What to expect from Jeremy Hunt’s Budget?
Chancellor Jeremy Hunt will unveil his Budget on Wednesday as the country faces the pressing issues of inflation, pay and public finances.
The Budget comes in the wake of the autumn statement last November, which saw the Chancellor hike taxes as he and Rishi Sunak sought to restore UK financial credibility after Liz Truss’ short-lived premiership.
This time, the Chancellor is expected to focus on measures that will get various cohorts back to work as part of a wider push to boost growth.
Here’s what we know so far and what we can likely expect in the Budget this week.
Back to work
Efforts to encourage the over-50s, the long-term sick and disabled, and benefits claimants back into the workplace are likely to form a key plank of Mr Hunt’s plans.
Key details will include 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.
The axing of the eligibility system will mark the biggest reform to the welfare system in a decade and will mean claimants can continue to receive the payments after they return to employment.
Elsewhere there will also be efforts to tackle expensive childcare costs, with Mr Hunt set to announce a rise in the maximum universal credit childcare allowance by several hundred pounds.
Cost of living
Mr Hunt is expected to cancel the planned £500 hike in average energy bills which was due to come into force next month, in a move that would see bills for the average household staying at around £2,500, instead of going up to £3,000 as was previously announced.
The Treasury has come under increasing pressure in recent weeks to cancel the rise, which was set to come into force from April 1.
On fuel duty, some Tory backbenchers have urged the Chancellor to act to support motorists facing a 12p-per-litre hike in fuel duty in March.
A 23% increase in the duty is pencilled in for this month, but chancellors have repeatedly frozen the levy in the past.
Mr Hunt has so far not said what he will do.
Action is also expected on prepayment meters with the Chancellor set to end the so-called “prepayment premium” from July, something that the Treasury expects will save more than four million households £45 a year on their energy bills.
It has been reported that the Chancellor is considering raising the £40,000 cap on tax-free annual pensions contributions.
It could come among a a rise in the lifetime allowance (LTA) on tax-free pensions savings.
There have been reports too that the UK state pension age could rise to 68 sooner than had been expected.
The Treasury has been under pressure for months to boost the defence budget, as the war in Ukraine continues.
The Prime Minister has promised an extra £5 billion for the military over two years, with an extra £1.98 billion this year and £2.97 billion next year for defence.
According to Mr Sunak, the extra funding will take spending from 2% of GDP in 2020 to 2.25% in 2025.
Any indications from the Chancellor about the future trajectory of defence spending beyond this will likely be eagerly received by MPs.
After months of strikes across transport, the NHS and other sectors there has been some hope in recent weeks that rows over pay can be brought to an end.
Unions representing ambulance workers, physiotherapists, nurses and midwives remain locked in talks with the Department of Health but Mr Hunt could potentially use his Budget speech to offer details of some sort of pay settlement to end the industrial action.
Among the measures to be announced will be plans to give the UK’s 363,000 international traders a more streamlined customs process.
The changes will likely give traders six additional days to submit forms after border crossings, reducing admin burdens for business, as well as fewer authorisations and financial guarantees.
Conservative MPs have been pushing for tax cuts, even if Jeremy Hunt has so far appeared to be resistant to those calls.
As ever, all eyes will be on the Chancellor to see if he offers any tax relief initiatives for businesses when he stands up in the Commons on Wednesday.