Childcare and pension tax breaks in Hunt’s ‘back to work’ Budget TODAY

Jeremy Hunt is unveiling a ‘back to work’ Budget today – with free childcare for under-threes and tax incentives for people to pay into pensions for longer.

Boosted by a marginally brighter economic outlook, the Chancellor will announce some big-ticket moves to tackle eye-watering levels of inactivity in the workforce after Covid.

Most parents are expected to get up to 30 hours of funded childcare for one and two-year olds, building on the current provision for pre-schoolers.   

A planned rise in the cap on average energy bills next month is also being ditched to ease the pressure on struggling families, while the long-standing freeze on fuel duty is set to be extended.

Despite months of lobbying from MPs and businesses, the Chancellor will push ahead with increasing corporation tax from 19 per cent to 25 per cent and Rishi Sunak’s ‘Superdeduction’ scheme is coming to an end. He will also snub pleas for early income tax cuts as the burden heads towards a postwar high.

However, there will be new tax breaks for firms that invest in the UK, with claims they could be worth up to £11billion a year. 

Mr Hunt briefed the Cabinet on the contents of the Budget this morning, before delivering the statement to the Commons around 12.30pm.  

Jeremy Hunt briefed the Cabinet on the contents of the Budget this morning, before delivering the statement to the Commons around 12.30pm

Ministers were told the contents of the keenly-awaited package ahead of the announcement

The main elements in the Budget are set to include:

• Up to 30 hours of free childcare for one and two year-olds if both parents each earn less than £100,000; 
• The lifetime allowance on pensions to rise from £1.07million to £1.8million, after complaints that many middle-earners were finding it was not worth them working due to tax penalties;
• Changes to Universal Credit to encourage people to get back to work, with more support for childcare; 
• The energy bills guarantee is being extended for another three months, with prices likely to be lower by June anyway; 
• Fuel duty is being frozen for a 13th year in a row, and the ‘temporary’ 5p a litre cut is being maintained;
• Alcohol duty will rise in line with inflation from August and reforms to base the levy on strength will go ahead – with bottles of wine set to go up by around 45p, but other drinks getting cheaper;  
• Defence spending is being increased by £5billion for the next two years amid the fallout from the Ukraine war;
• There will be a £200million fund to tackle potholes after a Mail campaign.  

Lower than expected borrowing figures, a drop in wholesale energy prices and marginally improved GDP prospects have created some good news for the Treasury on the public finances.

The Office for Budget Responsibility (OBR) is likely to upgrade forecasts, after predicting at the last fiscal package in November that the economy would shrink 1.4 per cent this year. Borrowing is around £30billion less than had been anticipated so far this year.

However, the overall picture remains tough and Treasury sources insist the Chancellor will proceed with caution and prioritise balancing the books to combat soaring inflation.

Tory MPs are desperate for the package today to hold together, warning that this is the moment that could dictate the fate of Mr Sunak’s premiership.

The Budget is the first for Mr Hunt – and the first that has been laid out in 17 months, although there have been a series of ‘fiscal events’ amid the meltdown over Liz Truss and Kwasi Kwarteng’s bungled growth drive.  

Mr Hunt will promise to remove ‘the obstacles that stop businesses investing’ while also ‘tackling the labour shortages that stop them recruiting’ and ‘breaking down the barriers that stop people working’.

At the centre of that plan will be a range of measures designed to encourage the over-50s, the long-term sick and disabled, and benefits claimants back into the workplace.

The Chancellor is set to announce the axing of the system used to assess eligibility for sickness benefits, paying parents on universal credit childcare support upfront and increasing the amount they can claim by several hundred pounds. 

Working parents of children aged three and four currently can claim 30 hours of free care a week unless one earns more than £100,000. 

And families with two-year-olds are entitled to 15 free hours – if they claim benefits.

But under Mr Hunt’s plans the scheme will be massively extended so parents who work can get 30 free hours a week when their children are aged both one and two.

He is also expected to raise the hourly rate the Government pays to providers in measures costing around £4billion. 

UK childcare fees are among the highest in the world, with spiralling costs in areas such as energy and food forcing day nurseries to hike their charges to levels some parents can no longer afford.

Yet underfunding for the 30-hour provision has seen nurseries close, while others have pushed the costs on to parents of younger children. 

Changes to pensions are also expected, with the Chancellor likely to allow workers to put more money into their pension pot before being taxed by lifting the lifetime pension allowance.

That  

The Treasury confirmed early this morning that the planned £500 hike in average energy bills, due to come into force next month, has been ditched.

Instead the level will stay at £2,500 for at least another three months – by which time prices are expected to have fallen back.

Action is also due on prepayment meters with Mr Hunt scrapping the so-called ‘prepayment premium’ from July.

The Chancellor will promise to ‘harness British ingenuity to make us a science and tech superpower’ as he sets out a road-map for the country’s economic future.

Childcare is shaping up to be a key battleground ahead of the election next year and Labour has promised to make it a priority if it wins. 

Labour MP Stella Creasy, who has campaigned on the issue, last night branded Mr Hunt’s plan ‘economically illiterate’, warning it would push up demand without addressing supply.

Neil Leitch, chief executive of the Early Years Alliance, said the ‘devil was in the detail’, adding: ‘We know from harsh experience that what can sound like an impressive investment in theory can end up being wholly inadequate in practice.

‘Understanding exactly how this announcement will translate into hourly funding rate changes, especially in light of the extension of the 30 hours offer to one and two-year-olds, will be key.’

Paul Johnson of the Institute for Fiscal Studies said many would welcome any announcement to boost free childcare.

But he warned the system was ‘hugely complex’, adding: ‘As universal support has expanded, targeted support for children most in need has contracted.’

Suella Braverman arriving for Cabinet, where the Chancellor briefed ministers on the contents of the Budget 

Dominic Raab and Grant Shapps were among the other ministers at Cabinet this morning

Underfunding for the 30-hour provision has seen nurseries close, while others have pushed the costs on to parents of younger children

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Chancellor Jeremy Hunt pictured preparing for his Spring Budget last night

The Chancellor will stand up in the Commons at 12.30pm today and say he wants his ‘Budget for growth’ to make Britain one of the most prosperous countries in the world.

While resisting pressure from Tory backbenchers for significant tax cuts, he will unveil a series of policies designed to stimulate the economy.

He is expected to reject the ‘narrative of decline’ and vow to build on the country’s competitive advantages to spread wealth and opportunity.

Official figures yesterday showed vacancies across the UK have fallen for the eighth month in a row as firms hold back on hiring amid woes in the wider economy.

Mr Hunt will offer an olive branch to business with plans for 12 low-tax ‘investment zones’ and will try to encourage older workers to stay in employment with skills bootcamps, training and ‘midlife MOTs’. 

The latter are designed to help people make informed decisions about their finances and retirement.

Hunt tries to woo business tax rebels with £11billion investment tax break 

Mr Hunt will seek to head off a Tory rebellion over corporation tax rises with investment breaks for firms that could cost up to £11billion a year.

The business tax is due to go up from 19 per cent to 25 per cent in April, under plans agreed during Boris Johnson’s premiership and Rishi Sunak’s tenure as chancellor. 

Mr Hunt has confirmed that he does not plan to legislate to stop it or retain a ‘super-deduction plan’ that gave firms a generous tax break if they invest in factories and machinery.

It was introduced during the Covid pandemic to boost struggling firms and the twin changes have been branded a ‘double-whammy’ by business leaders.

But Mr Hunt today will introduce 100 per cent capital allowances for three years. This means firms will be able to offset the cost of their investments in the UK against tax on their profits.

The Financial Times quotes Treasury sources as saying it could initially cost £11billion a year before falling back.

He has already made a pre-speech announcement reflecting his desire to shock the economy into growth.

The Treasury chief will announce 12 new investment zones to ‘supercharge’ growth in hi-tech industries.

Officials said the scheme – backed by £80 million of investment over five years in each of the new high-growth zones – is designed to accelerate research and development in the UK’s ‘most budding industries’.

The Treasury said each of the new investment zones will be clustered around a university or other research institution, bringing growth to areas which have traditionally underperformed economically – a nod to the UK Government’s so-called ‘levelling-up’ agenda.

Overhaul of Universal Credit to encourage benefit claimants to move into work or boost their hours 

The Chancellor is announcing an overhaul of the Universal Credit system to encourage benefit claimants to move into work or boost their hours.

This includes an increase in the maximum amount parents on Universal Credit can receive in childcare support, which has previously been frozen at £646-a-month per child.

Parents will also now be paid childcare support up front when moving into work or increasing their hours, rather than being paid in arrears.

The Treasury hopes this will remove a barrier that many face when thinking about going back to work or taking on more hours.

Meanwhile, stricter rules are being introduced for Universal Credit claimants who care for children.

This will require them to step up their search for work or to increase their hours, wotj additional support from a work coach to help them to do so.

There will also be an increase in the minimum earnings threshold needed to avoid regular meetings with a work coach.

This will rise from the equivalent of 15 to 18 hours a week, while the partner of a working person will also now be required to look for a job.

Household energy bills will NOT go up before June and remain at £2,500 as Treasury extends the government’s price cap 

The energy price guarantee will be extended for a further three months from April to June at its current level, capping average annual household bills at £2,500, the Treasury has confirmed.

The three-month extension of the energy price guarantee (EPG) at its current level will save a typical household around £160, the Government said.

Prime Minister Rishi Sunak said: ‘We know people are worried about their bills rising in April, so to give people some peace of mind, we’re keeping the energy price guarantee at its current level until the summer when gas prices are expected to fall.

The EPG had been due to rise to £3,000 in April, but falling energy prices mean that the current level can be extended to ‘bridge the gap’ until costs fall below the cap.

Chancellor Jeremy Hunt, who included the measure in his Budget being unveiled today, said: ‘High energy bills are one of the biggest worries for families, which is why we’re maintaining the energy price guarantee at its current level.

‘With energy bills set to fall from July onwards, this temporary change will bridge the gap and ease the pressure on families, while also helping to lower inflation too.’

£1billion for ‘investment zones’ in 12 former industrial areas to boost UK tech growth 

The Chancellor is expected to set out plans for a billion-pound network of 12 investment zones to boost high tech business development in former industrial heartlands of the UK. 

The Treasury said each of the new investment zones will be clustered around a university or other research institution, bringing ‘supercharged’ growth to areas which have underperformed economically in recent decades.

Companies in the ‘high-growth’ investment zones could be spared stamp duty when they buy property, pay no business rates, and see a reduction in employer national insurance contributions. 

They will be focused on one of a series of key sectors – technology, creative industries, life sciences, advanced manufacturing and the ‘green’ sector.

Eight areas in England have been shortlisted – the East Midlands, Greater Manchester, Liverpool, the North East, South Yorkshire, the Tees Valley, the West Midlands and West Yorkshire.

Eight areas in England have been shortlisted – the East Midlands, Greater Manchester, Liverpool (skyline pictured above) , the North East (The Angel of the North pictured below), South Yorkshire, the Tees Valley, the West Midlands and West Yorkshire.

The Government is also in discussions with the devolved administrations over how investment zones can be established in Scotland, Wales and Northern Ireland – accounting for the four final locations.

Officials said the scheme – backed by £80 million of investment over five years for each of the new high-growth zones – is designed to accelerate research and development in the UK’s ‘most budding industries’.

The move comes after the Government was forced to step in to ‘facilitate’ the sale of the UK arm of the collapsed Silicon Valley Bank to HSBC to prevent dozens of tech companies being ‘wiped out’.

In addition, Mr Hunt will set out plans to accelerate the growth of ‘high-potential innovation clusters’ in Glasgow, Greater Manchester and the West Midlands with £100 million of investment in 26 ‘transformative’ research and development projects.

Top Admiral defends the £5bn boost for UK armed forces despite Army chiefs saying the figure ‘couldn’t have been much worse’ 

The head of the Armed Forces has defended a controversial £5billion uplift in military cash amid fury over how it will be spent.

Admiral Sir Tony Radakin said the money was ‘really good news’ but hinted some capabilities would be ‘pared down’.

Some £3billion will go on the development of submarines, with £2billion on replacing equipment sent to Ukraine.

But it has outraged Army chiefs who were hoping to invest in tanks and long-range artillery to meet threats posed by Russia. Pleas by Defence Secretary Ben Wallace for £11billion have been batted away by Chancellor Jeremy Hunt. 

Admiral Radakin, a former head of the Royal Navy, told the BBC: ‘This is significant investment and significant clarity. I’ve met all the defence chiefs and we all see this as being investment in UK defence…

The head of the Armed Forces Admiral Sir Tony Radakin defended a controversial £5billion uplift in military cash yesterday amid Army fury over how it will be spent 

Some £3billion will go on the development of submarines, with £2billion on replacing equipment sent to Ukraine. [File image] 

‘We also hope to accelerate some of the capabilities that we’ve identified… And, inevitably, you might pare back in other areas.’

Senior Army officers, who face the loss of thousands of troops by 2025, say the £4.6billion value of equipment pledged for Ukraine falls way short of the £2billion promised for replacements.

One told the Mail: ‘We’ve been cut out completely. The Treasury have basically said you can have under half of what you’ve given away. The settlement couldn’t have been much worse really. But the Navy are happy.’

Former head of the Army Lord Dannatt suggested the £5billion is around a third of what was required, adding: ‘With a land war in Europe our army is woefully under-funded.’