MPO Budget 2023 review – what does it all mean?
Today’s budget by the Chancellor, Jeremy Hunt reveals plans by this government to help stimulate economic growth by focusing on a “back to work” strategy.
The Chancellor faces criticism over the current ‘cost of living’ crisis and promises to support the ‘economically inactive’ (over 50s, long-term sick and people with disabilities). The budget targeted the rising rates of inflation and energy costs for millions of households around the UK.
Energy price cap extended for another 3 months
In an attempt to bridge the gap to the coming reductions in the affects of the wholesale price of gas on our energy bills, the government has extended the Energy Price Guarantee (EPG) by 3 months.
The Energy Price Guarantee reduces the amount a household on a default tariff can be charged per unit of gas/electricity used.
The cap of £2,500 for households gas and electricity bills will be extended to the end of June to help to reduce the impacts of increasing energy prices. The cap was due to be increased to £3,000 in April (as announced in October 2022 in the Autumn mini budget). This plan was intended to help to reduce the impact on the cost to the state.
This isn’t quite all that it seems as households will still need to find an extra £67 per month from the end of April when the Energy Bill Support Scheme closes.
Ed Miliband, Shadow Climate Secretary for the Labour Party, criticised the Chancellor for not announcing a windfall tax for oil and gas providers, to “pay their fair share”.
Free childcare increased to 30 hours per week
The Chancellor emphasised the urgent need for this government to support young families back in to the workforce.
New parents in the UK are faced with spiralling costs of childcare from “one of the most expensive systems in the world” meaning that returning to work can leave them worse off. The scheme aims to target new parents at the end of their 9 month maternity or paternity periods.
- 30 hours free childcare per week
- Households with children between 1 and 4 years of age
- April 2024 parents of 2 year olds will be able to access 15 hours per week free care
- September 2024 15 hours will be offered to parents from 9 months old
- September 2025 will be increased to 30 hours for all parents of under 5’s
Freeze on fuel duty
The Chancellor has also announced a freeze on the 5p fuel duty cut that from the previous budget, costing the government an estimated £6billion.
As inflation remains high and the cost of living crisis continues, it would seem a bad time to increase fuel duty for motorists. The extension will be for another 12 months which is expected to save average drivers £100 per year.
Pension limits scrapped
In an attempt to incentivise workers out of early retirement, the Chancellor has scrapped the lifetime allowance limit on pensions.
This is a step further than what was expected and aims to target workers choosing early retirement by stopping limits on private pensions. The maximum amount you can pay into your pension per year has been raised from £40,000 to £60,000.
A new voluntary scheme has also been announced to help people living with disabilities to look for work and not be afraid of losing benefits.
Support for carers
The care relief threshold is to be almost doubled to £18,140 to provide tax breaks to carers that qualify, giving back an average of £450 per year.