What is the Spring Budget?
The Spring Budget is a yearly statement made by the Chancellor of the Exchequer, in the House of Commons. It explores the current state of the economy, predictions from the Office for Budget Responsibility (OBR), and the UK Government’s plans for new policy and spending commitments for the next few years.
What was announced in the Spring Budget 2023?
Today, the Chancellor, Jeremy Hunt MP, addressed the House of Commons with the new Spring Budget 2023. The Budget, which has been nicknamed the ‘budget for growth’, announced:
30 hours free childcare in England for children aged over nine months and under five for households with working parents.
Childcare costs paid upfront for those who get Universal Credit.
Local Housing Allowance rates will stay frozen.
Disability benefits will be reformed, including getting rid of work capability assessments.
Energy bills will stay at the current levels until Summer 2023.
People who pay for energy by prepayment meters will pay the same as those who pay by direct debit.
Skills training for over 50s wanting to return to work and an increase to tax free amounts that can be paid into pensions over 50.
£100m to support charities and community organisations helping people in the cost of living crisis.
How will the Spring Budget 2023 affect me?
30 hours free childcare in England
You will also receive 30 hours of free childcare for all children aged over 9 months and under five years old if all parents in the household work 16+ hours a week.
This should reduce your childcare costs by nearly 60%! Free childcare is currently only available for three and four year old children. The introduction of the free childcare will be staggered across age groups from 2024 to 2025.
More support with childcare costs for those who get Universal Credit
Childcare costs will be paid upfront, so you can know your childcare is covered, and don’t have to worry about paying out of pocket. Also, the maximum amounts that can be claimed per child increased by nearly 50%.
But there are risks here too: payment in advance means that a family’s changing circumstances could leave them having to repay support, and opens DWP up to fraudulent claims. The government needs to it easier for people to pay back overpayments in an affordable way.
Local Housing Allowance rates will stay frozen
There was no mention about Local Housing Allowance rates in today’s Budget. These rates are used to calculate housing benefit for tenants renting from private landlords. As it stands, Local Housing Allowance rates will stay frozen.
Disability benefits will be reformed
The Work Capability Assessment is going to be scrapped and will be replaced with a new voluntary employment scheme. The goal is to empower those who want to work to be able to do so without a reduction in support, and reducing the number of assessments needed to qualify for health-related benefits.
Disability charities and advocates have warned that this could put pressure on people to work as they’re afraid of sanctions, when they’re really not well enough to work.
However, the full details of this proposal haven’t been announced yet so things will look the same for a while.
Energy bills will stay at the current levels until Summer
The Energy Price Guarantee, which has helped suppress household energy bills this winter, will now stay at £2,500 for another three months, instead of rising to £3,000 (for the typical annual bill). However, the Energy Bill Support Scheme which gave £400 to every household (in instalments of £67 between October 2022 and March 2023) is ending. This means that bills won’t rise but you won’t receive any more discounts.
This proposal will look different in Northern Ireland.
Pre-payment meters will cost the same as direct debit charges
People who pay for energy by prepayment meters will pay the same as those who pay by direct debit. We don’t know the date this will take effect yet but it’s expected to save you about £45 per year once in place. This could benefit up to four million households in the UK.
This proposal will look different in Northern Ireland.
Skills training and bootcamps will be set up to encourage people to return to work, especially those over 50
Skills training will be offered to those returning to work, including those over 50 who are coming out of retirement. More than 8,000 extra places will be opened on skills bootcamps, giving people the chance to re-skill in sectors that need more workers, such as construction and technology.
There will also be the option to take a ‘returnship’, where training time is reduced taking into account previous experience.
What does CAP think about the Spring Budget?
The key things we want to see at CAP are help for households with high energy costs, support for low income households to afford the essentials, and tackling the ongoing debt crisis through a well-supported and funded debt advice sector.
We’re glad to see more support for parents on low incomes, through increased Universal Credit and the option to pay upfront. We originally called for this to happen in 2018, and believe that this will have a positive impact on parents who are currently struggling with expensive childcare costs.
Similarly, the announcement that those on prepayment meters will not pay more is encouraging, as it removes the ‘poverty premium’ and creates a fairer energy system. We’ve been calling for this since 2015, so it’s a step in the right direction, although it will only save each household around £45 a year.
With the previous announcement that the Energy Price Guarantee would be rising next month, we’re also glad to see that the UK Government has decided to stick to the lower amount of £2,500 for three more months. However, costs are still extortionate, and for those on low incomes, the impact is still very much being felt. Bills are still double what they were in 2021.
The Chancellor remarked about the brilliant work the third sector is doing and has pledged £100m to support charities and community organisations who are able to reach people the central UK Government can’t.
Failing to unfreeze the Local Housing Allowance rates means that social security once again falls behind household costs. This freeze makes it harder for private renters to cover costs, increasing risk of homelessness, poverty and debt. This is not good enough. It fails to offer adequate support to those already on the lowest incomes, and fails to safeguard vulnerable households from destitution.
With one in ten UK workers living in poverty, the reform of disability benefits is not sufficient without action that guarantees work as a route out of poverty. With increased costs, those receiving disability benefits are still at risk of falling into poverty, work or no work.
The announcements made in the Spring Budget 2023 today will, sadly, not make a meaningful difference to the 13.4 million people in UK poverty (that is 1 in 5 people!). Today’s budget failed to deliver any further support for low income households. The good news is, we know that change is possible, and at CAP we’re putting our belief into action as we continue to support people through local churches with free, expert debt help.