Budget 2023: What is in the spring statement?

The Chancellor unveiled a major expansion of childcare support

The Chancellor Jeremy Hunt prepares for the spring budget with his team at No11 Downing Street. Zara Farrar / HM Treasury
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Jeremy Hunt unveiled his "budget for growth" on Wednesday to get people back to work, with a major expansion of childcare support.

In an unexpected revelation, the Chancellor revealed the Office for Budget Responsibility (OBR) now forecasts that the UK will not enter a technical recession this year and that the government "will meet the Prime Minister's priorities to halve inflation, reduce debt and get the economy growing".

He said despite "continuing global instability", the OBR expects inflation in the UK will fall from 10.7 per cent in the final quarter of last year to 2.9 per cent by the end of 2023.

He also made announcements on energy bill support, benefits reform and pensions allowances.

The spring statement came a few months after the Chancellor’s autumn statement, in which he raised taxes in an effort to restore confidence in the UK’s finances.

Here is a rundown on what he announced.

Back to work

Mr Hunt announced a major expansion of free childcare for one and two-year-olds.

The move will provide an extra 30 hours per week to parents of children over the age of nine months, and increase funding by £288 million ($350.01 million) by 2024-2025 for nurseries under the existing programme of free childcare for three-year-olds.

The Chancellor announced a boost for childcare suppliers, with the government piloting incentive payments of £600 for childminders joining the profession ― £1,200 if they join through an agency.

Mr Hunt said he will also increase funding paid to nurseries providing free child care under the hours offer by £204 million from this September, rising to £288 million next year. The minimum staff-to-child ratio will change from 1:4 to 1:5 for two-year-olds in England, although this will remain optional, he said.

Mr Hunt also said he wants all schools to be able to offer wraparound care either side of the school day by September 2026.

The Chancellor announced 30 hours of free child care for all under-fives from the moment maternity care ends, where eligible.

There will also be the "biggest change to our welfare system in a decade", Mr Hunt said, with reforms aimed at supporting more disabled people into work.

The government will fund a new programme called "universal support" in England and Wales, which could help up to 50,000 people per year.

The Chancellor also revealed sanctions reforms aimed at getting people on Universal Credit benefits into work, but for those working low hours the government will increase the earnings threshold from the equivalent of 15 hours to 18 hours.

Cost of living

The Chancellor confirmed the energy price guarantee will be extended for another three months, and that households on prepayment meters will get help as their charges will be aligned with direct debit charges.

He also confirmed that fuel duty will remain frozen and a 5p reduction will be maintained for a further year.

Chancellor of the Exchequer Jeremy Hunt talks to a television crew outside the BBC's headquarters in London. Reuters

Pensions

Mr Hunt announced he will abolish the lifetime allowance limit on pensions and that he will increase the pensions annual tax-free allowance from £40,000 to £60,000.

Defence

The Chancellor confirmed the Government will add £11 billion to the defence budget over the next five years and another £30 million is being allocated for veterans.

Others

Mr Hunt said there will be 12 new investment zones, and they will potentially be in the West Midlands, Greater Manchester, the North East, South Yorkshire, West Yorkshire, East Midlands, Teesside and Liverpool. There will also be at least one in each of Scotland, Wales and Northern Ireland.

The Chancellor also announced he will provide a £63 million fund to "keep our public leisure centres and pools afloat" in response to high costs, and £100 million will be given to support thousands of charities and community organisations.

Mr Hunt said he will assign an extra £10 million to the third sector for suicide prevention and allocate £400 million for mental health and muscular skeletal support. There will also be a £3 million pilot to help people with special needs transition into the workplace.

Mr Hunt also announced a series of levelling-up and local transport-related funding pots.

The Chancellor confirmed the planned increase in corporation tax to 25% will be going ahead, but announced a new policy of "full capital expensing" over the next three years, which will mean every pound invested in IT equipment, plant, or machinery can be deducted immediately from profits.

Mr Hunt said he will introduce a new tax credit for small and medium-sized firms that spend 40 per cent of their expenditure on research and development. Tax reliefs for film, TV and video gaming will also be extended, he said.

Up to £20 billion will be allocated for the early development of carbon capture and storage, he said.

Mr Hunt said that, subject to consultation, nuclear power will qualify for the same investment incentives as renewable energy and alongside that "will come more public investment".

The Chancellor also announced an annual £1 million prize for AI research over the next 10 years, called the "Manchester Prize".

Updated: March 15, 2023, 3:46 PM