Budget 2023: UK to avoid recession as Hunt announces major changes on pensions, energy bills and childcare

In what was dubbed a "Budget for growth", Hunt set out reforms to help convince more Britons to stay in work, including the expansion of childcare support and increased pension allowances.

He also confirmed the Government's £2,500 energy price guarantee would remain in place until July, scrapping a hike in the cap that had been due to come into force in April.

"Today the Office for Budget Responsibility forecast that because of changing international factors and the measures I take, the UK will not now enter a technical recession this year," the Chancellor told MPs.

“Today, we deliver the next part of our plan. A Budget for growth.

“Not just the growth that comes when you emerge from a downturn, but long-term, sustainable, healthy growth that pays for our NHS and schools, finds jobs for young people, and provides a safety net for older people all whilst making our country one of the most prosperous in the world. Prosperity with a purpose.”

Labour leader attacked the announcements made by Hunt, claiming the Conservatives had turned Britain into the "sick man of Europe".

Jeremy Hunt's big announcements

Energy Bills
The Government is to extend the energy price guarantee at its current rate for a further three months.

It means average households' annual energy bills will remain capped at £2,500 rather than the £3,000 previously planned.

Falling wholesale energy prices mean that the Government could change how long it offered support at the current rate.

The energy price guarantee was introduced by the Government last spring to help save Britons from skyrocketing bills.

The price cap implemented by the energy regulator Ofgem would have seen average households paying over £4,000 a year.

Pensions
Jeremy Hunt announced he will abolish the pension lifetime allowance altogether in his Spring Budget.

Currently Britons can put aside up to £1million towards a workplace pension before they are taxed on the money saved.

The Chancellor said he would get rid of the allowance cap in order to help keep more people in work.

He said: "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 per cent from £40,000 to £60,000.

"Some have also asked me to increase the Lifetime Allowance from its £1million limit. But I have decided not to do that.
“Instead I will go further and abolish the Lifetime Allowance altogether.”

Potholes
Extra funding to tackle potholes across the UK was promised by Jeremy Hunt.

He said the £500million allocated to tackle the blight on Britain's roads would be increased by a further £200million next year.

It comes after data from the RAC indicated the pothole problem on Britain's roads were worse at the end of 2022 than they had been for three years.

Fuel Duty
The Chancellor confirmed that the 5p reduction in fuel duty introduced last March will be extended for another 12 months and that it would not rise in line with inflation.

He said the decision would save the average driver £100 over the next 12 months.

'Brexit pubs guarantee'

The Chancellor outlined plans to "significantly increase the generosity of draught relief".

He said that from August 1 the duty on draught products in pubs will be up to 11p lower than the duty in supermarkets.

He described the policy as the "Brexit pubs guarantee" saying that it was not possible to make the change while in the EU.
The Chancellor joked to MPs: “British ale may be warm, but the duty on a pint is frozen.”

Childcare

In an effort to remove barriers to work, Jeremy Hunt promised up to 30 hours a week of free childcare for eligible households in England with children as young as nine months, instead of three and four-year-olds under the current policy.

The phased policy, which will be fully introduced by September 2025, will be worth up to £6,500 a year for working families.

He also pledged an expansion in wrap-around care at the start and finish of the school day for parents with older children and changes to staff-to-child ratios in England to expand supply of childcare.

Jeremy Hunt said he was early doubling the qualifying care relief threshold to £18,140 to give a tax cut to a qualifying carer worth an average of £450 a year. He added funding would also be increased to help more care leavers into employment.

Labour reaction

Labour leader Sir Keir Starmer accused the Conservative Government of being “out of touch” as he tore into the Budget after Jeremy Hunt's announcements.

He claimed: "For all the hype, a Budget for growth that downgrades the growth forecast.

“His opening boast was that things aren’t quite as bad now as they were in October last year after the ‘kamikaze’ budget and the more that he pretends everything is fine, the more he shows just how out of touch they are.”

Starmer said the policies would not transform the future of the country and that Britons were "no better off" after 13 years of Conservative Governments.

He said: “After 13 years of his Government, our economy needed major surgery, but like millions across our country, this Budget leaves us stuck in the waiting room with only a sticking plaster to hand. A country set on a path of managed decline, falling behind our competitors, the sick man of Europe once again.

“This was a day for ambition, for bringing us together with purpose and intent, for unlocking the pride that is in every community, matching their belief in the possibilities of the future.

“But after today we know the Tory cupboard is as bare as the salad aisle in our supermarket. The lettuces may be out, but the turnips are in.

"A hopelessly divided party caught between a rock of decline and a hard place at their own economic recklessness. Dressing up stagnation as stability as their expiry date looms ever closer.”