Spring Budget 2023: Seven key announcements expected today
While there are likely to be a string of other measures announced, here is what we know (or at least suspect) so far.
Energy price guarantee
One of the key announcements so far is that the Energy Price Guarantee would be extended for an extra three months from April to June.
The guarantee caps average energy bills at £2,500 and had been due to increase by £3,000 at the end of April.
In a tweet, the Treasury said that energy bills were expected to fall from July and that this would “bridge the gap” and ease pressure on families. It added that this could save the average family £160.
This represents a U-turn from the Government which has previously ruled out any change.
Another announcement that is expected is the extension of free childcare to cover one and two-year olds.
At the moment, working parents can access 30 hours of free childcare a week for three and four-year olds.
According to media reports, this is part of the Government’s drive to encourage more people to return to work.
Another aspect of this is that those on Universal Credit could receive childcare funding upfront rather than claiming it back.
Corporation tax increased to 25%
Hunt is also expected to increase corporation tax from 19% to 25%, with reports in The Telegraph yesterday that this could trigger a Tory backbench revolt.
The increase is expected to come into force from April.
The report said there have been warnings from backbench MPs that this tax increase could harm economic growth.
Pensions changes on the cards
As highlighted in YourMoney.com yesterday, Hunt is expected to make three major pensions boosts to encourage over-50s back to work and curb higher earning professionals from leaving sectors such as education and medicine.
These include increasing the pension annual allowance from £40,000 to £60,000, upping the pension lifetime allowance from £1,073,100 to between £1.5m and £1.8m and raising the Money Purchase Annual Allowance from £4,000 to £10,000.
There may also be a review of the state pension age, which was due to be introduced gradually rising from 66 to 67 between 2026 and 2028 to 68 between 2044 and 2046. This could be brought forward to the mid-2030s.
Creation of 12 investment zones
The Government will also create 12 “investment zones” around the UK, which will be backed with £80m in funding.
This funding include tax incentives, such as tax breaks, with the BBC noting Hunt could also introduce a new tax break regime for businesses.
Fuel duty frozen and change to alcohol duty
The fuel duty cut could also be extended until April, while alcohol duties are widely expected to rise with inflation from August.
The Government cut fuel duty by 5p in March 2022, with it expected to come to an end at the end of March 2023. Reports suggest that this could be frozen for another year.
On the alcohol duty side, from August this would rise with inflation and a new system for taxing alcohol could come into effect based on alcohol strength.
Public sector pay
The Government could commit to a stronger public sector pay deal to bring the never-ending stream of public service strikes to a conclusion.
At the moment, existing departmental budgets will allow for a 3.5% public sector pay rise. Hunt may go further and announce a 5% increase. This would cost £4bn, according to Deutsche Bank.