What the budget means for you: Jeremy Hunt unveils help with pensions, childcare and the cost of fuel

15 March 2023, 14:16

Jeremy Hunt has presented his Spring Budget
Jeremy Hunt has presented his Spring Budget. Picture: Alamy/ParliamentTV

By Will Taylor

Jeremy Hunt has unveiled a raft of measures in his Spring Budget, designed to help squeezed Brits get through the cost of living crisis.

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The chancellor has extended support for energy bills, announced cuts to the cost of childcare and unveiled help with the cost of fuel and pints.

Pension reforms will also see people save more on the cash they square away for retirement.

Mr Hunt said his Budget would halve inflation, as Rishi Sunak announced he wanted to do, and he said the UK would avoid a "technical recession" this year.

He told the Commons: "In the face of enormous challenges I report today on a British economy which is proving the doubters wrong.

Read more: Budget 2023 as it happened: Key points from Jeremy Hunt's 'Budget for growth'

"In the autumn we took difficult decisions to deliver stability and sound money. Since mid-October, 10-year gilt rates have fallen, debt servicing costs are down, mortgage rates are lower and inflation has peaked.

"The International Monetary Fund says our approach means the UK economy is on the right track."

Mr Hunt then unveiled details of his help for Brits facing soaring bills and prices.

Jeremy Hunt elicits laughter in the Commons after declaring he would 'freeze' duty on British Ale

Help with energy bills extended

The Government's energy price guarantee, which caps the average household's yearly bill at £2,500, will continue for three months from April 1.

That had been confirmed even before Mr Hunt got to his feet in the Commons. It saves the typical household about £160, according to the Government.

Mr Hunt had said: "High energy bills are one of the biggest worries for families, which is why we're maintaining the energy price guarantee at its current level.

"With energy bills set to fall from July onwards, this temporary change will bridge the gap and ease the pressure on families, while also helping to lower inflation too."

Read more: Hunt claims economy is ‘proving doubters wrong’ as he announces Budget

Mr Sunak said: "We know people are worried about their bills rising in April, so to give people some peace of mind, we're keeping the energy price guarantee at its current level until the summer when gas prices are expected to fall.

"Continuing to hold down energy bills is part of our plan to help hardworking families with the cost of living and halve inflation this year."

Mr Hunt also said people on prepayment meters, who pay more than comparable customers on a direct debit scheme, will have their costs brought in line with direct debits.

Jeremy Hunt has revealed what help Brits can expect
Jeremy Hunt has revealed what help Brits can expect. Picture: Alamy

Pension tax reforms

The annual tax-free allowance on pensions will rise from £40,000 to £60,000, the Chancellor said, and the lifetime allowance will be abolished altogether.

The lifetime allowance was set at £1m – meaning any amount saved over that would be taxed.

It's been claimed that was putting off doctors from working longer hours or retiring later because they were worried about getting taxed.

Mr Hunt told MPs: "I have listened to the concerns of many senior NHS clinicians who say unpredictable pension tax charges are making them leave the NHS just when they are needed most.

“The NHS is our biggest employer, and we will shortly publish the long-term workforce plan I promised in the Autumn Statement. But ahead of that I do not want any doctor to retire early because of the way pension taxes work."

He added: "No one should be pushed out of the workforce for tax reasons. So today I will increase the pensions annual tax-free allowance by 50% from £40,000 to £60,000.

"Some have also asked me to increase the Lifetime Allowance from its £1 million limit. But I have decided not to do that.

"Instead I will go further and abolish the Lifetime Allowance altogether."

He said this would affect more than 80% of doctors in the NHS from getting taxed and incentivise the most "experienced and productive workers" to stay in work, as part of his plan to encourage people to stay in jobs for longer.

The budget has unveiled some help for squeezed Brits
The budget has unveiled some help for squeezed Brits. Picture: Alamy/LBC

Childcare reforms

Sweeping reforms to childcare have been announced, with Mr Hunt declaring it to be one of the "most expensive systems in the world".

Households where the adults are working will be entitled to up to 30 hours of free childcare from the moment the child reaches nine months.

"The 30 hours offer will now start from the moment maternity or paternity leave ends. It's a package worth on average £6,500 every year for a family with a two-year-old child using 35 hours of childcare every week and reduces their childcare costs by nearly 60%," Mr Hunt said.

But it will be introduced in stages to ensure the market can adapt.

From April 2024, half a million parents will be able to access 15 hours of free care for children aged two.

Then, from September 2024, 15 hours will be offered to all children aged nine months and above. One million parents will be eligible for that.

Later, from September 2025, every single working parent of a child aged under five will be able to get 30 hours of free childcare a week.

All schools should also be able to offer wraparound care for pupils. New funding for schools and local authorities is aimed at enabling care between 8am and 6pm.

"Our ambition is that all schools will start to offer a wraparound offer, either on their own or in partnership with other schools, by September 2026," Mr Hunt said.

Nurseries providing free childcare under the hours offer will get £204m from September, then £288m the year after – which Mr Hunt said is an average of a 30% increase in the two-year-old rate for this year.

Staff to pupil ratios in England will go up from 1:4 to 1:5.

And 700,000 parents on Universal Credit will be helped to look for work by being offered assistance with childcare.

Mr Hunt said: "Many remain out of work because they cannot afford the upfront payment necessary to access subsidised childcare. So for any parents who are moving into work or want to increase their hours, we will pay their childcare costs upfront.

"And we will increase the maximum they can claim to £951 for one child and £1,630 for two children, an increase of almost 50%."

Fuel duty cut retained and frozen

Mr Hunt said he had listened to worries about fuel duty going up.

The chancellor said his move to keep the 5p cut in fuel duty and freeze it, which he said would save drivers about £100 every year.

He told the Commons: "Because inflation remains high, I have decided now is not the right time to uprate fuel duty with inflation or increase the duty.

"So here's what I am going to do: for a further 12 months I'm going to maintain the 5p cut and I'm going to freeze fuel duty too.

"That saves the average driver £100 next year and around £200 since the 5p cut was introduced."

A 'Brexit pubs guarantee'

Mr Hunt said duty on draught products will be 11p lower in pubs than the duty is in supermarkets.

He said that will be maintained from August 1 as part of a "Brexit pubs guarantee", noting that it will also apply in Northern Ireland - something he said is allowed as part of the new Windsor Framework agreed with the EU.

"From August 1 the duty on draught products in pubs will be up to 11p lower than the duty in supermarkets, a differential we will maintain as part of a new Brexit pubs guarantee," he told MPs.

"British ale may be warm, but the duty on a pint is frozen."