Chancellor Jeremy Hunt set out his plans to grow the UK's economy in the House of Commons on Wednesday (March 15).
From extending the energy bill price guarantee to freezing fuel duty, the Chancellor continued to implement plans to help struggling households with the cost of living crisis. He also announced the country would not yet be entering a recession and added that the economy is “proving the doubters wrong”, although growth remains sluggish.
The Office for Budget Responsibility (OBR) still forecast a contraction of 0.2% this year, a significant improvement on the -1.4% predicted in November. The OBR also upgraded its growth forecast for 2024 from 1.3% to 1.8%, but downgraded predictions for the following years to 2.5% in 2025, 2.1% in 2026 and 1.9% in 2027.
READ MORE: The 10 key announcement's from Jeremy Hunt's Spring Budget including childcare changes
In an effort to remove barriers to work, he promised up to 30 hours a week of free childcare for eligible households in England with children as young as nine months, instead of three and four-year-olds under the current policy. A package to help get long-term sick and disabled people who wish to, to return to work was also announced.
Read on to find out the key announcements revealed in Wednesday's fiscal statement and how they could impact your personal finances.
Energy Price Guarantee to be extended
The government announced plans to axe a proposed increase to the Energy Price Guarantee, which was introduced to help struggling households with the cost of energy bills over winter. The guarantee will remain at £2,500 for an additional three months to help 'bridge' the gap as companies wait for wholesale prices to fall below Ofgem's energy cap in July.
Customers would have been paying about 20% more on their energy bills – approximately £500 – if the Energy Price Guarantee was scrapped in April as originally planned. However, consumers still face having to find an extra £67 a month to pay their energy bills from April when the Government’s separate Energy Bill Support Scheme – which has seen all households receive six monthly payments of £66 or £67 direct to their energy accounts – comes to an end.
Fuel duty frozen again
Duty on fuel - a tax motorists pay when buying petrol and diesel - was frozen and a 5p cut to the rate will continue for a further 12 months. The Chancellor predicted a saving of £100 next year for motorists.
A rise in fuel duty would have led to a 12p per litre increase in fuel prices.
Back-to-work package for long-term sick and disabled
Mr Hunt announced a new back-to-work package which will aim to encourage those over 50, the long-term sick and disabled and benefit claimants to go back into the workforce in an attempt to recover from the effects of the pandemic. As part of the new plans, the system used to assess eligibility for sickness benefits will be axed.
In England and Wales, a new programme known as Universal Support will provide support for disabled people to find work if they want to. A £400m plan will be provided for mental health and other resources for those who are unable to work due to medical issues.
Parents on universal credit will be paid childcare support upfront and the amount they can claim increased by several hundred pounds.
Pension changes
The lifetime allowance limit on pensions will be abolished in April, Mr Hunt announced. People will usually pay tax if their pension pots are worth more than the lifetime allowance, which used to stand at £1.07 million.
People could potentially incur tax charges as high as 55% on pension savings above this. Mr Hunt said the changes would “stop over 80% of NHS doctors from receiving a tax charge” and incentivise “our most experienced and productive workers to stay in work for longer”.
Some pensions experts pointed out that millions of workplace pension savers will feel no impact from the measures. The reforms have been strongly welcomed by some within the NHS, who said they could help to retain experienced senior staff who are playing a critical role in healthcare.
Mr Hunt also unveiled an increase in the annual pension allowance – the limit on how much money someone can build up in their pension in any one tax year while still benefiting from tax relief – from £40,000 to £60,000.
Extension to free childcare provisions
Families with children under 5 will eventually be able to access 30 hours of free childcare. All adults in the household must be working for at least 16 hours a week to be eligible.
Working parents of two-year-olds will be able to access 15 hours of free care from April 2024. From September 2024, that 15 hours will be extended to all children from 9 months up. From September 2025, every single working parent of under 5s will have access to 30 hours free childcare.
Families could be saving up to £6,500 a year on childcare under the new scheme. The free childcare will be available as soon as maternity care ends, meaning parents can get back to work sooner.
Cigarettes and alcohol
There was good news for pub fans with an increase in the draught relief, a move the Treasury calculated will make alcohol duty 11p lower on pulled pints compared to supermarket sales.
However, drinkers will see tax on other alcohol soar by 10.1% in August in line with inflation, while the price of cigarettes will become more expensive after tobacco duty was uprated.
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