Budget overview

• 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 31March 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 that it was 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 are 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 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 are continuing our commitment to support R&D and recognising the hugely important role the sector plays 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, allowing them to focus on their priorities like growing their business. We are announcing a systematic review into taxes paid by smaller businesses and a consultation to expand the ‘cash basis’ – a simplified way for four million sole traders to calculate and pay their Income Tax. We are also announcing a range of measures to simplify customs import and export processes for small businesses.

• Launching a competition through Great British Nuclear to build Small Modular Reactors in the UK and including nuclear energy in the green taxonomy. Bolstering Britain’s energy security and reaching Net Zero by 2050 means backing British nuclear. The state-owned body, Great British Nuclear will launch a competition to build SMRs in the UK and include nuclear energy in the green taxonomy.

• Providing up to £20 billion funding for early deployment of carbon capture usage and storage – unlocking investment and job creation across the UK. This is particularly 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 will be able to 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, encouraging more Universal Credit claimants to take up 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 providers of free childcare, supporting the sector to meet 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 to meet rising costs and facilitate the expansion of new free hours and improve quality of provision.

• Introducing market reforms to the childcare sector, allowing providers to offer more flexibility. We will proceed with changes to minimum staff-to-child ratios for 2 year olds, moving from 1:4 to 1:5 to align with Scotland. The change 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 introducing a childminders grant to support childminders with start- up costs, incentivising more talented childcare providers to the sector. 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 in work. We are removing the effect of the lifetime allowances for pensions from April 2023, before completely abolishing it. We are also increasing the annual allowance for pensions to £60,000, encouraging older workers, such as Doctors, to stay in work.

• Increasing the Administrative Earnings Threshold (AET) from 15 to 18 hours, helping Universal Credit claimants into work. This is expected to mean that over 100,000 UC claimants, including those in-work 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 be automating parts of the process to reduce error rates and providing 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 abolish 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 back 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 journeys for motorists. 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 major repair and renewals to ensure our road network is safe and 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 including the Fishers Arms in Horncliffe. 

• 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 there will be 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 resources they need.

• Delivering 20 Levelling Up Partnerships to regenerate areas that are most in need and support local growth. With over £400 million of investment, the government will work in partnership with 20 of the most left-behind areas in 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 of our defences. We are investing an extra £5 billion for 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 nuclear 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 nuclear 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 replenishing and bolstering our munitions and stockpiles to replaces items donated to Ukraine, building on the £560 million provided at the Autumn Statement.

• Providing an additional £33 million over the next three years to support Veterans to recognise the sacrifice they made 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 and the Integrated Review Refresh has gone further by setting a new ambition to reach 2.5 per cent of GDP when the fiscal and economic situation allows.