The Chancellor of the Exchequer, Jeremy Hunt, has this afternoon (15 March) unveiled his Budget for 2023. At it's heart is the aim of achieving long-term, sustainable economy growth that delivers prosperity for the people of the UK. Measures announced seek to help people back to work, encourage businesses to invest, and tackle labour shortages head-on.

I have summarised some of the key announcements below:

Childcare

The Budget sets out significant reforms to childcare that will remove barriers to work for nearly half a million parents with a child under 3 in England who are currently not working due to caring responsibilities:

• 30 hours of free childcare for every child over the age of 9 months with working parents by September 2025 worth £6,500 per year per child, where eligibility will match the existing 3-4 year-old 30 hours offer.
• This will be introduced in phases, with 15 hours of free childcare for working parents of 2-year-olds coming into effect in April 2024 and 15 hours of free childcare for working parents of 9 months – 3 years old in September 2024.
• The funding paid to nurseries for the existing free hours offers will also be increased by £204 million from this September rising to £288 million next year.
• Schools and local authorities will be funded to increase the supply of wraparound care, so that parents of school age children can drop their children off between 8am and 6pm – tackling the barriers to working caused by limited availability of wraparound care.
• Childcare costs of parents moving into work or increasing their hours on Universal Credit paid upfront rather than in arrears, with maximum claim boosted to £951 for one child and £1,630 for two children – an increase of around 50%.
• In recognition of both the importance and short supply of childminders, incentive payments of £600 will be piloted from Autumn of this year for those who sign up to the profession (rising to £1,200 for those who join through an agency) to increase. 
• Market reforms to the childcare sector will be introduced, allowing providers to offer more flexibility. Changes to minimum staff-to-child ratios for 2 year olds, moving from 1:4 to 1:5 will be implemented to align with Scotland. The change being introduced will bring England’s requirements more closely in line with international norms.
• A childminders grant will be introduced to support childminders with start-up costs, encouraging more people to enter the sector. This amounts to £600 for individual applicants and up to £1,200 for applicants who apply through a childminder agency.

Employment

The Chancellor set out a comprehensive plan to help people move into work, increase their hours, and extend their working lives, including for those on benefits.

• The Lifetime Allowance charge will be removed before being abolished altogether, removing barriers to remaining in work and simplifying the tax system by taking thousands out of the complexity of pension tax.
• The Annual Allowance will be increased from £40,000 to £60,000, incentivising highly-skilled workers to remain in the labour market. As a result of the pensions tax measures announced today, an estimated 80% of NHS doctors will not receive a tax charge with respect to accruals under the 2015 NHS career average scheme.
• A new ‘Returnerships’ apprenticeship targeted at the over 50s will refine existing skills programmes to make them more accessible to older workers, giving them the skills and support they need to find a recognisable path back into work.
• The midlife MOT offer will be expanded and improved to ensure people get the best possible financial, health and career guidance well ahead of retirement. There will be an enhanced digital midlife MOT tool and an expansion of DWP’s in person midlife MOTs for 50+ Universal Credit claimants, aiming to reach 40,000 per year.
• A DWP White Paper on disability benefits reform will herald the biggest change to the welfare system in the past ten years, to make sure it better meets the needs of disabled people in Great Britain. This includes removing the Work Capability Assessment, meaning the majority of claimants will now have to do one health assessment rather than two. Reforms will also support claimants to try work without fear of losing their financial support.
• A new voluntary employment scheme for disabled people and those with health conditions called Universal Support will be funded in England and Wales. The government will spend up to £4,000 per person to find them a suitable role and cater to their needs, supporting 50,000 places per year once fully rolled out.
• A £406 million plan to tackle the leading health causes keeping people out of work, with investment targeted at services for mental health, musculoskeletal conditions, and cardiovascular disease.
• Strengthening work search and work preparation requirements for around 700,000 lead carers of children aged 1-12 claiming Universal Credit in Great Britain.
• Increasing the Administrative Earnings Threshold (AET) - which determines how much support and Work Coach time a claimant will receive based on their earnings - for an individual claimant, from the equivalent of 15 to 18 hours at National Living Wage and removing the couples AET in Great Britain. Over 100,000 non-working or low-earning individuals will be asked to meet more regularly with their Work Coach for support to move into work or increase their earnings.
• The application and enforcement of the Universal Credit sanctions regime will be strengthened, by providing additional training for Work Coaches to apply sanctions effectively, including for claimants who do not look for or take up employment, and automating administrative elements of the sanctions process to reduce error rates and free up Work Coach time.
• Elsewhere, international talent will be attracted through a new migration package that includes adding five construction occupations to the Shortage Occupation List and expanding the range of short-term business activities that are covered under the UK’s six-month business visit visa offer.

Enterprise

The Chancellor put forward a plan to boost innovation, drive business investment and hold down energy costs.

• A ‘full expensing’ policy introduced from 1 April 2023 until 31 March 2026 and an extension to the 50% first-year allowance in the same period – a transformation in capital allowances worth £27 billion to businesses over three years.
• A £500 million per year package of support for 20,000 research and development (R&D) intensive businesses through changes to R&D tax credits.
• Generous reforms to tax reliefs for the creative sectors will ensure theatres, orchestras, museums and galleries are protected against ongoing economic pressures and even more world-class productions are made in the UK.
• The Medicines and Healthcare products Regulatory Agency (MHRA) will receive £10 million extra funding over two years to maximise its use of Brexit freedoms and accelerate patient access to treatments. This will allow, from 2024, the MHRA to introduce new, swift approvals systems, speeding up access to treatments already approved by trusted international partners and ground-breaking technologies such as cancer vaccines and AI therapeutics for mental health.
• All of the recommendations from Sir Patrick Vallance’s review into pro-innovation regulation of digital technologies, published alongside Spring Budget today, are to be accepted.
• £900 million of funding for an AI Research Resource and an exascale computer – making the UK one of only a handful of countries to have one – and a commitment to £2.5 billion ten-year quantum research and innovation programme through the government’s new Quantum Strategy.

Levelling Up

To level up growth across the UK and spread opportunity everywhere, local communities will be empowered to command their economic destiny.

• Greater responsibility for local leaders to grow their local economy.
• Over £200 million for high quality local regeneration projects in areas of need, from the transformation of Ashington Town Centre to a skills and education campus in Blackburn.
• Over £400 million for new Levelling Up Partnerships in England most in need of levelling up. Rother District has been chosen as one of these areas with the key aim being to identify key issues for the area with bespoke help from the Government.
• Business rates retention expanded to more areas in the next Parliament.
• Delivering trailblazer devolution deals for the West Midlands and Greater Manchester Combined Authorities that include single multi-year settlements for the next Spending Review, alongside a commitment to negotiate further devolution deals in England.
• 12 Investment Zones across the UK including 4 across Scotland, Wales and Northern Ireland
• £8.8 billion over the next five-year funding period for a second round of the City Region Sustainable Transport Settlements.

Tax and wages

• Cap on amount workers can accumulate in pensions savings over their lifetime before having to pay extra tax (currently £1.07m) to be abolished.
• Tax-free yearly allowance for pension pot to rise from £40,000 to £60,000 - having been frozen for nine years.
• Fuel duty frozen - the 5p cut to fuel duty on petrol and diesel, due to end in April, kept for another year.
• Alcohol taxes to rise in line with inflation from August, with new reliefs for beer, cider and wine sold in pubs.
• Tax on tobacco to increase by 2% above inflation, and 6% above inflation for hand-rolling tobacco.

Energy

• Government subsidies limiting typical household energy bills to £2,500 a year extended for three months, until the end of June.
• £200m to bring energy charges for prepayment meters into line with prices for customers paying by direct debit - affects 4m households.
• Commitment to invest £20bn over next two decades on low-carbon energy projects, with a focus on carbon capture and storage.
• Nuclear energy to be classed as environmentally sustainable for investment purposes, with promise of more public funding.
• £63m to help leisure centres with rising swimming pool heating costs, and invest to become more energy efficient.

Economy and public finances

• Office for Budget Responsibility predicts the UK will avoid recession in 2023, but the economy will shrink by 0.2%.
• Growth of 1.8% predicted for next year, with 2.5% in 2025 and 2.1% in 2026.
• UK's inflation rate predicted to fall to 2.9% by the end of this year, down from 10.7% in the last three months of 2022.
• Underlying debt forecast to be 92.4% of GDP this year, rising to 93.7% in 2024.

A full copy of the Spring Budget can be found here.