15 March 2023

How might the Budget actually affect me?

15 March 2023

Chancellor Jeremy Hunt has unveiled his Spring Budget in the midst of a cost-of-living crisis.

In it, he covered everything from energy caps to childcare – and you might be wondering what his plans actually mean for you.

Childcare

Childcare is being made a priority. Hunt announced 30 hours a week of free care would be available for children aged between nine months and four years, in a policy to be introduced in stages.

“By extending 30 hours of free childcare to one and two-year-olds in England, this will close the cliff edge of support at the end of parental leave and get more economically inactive people back into work,” says Victor Trokoudes, founder and CEO at smart money app Plum.

“We’ve argued for some time about the benefits to economic growth from improving childcare provision, so we’re pleased this has now been recognised by the Treasury.

“The impact on the economy could be enormous: helping cut inflation, loosen labour markets and provide a much-needed boost to both productivity and optimism in the country’s future.

“For women particularly, today’s announcement could be a game-changer, as the single key factor in helping mothers remain in the labour market is full time free childcare rather than part time”.

Energy

There was good news in the Budget for those struggling with high energy bills.

“Millions of people across the UK will be heaving a sigh of relief at the news that the energy price guarantee has been extended by a further three months,” says Sarah Pennells, consumer finance specialist at Royal London.

“The Chancellor’s announcement means that energy bills for households with typical gas and electricity use, paying by direct debit, will be limited to £2,500 a year, instead of the £3,000 ceiling which was scheduled to begin on April 1.

“Without the government’s energy price guarantee, a typical household would be facing energy bills of £3,280 a year, which is the energy regulator Ofgem’s current energy price cap,” she explains.

So at least you will know what to budget for energy-wise as we head into warmer months.

On top of this, prepayment meters – which often cost more – will change.

“There has been a longstanding criticism of the fact that some of the poorest families have to pay more for their energy through a prepayment meter,” says Pennells.

Ofgem has agreed with suppliers a temporary suspension to forced installations of prepayment meters, and Hunt said he will “bring their charges in line with comparable direct debit charges”.

Fuel

Drivers were despairing last year as fuel prices soared and shortages were widespread.

In the Budget, Hunt said: “Because inflation remains high, I have decided now is not the right time to uprate fuel duty with inflation or increase the duty.

“So here’s what I am going to do: for a further 12 months I’m going to maintain the 5p cut and I’m going to freeze fuel duty too. That saves the average driver £100 next year and around £200 since the 5p cut was introduced.”

Drivers may also be pleased to hear the Potholes Repair Fund has been promised a £200m boost.

Booze

If you’re shocked by the price of a pint in pubs, Hunt has promised change.

“Today, I will do something that was not possible when we were in the EU and significantly increase the generosity of Draught Relief, so that from 1 August the duty on draught products in pubs will be up to 11p lower than the duty in supermarkets, a differential we will maintain as part of a new Brexit pubs guarantees.

“British ale may be warm, but the duty on a pint is frozen,” he said.

Leisure

Enjoy swimming, but worried your local leisure centre is facing challenges? The changes to energy costs should secure the future of local facilities a little more.

Hunt has said he will provide a £63 million fund to “keep our public leisure centres and pools afloat” in response to high costs, and £100 million will be given to support thousands of charities and community organisations.

Pensions

Hunt has introduced measures to allow people to continue working for longer.

“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% from £40,000 to £60,000,” he said.

However, Karen Bennett CBE, CEO of Enterprise Credit Union, suggests this might not make a huge difference to lower-paid workers.

“We recognise the increase in the amount workers can accumulate in their pension savings before paying extra tax might be beneficial for some people, but what does it mean to the average person, those who are already struggling? Where are they going to get the funds from to increase their pension pots?” she asks.

The best videos delivered daily

Watch the stories that matter, right from your inbox