Chancellor Jeremy Hunt on Wednesday (15 March) unveiled his new Spring Budget for 2023, with major announcements made on chilcare, pensions, and energy bills.
It comes as the cost of living crisis continues to plague families and households, with the government under pressure to do more to help those who are struggling. Inflation also continues to be a pressing concern - and many, particularly the Bank of England, are worried about the stagnant growth the country has seen in recent months.
In response to concerns, Hunt has extended the energy bill support scheme to help those struggling with soaring bills. He has also implemented free childcare for children above the age of nine months in eligible households and revealed plans for a new, voluntary employment scheme for disabled people - things he said will encourage people back into the workforce and improve growth.
On the surface, these announcements sound pretty solid. But it always takes a day or two for the flaws of a such an announcement to gradually reveal themselves. Already, the Labour Party has taken aim at the government for putting the country “on a path of managed decline”, while charities have pointed out that many people have been excluded from the benefits of the budget - with handouts for the richer people in society.
But what do experts in the field think? Here, economists give their verdict on the Spring Budget 2023 - commenting on Hunt’s announcements on childcare, pensions, energy bills, and more.
‘A relief after the disastrous mini budget’
Economist Tony Yates told NationalWorld that it was “something of a relief to return to a normal budget after the disaster of Liz Truss and Kwasi Kwarteng’s mini budget.”
He said that as the UK is currently facing a “catastrophic and historically unprecedented stagnation in real incomes”, Chancellor Hunt had “very little room for manoeuver” in his fiscal announcement. This, Mr Yates continued, was the case both “in monetary terms, because a stagnating economy means low tax revenues, and in political terms, because his party are deeply divided over how to fix the economy - and regain popularity.”
The economic expert said that in general, the policies all existed within “regular and conservative (with a small c) fiscal guidelines” - but that on further inspection, some of the changes aren’t all they were cracked up to be.
Commenting on the new investment zones, which Hunt said all have the potential to be “the new Canary Wharf”, Mr Yates remarked that they will “probably be futile incentives for business investment” - as they will likely simply shift activity from one place to another. On abolishing the lifetime allowance limit on pensions, Mr Yates said this was “tax cuts for the very highest earners, labelled as an incentive to encourage NHS doctors to stay in the workforce.”
Meanwhile, he, like many others, also raised concern over the practicalities of the announcements surrounding free childcare. “It doesn’t look to me to be adequately funded,” Mr Yates said, “but it is a major change in thinking for the government.”
‘Money for motorists, but not for nurses, doctors, and teachers’
Paul Johnson, director at the Institute for Fiscal Studies, has argued that the budget is equally as notable for what it left out as what it included. He noted in particular the government’s failure to address widespread industrial action in the country, remarking there was “no funding to be found to improve the pay offer to striking public sector workers, where £6 billion might have been enough to make an inflation-matching pay offer possible this coming year.”
He said: “That’s a political choice. Money for motorists, but not for nurses, doctors and teachers.”
Mr Johnson also suggested that not enough had been done to address rapidly falling household incomes, but considered the budget in general, like Mr Yates, to be “a sensible set of changes which could have the sort of marginal, but positive, impact which is perhaps as much as we can expect from measures in a single Budget.”
He noted that several of the policies were aimed at getting people back into the workforce, describing the extension in free childcare as the “biggest policy” - which he predicted should help “tens, but not hundreds, of thousands of parents into work - provided it is appropriately funded.”
The economist added that the pension tax changes will likely be “less effective” at encouraging people to return or stay in the workforce, but that the budget was, overall, “aiming in the right direction.”
‘Not enough help’
Perhaps one of the most eagerly-anticipated announcements was what the government would do in relation to energy bills - and Hunt has confirmed that support for households at the current level will continue until June.
James Kirkup, director of economic think tank the Social Market, has said it was a “sensible short-term measure” to extend the Energy Price Guarantee, but argued that the “current patchwork of energy bill policies means that many people in real need don’t get enough help.” Meanwhile, he continued, “some wealthy households get public money they don’t really need.”
He continued: “What Britain and its households really need is a sustainable long-term policy framework for helping with energy bills, based on a social tariff that targets help on fuel-poor households and a more ambitious scheme to insulate more of our drafty homes.”
However he said scrapping the lifetime pension allowance was a “regressive policy”. He explained: “There may be staff retention benefits to raising pension lifetime allowance & annual allowance. But it’s still a regressive giveaway to a very small rich minority.”