The five biggest things you need to know from today's budget
There was big news on childcare costs, energy bills and pensions
Last updated 15th Mar 2023
Jeremy Hunt delivered his first full Budget today since becoming Chancellor and went further than many expected on some points like childcare costs and pension tax.
Here's everything you need to know about today's Budget and which parts affect you.
Funded childcare for children over nine months
The current provision of up to 30 hours a week of funded childcare in England for working parents of under 5s has been extended, it will now include children from 9-months-old.
Jeremy Hunt went further than expected on this measure, it was thought he would include one and 2-year-olds, but Mr Hunt dropped the age bracket to 9 months so it can come into effect at the end of parental leave.
This funding will be brought in gradually though, with the Chancellor saying: “Working parents of two-year-olds will be able to access 15 hours of free care from April 2024, helping around half a million parents.
“From September 2024, that 15 hours will be extended to all children from 9 months up, meaning a total of nearly one million parents will be eligible. And from September 2025 every single working parent of under 5s will have access to 30 hours free childcare per week.”
Help with energy bills extended
The Chancellor confirmed that the energy price guarantee, which caps average household bills at ÂŁ2,500, will be extended at its current level from April to June.
It had been due to rise to ÂŁ3,000 in April but has been extended to June when it's expected energy bills will start to fall.
Mr Hunt also announced the end to people with pre-payment meters being charged more than those on direct-debit.
Pensions
This may not affect you right now, but it might in the future as the lifetime pension allowance has been abolished.
The amount of money you can have in your pension before it gets taxed had been expected to be increased, but was actually got rid of entirely.
Sir Keir Starmer criticised this in his response saying it will only benefit the richest 1% of society.
Fuel and beer duty
Fuel duty was frozen with the 5p cut introduced previously being maintained for another year, saving the average driver around ÂŁ100 according to the Chancellor.
A "draught relief" will cut duty on beers and cider in pubs by 11p a pint, with the Chancellor saying “British ale is warm, but the duty on a pint is frozen.”
Pothole repairs to get funding boost
Funding to fix potholes across England will be boosted by ÂŁ200 million, Jeremy Hunt has announced.
The Chancellor said the Government’s Potholes Fund – which previously provided £500 million a year to councils – will be increased to £700 million in the 2023/24 financial year.
Other interesting points from today's budget:
The Chancellor opened his Budget statement by telling the MPs that a technical recession – two quarters of negative growth will be avoided according to the OBR (The Office for Budget Responsibility).
Here are some of the other key points from today:
- Â ÂŁ63 million of money to help leisure centres with swimming pools meet energy costs and become more efficient.
- The creation of 12 investment zones – eight in England, four in Scotland, Wales and Northern Ireland, benefiting from tax breaks, each backed by £80 million over five years.
- Paying childcare support to parents on Universal Credit upfront, rather than in arrears, and increasing the amount they can claim.
- A new policy of “full expensing” will mean that every single pound a company invests in IT equipment, plant or machinery can be deducted in full and immediately from taxable profit, a cut worth an average of £9 billion a year for every year it is in place.
- The Chancellor confirmed the Government will add ÂŁ11 billion to the defence budget over the next five years and another ÂŁ30 million is being allocated for veterans.
- The Chancellor announced an annual £1 million prize for AI research over the next 10 years, called the “Manchester Prize”.
- Mr Hunt said that, subject to consultation, nuclear power will qualify for the same investment incentives as renewable energy and alongside that “will come more public investment”.
Labour's response
In response Labour Leader Sir Keir Starmer said the budget didn't go far enough in many ways, he said the economy needed major surgery, but that this Budget "leaves us in the waiting room with a sticking plaster".
Shadow Chancellor Rachel Reeves tweeted that this budget was just 'papering over the cracks'
Meanwhile unions criticised the Budget for failing to tackle the pay disputes ongoing across the country.
Cost of Living crisis in pictures
Interest rates and inflation go up
Inflation rose by 8.8% in the 12 months to January 2023, down from 9.2% in December 2022. With interest rates also rising to 4%, those saving money will earn more interest on their finances, whilst those paying mortgages would pay more interest to the bank.
Energy bills
The price of energy went up incredibly as the cost of living crisis hit, with the gas price spike caused largely by the war in Ukraine. The price cap - which is set by an independent regulator to help offset costs onto customers - was set to rise to ÂŁ3,549 for an average home in October but a price freeze from the government restricted the typical bill to ÂŁ2,500. That's still an increase of 27% from the previous energy cap and as it's a cap on unit cost, the more energy you use the higher your bill will be.
Food prices
The cost of a weekly shop also has gone up as a result of the cost of living crisis. As a result of the war in Ukraine, a number of products including cooking oils and wheat have been disrupted. This means that several products are now considerably more expensive, driving bills up for customers.
Prices at the pumps
The average cost of petrol has also rose to unprecedented levels. Supply lines for petrol have been thrown into doubt as a result of the war in Ukraine, as Russia is a large export partner for gas, oil and fuel. In April 2022, the average price for a litre of petrol on the forecourt was 160.2p, whilst a litre of diesel would cost 170.5p. By late June 2022 the price had risen to an average of 190.9p for a litre of unleaded and 198.9p for a litre of diesel. In March 2023 the price wass on average of 147.03 in petrol and 167.04 in diesel.
Average cost of filling up a car with petrol hits ÂŁ100
On 9th June 2022, the average cost of filling up a car with petrol hit ÂŁ100 for the first time ever. Diesel had already hit that milestone. It comes as the cost of fuel hit a record high of one pound eighty a litre. The 2p rise was the biggest daily jump in 17 years. Prices have dropped by at least 20p per litre since the high point.