In his first Spring Budget, Chancellor Jeremy Hunt has today set out the government’s plans for tax and spending. At the same time the Office for Budget Responsibility (OBR) published their economic and fiscal forecasts for the next five years.
Mr Hunt opened his budget by announcing that the OBR has confirmed that the UK will not enter a technical recession this year. They forecast that the government will meet the Prime Minister’s five points for growth.
He continued by stating that the difficult decisions that he needed to make in the Autumn to deliver stability are now paying off and that the government are committed to growth and “prosperity with a purpose”.
Before going into the specifics of what his budget will do for the UK, he said that the government was “following a plan and that the plan is working”.
The OBR has forecast that inflation will fall from 10.7% to 2.9% by the end of year and that the UK economy will grow throughout the forecast period. The OBR also expect the unemployment rate to rise more slowly than previously predicted.
Mr Hunt finished his opening preamble by saying that this return to growth has direct consequences for our role on the world stage.
HERE ARE THE KEY POINTS FROM TODAY’S SPRING STATEMENT
Energy Price GUARANTEE
The Energy Price Guarantee will remain at £2,500 for the next three months. This will save the average family £160 on top of the support already announced.
Prepayment Meters
Over 4 million households on pre-payment meters will get help. Their charges will be reduced so that they align with households who pay their bills by direct debit.
Swimming Pools
Mr Hunt has responded to concerned about the effect of high energy costs on our leisure centres and swimming pools. He announced a fund of £63 million fund to keep our public leisure centres and pools afloat.
LOCAL CHARITIES
£100 million to support local charities and community organisations to support their fantastic work.
Suicide Prevention
£10 million over next 2 years to help the voluntary sector who work in the area of suicide.
Great British Pub
The Chancellor will significantly increase the generosity on draft relief, which will be 11p lower than the duty on supermarkets. He called this the ‘Brexit Pubs Guarantee’. (“British Ale is wam but the duty on a pint is frozen!,” he added). This will apply to every pub in NI too (thanks to the Windsor Protocol).
Fuel Duty
Will be frozen.
DEFENCE
A total of £11 billion will be added to the defence budget over next five years.
VETERANS
Mr Hunt announced support for veterans amounting to £30 million.
The Chancellor broke down his approach to economic growth into four sections: Enterprise, Education, Employment, Everywhere. He started with Everywhere:
12 new investment zones
Using Canary Wharf as a model for success, Mr Hunt announced 12 new investment zones across the country:
West Midlands, Greater Manchester, the north-east, South Yorkshire, West Yorkshire, East Midlands, Teesside, and Liverpool. There will also be at least one in Scotland, Wales and Northern Ireland.
REGENERATION
- £200 million in high quality regeneration projects
- £161 million for mayoral combined authorities and Greater London
- £400 million for new levelling up partnerships in places such as Oldham, Mansfield, South Tyneside, Rochdale
- £8.8 billion over 5 years for sustainable transport schemes
- £200 million for potholes
He also confirmed investments for Scotland, Wales and NI
ENTERPRISE
Measures include
- a new investment allowance that means that every £ a company invests in IT equipment, plant or machinery can be deducted in full from taxable profit. This will be worth £9 billion over 3 years
- a new tax credit for small and medium firms in the Life Sciences sector that spend 40% or more of their expenditure on R&D
- Tax relief for the creative industries
ENERGY and NUCLEAR POWER
Measure include
- Carbon Capture Usage and Storage – £20bn for early development of CCUS, Paving the way for CCUS across the whole of the UK
- To encourage investment, nuclear power will be classed as environmentally sustainable (subject to consultation)
- creation of “Great British Nuclear” which will bring down costs and provide opportunities to help provide 1/4 of our electricity by 2050
Employment
- Disabled People
A new programme to help disabled people get into or back into work was announced. This will mean up to £4k per person will be invested in the scheme and it has the potential to help up 50,000 people per year.
£400million will be allocated for mental health and muscular skeletal support and £3million for people with special needs.
Earning thresholds to be increased to 18 hours per week (from 15 hours)
- Older (Experienced) People
The annual pensions tax free allowance will be increased from £40,000 to £60,000 and the lifetime allowance for pensions savings will be abolished.
- Childcare
Funding paid to nurseries to be increased by £204 million, going up to £288 million next year. A 30% increase.
Parents on Universal Credit will get around 50% more support for childcare to encourage them to get back to work. This will be paid upfront rather than in arrears. In real terms this means families will be able to claim £951 for their first child and £1630 for 2 children.
People joining the childcare profession will get incentive payments of £600, and £1200 if they join via an agency
By 2026 Mr Hunt wants schools to be able to offer wraparound care from 8am to 6pm (either on their own or in partnership with other providers).
30 hours of free weekly childcare is being extended to cover children below age of 3. Eventually the aim is cover all children from the age of 9 months where both adults work.
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