Jeremy Hunt has pledged to significantly expand state-funded childcare and business tax breaks as part of a budget package aimed at boosting economic growth.
In a bid to tackle barriers to work, it has promised up to 30 hours a week of free childcare for eligible households with children aged nine months, instead of the current policy in England for three and four-year-olds.
He also pledged to expand integrated care at the start and end of the school day for parents with older children and to introduce changes to staff-to-child ratios in England to expand childcare.
The chancellor said recession would be avoided and inflation would fall sharply as the economy “proved the skeptics wrong”.
In response, Sir Keir Starmer said Britain was “once again the sick man of Europe” and that the budget was “nearing the expiration date” for the Conservatives.
He added: “After 13 years of his government, our economy needed major surgery, but like millions of people across the country, this budget leaves us with nothing but a sticking plaster in the waiting room.”
But who are the real winners and losers of the budget?
Winners
1. People with children who pay for childcare. Mr Hunt’s changes are sure to help parents who need childcare, as well as paying for childcare for all ages over nine months. Ideally, for full-time working parents with two children, it looks likely to be around £6,500 a year. Help to provide ‘towels’ to schools and nurseries from 8am to 6pm is also greatly appreciated. However, the changes will be less effective for some parents who are underpaid and/or working part-time.
2. High-tech companies looking to invest in the future. While the main rates of corporate tax have not been reduced, very generous concessions for investments in IT technology, plant and machinery are welcome and should boost economic growth. The question is how long these investment benefits will last – the intention is to make them permanent, but there are no guarantees.
Budget 2023 corporation tax
(Photos courtesy of the Press Association)
3. Older, wealthier NHS consultants and NHS patients. Excluding lifetime benefits from the value of the pension pot aims to keep older, more experienced and efficient workers in place and stimulate growth. A certain group of NHS senior clinicians who have left work early or taken reduced hours in recent years have now faced a huge tax bill for loading up their nest eggs. The good news for those in need of high-quality professional care from an excellent surgeon or physician is reduced waiting times and reliable gray to complement a smart bedside approach.
4. Boozers. In other words, those who drank alcohol. Tapping into the tabloid caricature of the working man, Mr Hunt boasted that he made a pint of “warm British ale” in a “Great British pub” relatively cheaper than the discount alcohol available in supermarkets. More important and valuable, this move, if permanent, has left the pub trade, an important and distinctive part of national life, and in many villages the only place of community attention. This can reduce harmful drinking at home and on the street.
5. Robots. The substantial subsidies (£2.5 billion plus) available for research and development of artificial intelligence and quantum computing should, in jest, at least allow the country to fulfill the government’s ambition to make Britain a leader in this fast-growing field, with its revolutionary industrial potential. A good populist touch is the £1m award for AI innovation, called the Manchester Prize, named after the first British computer (built in this city in 1946). So by this time next year, a smart person will be a millionaire.
The losers
1. Everyone who earns more than about £12,000 a year. The pre-announced freeze on personal tax relief is a hidden tax, meaning that in practice most basic rate taxpayers will lose around £500 a year in net income, rising to £1,000 a year for higher rate taxpayers as wage inflation rises. their income is converted into higher tax rates. It is the single largest fiscal factor in reducing living standards (other than general inflation and mortgage rates, that is).
2. A small business without large investment schemes to finance. A typical example would be a small cleaning business whose finances are managed through a company and which now faces much higher taxation on its profits and dividends and has relatively little scope to make the most of generous investment allowances.
3. Buy to let landlords, investors and people selling their business. Again, a pre-announced and radical change to capital gains tax (and dividend income tax) will make them worse sooner or later.
4. Keepers. The ISA savings limit of £20,000 a year, although generous, will be suspended for another year, representing a significant reduction given current inflation. A small increase in savings interest rates will not compensate for this.
5. Virtually the entire public sector. Over the next few years, departmental spending will increase by an average of about 1 percent per year. With the NHS and defense taking a larger share of what’s available, some departments, particularly those without strong lobbying groups to defend them, will face further cuts in real terms – another era of austerity, perhaps in areas such as criminal justice. and the courts, local government, housing and, above all, the non-childcare and non-state pension (‘triple-locked’) elements of social security.
