged 9 months to 4 years
• Paying Universal Credit childcare costs up front rather than in arrears
• Introducing reforms to the childcare sector including changes to 2-year-old staff: child ratios from 1:4 to 1:5
• Introducing a ￡25 billion three-year tax cut for business investment
• Increasing the annual pension allowance to ￡60,000 and abolishing the Lifetime Allowance
• Establishing a new Universal Support programme for disabled people and the long-term sick
• Abolishing the Work Capability Assessment and increasing the Administrative Earning Threshold to 18 hours
• Extending the Energy Price Guarantee at ￡2,500 for three months
• Freezing fuel duty for a thirteenth year, saving the average driver around ￡200
• Delivering a Brexit Pub Guarantee so draught duty will always be less than duty in supermarkets
• By doing so we 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.

DELIVERING A ￡94 BILLION COST OF LIVING PACKAGE, INCLUDING:

• Extending energy support by capping the Energy Price Guarantee at ￡2,500 this Spring, giving families the certainty they need. For the next three months, the price households pay for the energy they use will continue to be capped, as they have been since October, so that a typical household will pay ￡2,500. The EPG will then increase to ￡3,000 from 1 July and remain in place until 31 March 2024.?
• Freezing fuel duty for a thirteenth consecutive year, saving the average driver around ￡200. We are 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.
• Ending the premium paid by over four million households using prepayment meters, ensuring fairness for all bill payers. We will ensure those who have prepayment meters no longer pay a premium for their energy by adjusting the Energy Price Guarantee from 1 July 2023, saving customers ￡45 a year on their energy bills.

GROWING THE ECONOMY:

ENTERPRISE:

• Announcing a tax cut for business worth ￡25 billion over three years, rewarding businesses for every single pound they invest in the UK. We are delivering full-expensing which offers 100 per cent first-year relief on new qualifying investments in main rate plant and machinery from 1 April 2023 until 31 March 2026. For every pound a company invests their taxes are cut by up to 25p – this puts ￡25 billion back into the economy over the next three years.
• The UK will still have the lowest Corporation Tax rate in the G7, incentivising investment and boosting growth. The UK’s rate will still be lower than the US, Germany, France, Italy, Japan and Canada – showing we are still one of the most attractive places to invest and grow a business.?
• Under today’s measures, the UK will have the most generous capital allowance regime for business in the OECD. Today’s measures take the UK joint top of the leaderboard with the US and Canada.?
• 70 per cent of companies will not be affected by the new rate of Corporation Tax – and only 10 per cent of companies will pay the 25 per cent rate. To protect small businesses, we will keep the Small Profits Rate, maintained at the current 19 per cent rate, for companies with profits less than ￡50,000 – meaning nearly 70 per cent of companies will be completely unaffected (that compares to a rate of 21 per cent they were paying in 2010). There will also be a taper above ￡50,000, so businesses only start paying the full rate of 25 per cent on profits from ￡250,000. This means that 1 in 10 companies will pay the full 25 per cent rate.
• Corporation Tax remains lower than it was at any point under the last Labour government. The average rate of Corporation Tax between 1997 – 2010 was 30 per cent. The average rate of Corporation Tax since 2010 has been just 21.2 per cent.
• Labour is all over the place on Corporation Tax, the Shadow Chancellor stood on a manifesto to raise it to 30 per cent. Labour’s 2019 manifesto called for Corporation Tax to rise to pre-2010 levels, which stood at an average of 30 per cent.?
• The UK has the lowest corporation tax rate in the G7. Under full expensing, the UK will also have the most generous capital allowance regime in the OECD.
• Increasing support for our R&D sector, cementing our position as a science superpower to grow the economy.?We continue our commitment to support R&D and recognise the industry's hugely important role in securing economic growth and cementing our position as a science superpower, creating new and high-skilled jobs. We will also support R&D SMEs with ￡500 million.?
• Simplifying the tax system for small and medium-sized businesses allows them to focus on their priorities, like growing their business. We are announcing a systematic review into taxes paid by smaller firms and a consultation to expand the ‘cash basis’ – a simplified way for four million sole traders to calculate and pay their Income Tax. We also announce various measures to streamline small business customs import and export processes.?
• Launching a competition through Great British Nuclear to build Small Modular Reactors in the UK and include nuclear energy in the green taxonomy. Bolstering Britain’s energy security and reaching Net Zero by 2050 means backing British atomic. The state-owned body, Great British Nuclear, will launch a competition to build SMRs in the UK and include atomic energy in the green taxonomy.?
• Providing up to ￡20 billion in funding for early deployment of carbon capture usage and storage – unlocking investment and job creation across the UK. This is mainly in the East Coast, North West of England and North Wales. Additional clusters will be selected through a Track 2 process, with details announced shortly; we recognise the potential benefits of the Acorn Cluster and the role it could play in industrial decarbonisation in Scotland.
• Launching 12 Investment Zones, catalysing high-potential, knowledge-intensive growth clusters across the UK to boost economic growth and new jobs. We are launching a re-focused Investment Zone programme to catalyse twelve new zones, including four across Scotland, Wales and Northern Ireland. England-based Investment Zones will have access to up to ￡80 million over five years. ?

EDUCATION:?

• Introducing 30 free hours of childcare per week for children from 9 months to 4 years, worth ￡6,500 per year per child from 2025, allowing parents to take up more work. We are expanding free childcare so that working parents can access 30 hours of free childcare per week from when their child is 9 months old to when they start school, increasing the availability and flexibility of childcare provision.
• Paying Universal Credit childcare costs up front rather than in arrears, helping with household budgets. To help parents on Universal Credit with the cost of childcare, we will pay childcare costs upfront rather than in arrears to encourage more Universal Credit claimants to take up more work.?
• Increasing the Universal Credit childcare cost maximum encourages more Universal Credit claimants to work. Increasing the Universal Credit childcare cost maximum amounts to ￡950 for one child and ￡1,629 for two children, encouraging more Universal Credit claimants to take up work.?
• Increasing the hourly rates paid to free childcare providers supports the sector in meeting rising costs. We will pay ￡204 million next year, increasing to ￡288 million by 2024-25, with further uplifts to follow each year. This will support the sector in meeting rising costs, facilitate the expansion of new free hours, and improve the quality of provision.?
• Introducing market reforms to the childcare sector, allowing providers to offer more flexibility. We will change the minimum staff-to-child ratios for 2-year-olds, moving from 1:4 to 1:5 to align with Scotland. The difference being introduced will bring England’s requirements more closely in line with international norms.
• Introducing childminders grant to support childminders with start-up costs, encouraging more people to enter the sector. We are raising childminders to donate to support childminders with start-up costs, incentivising more talented childcare providers in the industry. This amounts to ￡600 for individual applicants and up to ￡1,200 for applicants who apply through a childminder agency.

EMPLOYMENT:

• Increasing the annual pension allowance to ￡60,000 and abolishing of the Lifetime Allowance, encouraging older workers to stay at work. We are removing the effect of the lifetime allowances for pensions from April 2023 before altogether abolishing it. We are also increasing the annual budget for pensions to ￡60,000, encouraging older workers, such as Doctors, to stay at work.??
• Increasing the Administrative Earnings Threshold (AET) from 15 to 18 hours, helping Universal Credit claimants to work. This is expected to mean that over 100,000 UC claimants, including those in position and on lower earnings and non-working or low-earning partners on UC, 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, ensuring those who can work do. We will automate parts of the process to reduce error rates and provide additional training for Work Coaches to apply sanctions more effectively, including for claimants who do not look for or take up employment.
• Launching a new Universal Support programme, supporting disabled people and the long-term sick who want to work.?Will match disabled and long-term sick individuals in England and Wales who want to work with existing job vacancies – including tailored support within mental health services and an ambitious programme of digitation to support the management of long-term health conditions.
• Abolishing the Work Capability Assessment, helping more people who can work into the jobs that are right for them. We will set a timetable to cancel the Work Capability Assessment and remove the distinction between capable and not capable for work. These reforms will make the system better for disabled people and ensure they find the job that is right for them.?

EVERYWHERE:

• Launching 16 Regeneration Projects, backed by over ￡200 million, restoring pride to local communities. We are announcing over ￡200 million for 16 local regeneration projects in places in need across the country, from a skills and education campus in Blackburn to the transformation of Ashington town centre. These projects have been identified as key priorities by local areas.?
• Investing ￡200 million in maintaining and improving local roads and potholes, improving motorist journeys. We are investing ￡200 million in 2023-24 in maintaining and improving local roads, enabling local authorities to fix more potholes, complete resurfacing, and invest in significant repairs and renewals to ensure our road network is safely improved for motorists.?
• Announcing funding for an additional 30 projects through the existing ￡150 million Community Ownership Fund. This will enable more communities to take ownership of assets at risk of closure in places like Keighley, Stoke on Trent and the Vale of Clwyd. This means the Fund has now benefitted almost 100 communities across the UK. ?
• Confirming the Levelling Up Fund Round 3, providing more opportunity to level up places across the UK. Following the success of the ￡3.8 billion already invested across the UK rounds 1 and 2, we are announcing a third round of the fund. More details will be announced in due course.?
• Increasing funding for Devolved Administrations by ￡630 million over the next two years, strengthening the entire United Kingdom. The uplift provides over ￡320 million for the Scottish Government, ￡180 million for the Welsh government and ￡130 million for the Northern Ireland Executive – strengthening our Union by ensuring the Devolved Administrations have the necessary resources.?
• Delivering 20 Levelling Up Partnerships to regenerate areas most in need and support local growth. With over ￡400 million of investment, the government will partner with 20 of the most left-behind regions of England, starting with Mansfield and Redcar and Cleveland, to secure bespoke place-based regeneration in each area.
• Providing ￡60 million to Swimming Pool Support Fund, helping with immediate pressures faced by the leisure industry. We are investing ￡60 million in support for public swimming pools across England to address the immediate cost pressures facing public swimming pools as well as providing investment in energy efficiency measures to reform facilities.?

DEFENCE:

• Investing an extra ￡5 billion in defence and national security over the next two years, improving our resilience and readiness for guards. We are supporting an additional ￡5 billion for the defence 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, allowing us to grow our atomic skills programme. We are investing ￡3 billion across the defence nuclear enterprise, supporting areas such as the construction of industrial infrastructure, allowing us to enhance atomic skills. This will also support the delivery of AUKUS.?
• Replenishing and bolstering our munitions stockpiles, investing in the resilience of the UK’s defences. ￡1.9 billion will be spent in filling and maintaining our munitions and supplies to replace items donated to Ukraine, building on the ￡560 million provided in the Autumn Statement.
• Providing an additional ￡33 million over the next three years to support Veterans to recognise their sacrifice for our country. This funding will be split between three projects: World Class Veteran Support Infrastructure, Veterans’ Mobility Fund and Veteran Capital Housing Fund.
• We have always met the NATO 2 per cent spending target, we have now gone further to set a new ambition of 2.5 per cent when the fiscal and economic situation allows. We have always met the NATO 2 per cent spending target on defence. The Integrated Review Refresh has set a new ambition to reach 2.5 per cent of GDP when the fiscal and economic situation allows.?

BUILDING ON THE AUTUMN STATEMENT:

We are building upon the decisive action we took in the Autumn to deliver financial stability, sustainable public services and record cost of living support:?

• Protecting the Triple Lock, providing certainty in retirement for 12 million pensioners. This means that in April, the State Pension will increase in line with inflation, which is the most significant cash increase in the State Pension ever and will benefit 12 million pensioners.?
• Uprating benefits in line with inflation, protecting more than ten million families. To protect the most vulnerable, benefits will increase in line with inflation for 2023–24. More than ten million households receiving working-age and disability benefits will see an increase in their benefit payments. The average uplift for families with Universal Credit will be around ￡600.
• Increasing the National Living Wage, providing a ￡1,600 annual pay increase for two million workers. This will provide ￡1,600 to two million low-paid workers. From 1 April 2023, the National Living Wage will increase by 9.7 per cent to ￡10.42 an hour for workers aged 23 and over, delivering the largest-ever cash increase for the National Living Wage.?
• Putting in place up to ￡1,350 of the additional cost of living support, protecting vulnerable households with their bills. More than eight million households on means-tested benefits will receive three Cost of Living Payments totalling ￡900. More than eight million pensioner households will receive a Cost of Living Payment of ￡300 to be paid during winter 2023. More than six million people on disability benefits will receive a Cost of Living Payment of ￡150 to be paid during summer 2023. ?