14 March 2023 – The Chancellor will deliver his spring budget on 15 March, and it is expected that combating economic inactivity will play a big role in the Government’s plans.
Before any budget, there is much speculation about what will be in it. And it’s no different for this spring budget, which Jeremy Hunt will deliver on 15 March.
The Chancellor has already made clear on his appointment that his main priority is bringing down inflation, which currently stands at 8.8%. So it is widely anticipated that the March budget will heavily focus on reaching this aim.
Economic growth and reduction in public depths are also expected to have a big role in the budget and the government’s economic plan.
Unlike the ill-fated mini-budget last September, the spring budget will be announced alongside an updated economic projection by the Office for Budget Responsibility (OBR). This is part of the Chancellor and Prime Minister’s plan to project competence and stability to regain the trust of the financial markets.
While we won’t know for sure what measures will be announced until Wednesday, recent statements and comments by Jeremy Hunt give us a clue as to what might be in the budget.
No Tax Cuts But Measures To Tackle Economic Inactivity
After the ORB reported in February that public borrowing will be £30.6bn less this financial year than initially predicted, many Tory MPs called on the Chancellor to cut taxes to boost the economy.
But Jeremy Hunt has made it very clear that he doesn’t think that this is the right time to cut taxes. Therefore, it is not expected that the budget will contain any tax cuts. This means the planned rise in corporation tax is likely to go ahead in April.
Combating economic inactivity and bringing people back into work is a major factor in this March budget.
For many people, there are barriers preventing them from moving into work – lack of skills, a disability or health condition, or having been out of the jobs market for an extended period of time. I want this back-to-work Budget to break down these barriers and help people find jobs that are right for them. We need to plug the skills gaps and give people the qualifications, support and incentives they need to get into work.Jeremy Hunt, Chancellor of the Exchequer
Several news outlets have reported about the childcare crisis. Extremely high childcare costs drive parents, mostly mothers, of young children out of work or to reduce their hours.
In order to encourage parents back into work, Jeremy Hunt will announce on Wednesday that parents on universal credit will receive more help with child care costs.
This help will include the Government paying childcare costs upfront. At the moment parents have to pay the costs themselves upfront and then claim them back as a refund.
This can prevent parents from claiming the money or get them into debt. It is also expected that the Chancellor will increase the maximum amount parents on universal credit can claim, as the current amount of £646 per month per child is no longer enough at current prices.
While no concrete figure has been named, it is expected that the amount will increase by several hundred pounds.
It is not clear if parents of young children who don’t claim universal credit will also get more support with childcare costs.
Other parts of the group of people who are classed as economically inactive will also be targeted to encourage them into work. An expansion of skills training is meant to entice over-50s out of early retirement and back into work.
Other measures to get this group back into work could include favourable tax breaks for pension pots. It is also possible that the Chancellor will bring forward an extension of the official retirement age.
Another group targeted is people on sickness benefits. The number of people out of work due to long-term sickness has risen sharply since the pandemic. To get them back the Chancellor has said he will end the system that is currently used to assess eligibility for sickness benefits.
This means claimants will be able to get payments even after they have returned to work. On the other hand, claimants who don’t look for work or take up work will be hit with more sanctions. All with the aim to tackle economic inactivity.
Energy Bill Support Scheme
While the Treasury has already said that the current energy cost support scheme for households will continue in its current form for another three months, it is not known if the same applies for businesses.
Earlier this year the Chancellor said that all businesses will continue to receive help with their energy bills, but at a lower level from April onwards.
We will have to wait for the spring budget on Wednesday to find out if this is still the case, or if businesses will also continue to get the same level of support as now.