Today, Jeremy Hunt revealed his first Budget, in which he aims to deliver on the Prime Minister’s priorities set out by Rishi Sunak in January, namely reducing inflation, national debt, and increasing growth. Hunt has echoed his January Bloomberg speech by emphasizing the ‘four Es’ of ‘enterprise, education, employment, everywhere.’
According to the Office of Budget Responsibility, the UK is predicted to avoid a recession this year, with a contraction of only 0.2%. Inflation is expected to drop from 10.7% to 2.9% by the end of 2022. The OBR also forecasts growth of 1.8% for next year and 2.5% for the following year. However, despite this positive outlook, real living standards are still expected to fall by a cumulative 5.7% in 2022-23 and 2023-24, which is the most significant drop since 1956-57.
Some of the key measures from the Budget include:
- Increasing the pensions annual tax-free allowance from £40,000 to £60,000 and abolishing the Lifetime Allowance, which was previously set at £1.07m.
- Offering ‘returnerships,’ a new type of apprenticeship targeted at individuals over 50 with enhanced career advice for those on Universal Credit.
- Providing 30 hours of free childcare for every child over nine months old for parents in working households to reduce childcare costs by 60%, and increasing the childcare remuneration rate for nursery operators by 30%.
- Raising the headline rate of corporation tax to 25%, replacing the super deduction with full capital expensing for the next three years at a cost of £9 billion, with Hunt aiming to make it permanent when possible.
- Cancelling the planned increase of 11p in fuel duty this year, keeping rates the same for the next 12 months to save the average driver £100, and maintaining the energy price guarantee at a £2,500 cap for the next three months.
- Pledging £5 billion in funding for defense, increasing to £11 billion over the next five years, to reach 2.25% of GDP by 2025 and 2.5% ‘when circumstances allow.’
- Exploring the abolition of the workplace capability assessment through a White Paper on disability benefits reform, so that a claimant can seek work without losing financial support, and launching a new program called ‘Universal Support’ to help up to 50,000 disabled people get into work with up to £4,000 spent per person.
- Aiming for a quarter of the UK’s electricity to be provided by nuclear power by 2050, with Hunt launching the first competition for Small Modular Reactors, which will now have access to the same investment incentives as renewable energy.
- Freezing duty on average strength draught beer sold in UK pubs.
- Creating 12 new investment zones, including West Midlands, Greater Manchester, Teeside, and at least one in Scotland, Wales, and Northern Ireland, worth £80 million of support. Providing £200 million in local regeneration projects across England, £161 million in Mayoral authorities and Greater London, and £400 million for new levelling up partnerships.
- Offering finance commitments of £400 million for mental health and muscular skeletal support, a £63 million fund for leisure centers and swimming pools, £10 million over the next two years to combat suicide, and £11 million of support for Ukrainians in the UK, with an £1 million prize for AI research.
Keir Starmer branded the Conservatives as “turnips” and branded Jeremy Hunt’s Budget was “dressing up stagnation as stability”, claiming it put the country “on a path of managed decline”.