What will be included in the Spring Budget?

With Chancellor Jeremy Hunt’s 2023 Spring Budget just round the corner, many are speculating as to which measures will be unveiled. Business groups, including the Confederation of British Industry (CBI) and the Federation of Small Businesses (FSB), have made their requests clear in their Budget wishlists. But which measures are likely to be announced?

Here, we highlight some of the measures hotly tipped to be unveiled by the Chancellor.

 

Continued energy bill support

On 1 April, the Energy Price Guarantee (EPG) will rise by 20%, increasing the typical annual household energy bill from £2,500 to £3,000. According to reports, Mr Hunt will use the Budget to announce a three-month extension of the EPG and to maintain its current level of support, keeping the cap at £2,500.

Fuel poverty campaigners have warned that the April rise will see the number of households struggling to afford energy bills increase to 8.4 million from 6.7 million. Additionally, business group the British Chambers of Commerce (BCC) declared energy to be one of its ‘non-negotiable’ goals in its Spring Budget wishlist. It called for the Chancellor to ‘do more’ at the Budget to provide funding to help businesses become more energy efficient.

Mr Hunt recently said that the EPG is ‘under review’, and Energy Secretary Grant Shapps stated that he is ‘very sympathetic' to making sure the public is protected from energy price rises.

 

Tackling rising childcare costs

The Chancellor has faced calls from backbench MPs and business groups to cut the costs of childcare in the Spring Budget, helping to support families and ease the path back into the workplace for new parents.

Reports have emerged which suggest the government is considering an expansion of free childcare schemes to those with one and two-year-olds in England. Under the new proposals, parents of children aged between nine months and three years could get 30 hours of free childcare a week during term time. Only children aged three and four are currently eligible for this scheme.

The CBI recently said that an independent review of the childcare system is ‘long overdue’, and that by expanding childcare support, the government will be helping to get more people back into the workplace. Meanwhile, the FSB warned that the ‘childcare crisis’ is affecting the economy, with childcare providers facing ‘insufficient government funding’, forcing them to either shut for good or pass the costs onto struggling parents and carers.

The FSB has outlined a five-point plan to combat the issue. The plan includes extending the current 38 weeks free childcare entitlement to 45 weeks; giving nurseries in England 100% exemption from business rates; raising the UK’s tax-free childcare allowance from £2,000 to £3,000; and matching employers who make discretionary contributions for childcare.

 

Freezing fuel duty

Fuel duty is set to rise by RPI inflation in April, adding 7p to the price of a litre of fuel. A number of reports have suggested that the Chancellor may choose to freeze fuel duty in the Budget, with sources hinting that Mr Hunt believes there is a ‘strong precedent’ associated with maintaining a freeze in fuel duty.

 

Rise in corporation tax

Debate has been sparked amongst business leaders as to the government’s commitment to ease cost pressures on UK businesses, and the planned rise in corporation tax has only added fuel to the fire. April will see corporation tax rise from its current level of 19% to 25%, netting £18 billion per year for the Treasury. Critics of the rise argue that cutting corporation tax helps to stimulate growth and investment.

 

Combating strikes

Mr Hunt is under increasing pressure to offer a pay deal to public sector workers in an effort to put an end to disruptive strikes. Present government departmental budgets permit a 3.5% pay rise for the public sector, but the Chancellor has faced calls to use the Spring Budget to increase this to 5%, which would cost around £4 billion, according to estimates.

 

The Chancellor will present the 2023 Spring Budget next week on 15 March. Mercia’s team of experts will be watching and keeping you up to date on all the Budget announcements. Keep your clients up to date with our range of digital products.