Updates on Jeremy Hunt’s first Spring Budget as Chancellor
Credit: HM Treasury
Latest updates:
Three month extension to energy bill support.
There won’t be Changes to the planned rise in corporation tax.
The Financial Times is reporting a ‘clean energy reset’ form the Chancellor.
A conservative budget for a Conservative Government?
After the turmoil of last year’s politics, Chancellor Jeremy Hunt is expected to reveal a stricter budget which he hopes will encourage economic growth and control inflation.
In interviews running up to the announcement of the Spring Budget, Jeremy Hunt has alluded to policies that will allow a bounce back for the current recession whilst keeping taxes and Government borrowing low.
Childcare and Universal Credit
The rising costs of childcare have long been a concern to families with the UK having some of the highest prices in the world. However, this is not the only incentive for reducing the price. The Government plans to encourage Britain’s dormant workforce back into employment to help counteract a shrinking economy.
As part of this plan, they are expected to introduce measures on childcare and changes to disability benefits meaning that those claiming will also be able to work and claim at the same time.
The Government is expected to expand free childcare for children aged three to four years old increasing the current 15hr free childcare to 30hrs for parents who meet the income criteria.
Strikes
As the Chancellor announces his budget, teachers in England and Wales, junior doctors, civil servants, university staff and tube drivers will all be on strike.
Many will be keeping a keen eye out to see if Jeremy Hunt will announce a public sector pay deal in reaction to strikes.
Many have suggested the £30 billion windfall from lower borrowing could be used to help fund a pay deal with striking workers.
Business
Last November the Bank of England forecast the worst recession since the 1930’s, recent data suggests that the recession won’t be as bad as this first prediction after economic activity was more stable than first expected.
As well as a shallower recession, the rate of inflation is also falling from 11% in October to 10.1 in January however this is still way higher than the Government would like.
These factors will effects rates of pay, lead to redundancies, higher unemployment and means that your money worst go as far.
To help counteract the UK’s current slow economic growth, Jeremy Hunt is expected to announce several measures to encourage investment from businesses.
Update: The Chancellor has confirmed he won’t be making changes to the planned rise to corporation tax.
The corporation tax is currently set to rise to 25% from 19% next month. The rising tax has caused concern from Conservative MPs and business leaders.
There are also suggestions that the Chancellor will announce 12 new investment zones around the UK to “supercharge” growth. Each of these zones will be given tax incentives and £80m of investment over five years.
The investment will go to areas which have traditionally struggled economically and will focus on industries such as technology, life sciences and creative industries.
Update: The Financial Times is reporting that the Chancellor is planing to announce a ‘shake-up to the UK energy industry’, including a £20b plan to “transform carbon capture in Britain”.
Jeremy Hunt is thought to propose support for the UK’s move to cleaner processes and technology plus a plan to boost the use of nuclear power.
Update: The Government has confirmed it will extend support for energy bills for another three months.
The energy price guarantee, which sets the limit a household can pay on energy bills in a year, will stay at 2,500 till the end of June. The price cap was due to rise to £3,000 from April as set out in the Autumn Statement.
Fuel duty may also be frozen, extending the current 5p a litre cut that was set to end on March 31st for another year.
Pensions
There are changes expected to the tax band on pensions meaning that the amount you can contribute to a pension before you pay tax will rise from 40,000 to 60,000. And the amount a worker can accumulate in their pension savings before paying extra tax is expected to increase to £1.8m up from £1.07m.
This is also part of the Government plan to reactivate 8.89 million people aged between 16-64 in the UK who are "economically inactive".
The changes to tax on pensions are also thought to be part of a change to the age a person can start drawing from their pension; climbing from the current age of 66 to 68.
Credit: Ministry of Defence Ukraine
Defence
The Prime Minister, Rishi Sunak announced an extra £5b to defence spending during his visit to the US this week whilst also finalising the Aukus submarine deal, a $368bn plan between the US, UK and Australia to acquire eight nuclear powered submarines.
Rising threats from Russia and China mean the Chancellor is likely to announce changes to the defence budget and most likely increase spending.
Credit: HM Treasury
Other interesting suggestions for the budget include Sky reporting that up to £8.6m of funding for Edinburgh's festivals is expected to be announced.
We’ll keep you up to date with all the latest Spring Budget announcements here on CovFeed.