Chancellor of the Exchequer, Jeremy Hunt, has today (Wednesday, March 15) delivered his spring budget to the House of Commons, calling it “a budget for growth”.
Hunt already announced earlier today that the government is extending the energy bills support for a further three months.
“With energy bills set to fall from July, extending the Energy Price Guarantee will bridge the gap, easing the pressure on families. Made possible in part by windfall taxes on energy profits,” he said.
In a Twitter post yesterday (Tuesday, March 14), Hunt said his budget “sets out the next stage of the government’s plan to halve inflation, grow the economy and reduce debt”.
“Building on the stability we gained from my autumn statement, I will set out the next steps to drive economic growth across the UK,” he said.
While delivering the budget, Hunt said his main aim was to deliver long-term and sustainable growth for the UK economy while halving inflation and reducing debt.
He announced the freezing of fuel duty and announced that he will maintain the 5p cut for a further 12 months.
“Inflation destroys the value of hard earned pay, deters investment and ferments individual strife,” he said.
Hunt said that, despite “continuing global instability”, the OBR has forecast inflation to fall to 2.9% by the end of 2023.
Hunt said this proves the UK government is delivering on its promises, as “that is more than halving inflation”.
Energy
Hunt reiterated the UK government’s national ambition to reduce energy use by 15% and said that the long-term solution to achieve this is “not subsidy but security”. Hunt said this means investing in domestic sources of energy.
He announced £20 billion in support for the early development of CCUS (carbon capture, utilisation and storage) which will pave the way for CCUS all over the UK by 2050, he said.
Hunt said the UK is in need of “another critical source of cheap and reliable energy, and that is nuclear”.
He said, that subject to consultation, nuclear power will now be classified as environmentally sustainable.
“Increasing nuclear capacity is vital in meeting our net zero targets,” he said.
Tax
Under a new policy of capital expensing for the next three years with the intention of making it permanent, Hunt announced that businesses will be able to claim money back after investments in Research and Development (R&D).
If a qualifying small or medium-sized business spends 40% or more of their total expenditure on R&D, they will be able to claim a credit of £27 for every £100 they spend.
“Every single pound a company invests in IT equipment, plant or machinery can be deducted in full and immediately from taxable profits,” Hunt said.
“It is a corporation tax cut of nine billion pounds a year.”
Hunt said it was a support package aimed at helping 20,000 “cutting-edge” companies who are working hard to turn Britain into a “science superpower”.
Cost-of-living crisis
Last week, the National Farmers’ Union (NFU) called for Hunt to prioritise domestic food production as “energy, fuel and other production costs continue to soar”.
President of the union Minette Batters called for him to extend the Energy and Trade Intensive Industries (ETII) scheme to include energy intensive sectors like horticultural and poultry production.
Over the past two days, both the Welsh and Scottish governments called for Hunt to deploy the UK government’s full range of powers to help tackle the cost-of-living crisis.
Welsh Finance Minister Rebecca Evans said Hunt has the power to make better use of his welfare and tax lever, as well as room in the public purse, to ease the challenges currently being faced by households and businesses.
“This must be used to immediately support those most vulnerable – including practical actions to support people with energy costs, housing needs and welfare benefits,” she said.
Scotland’s Deputy First Minister John Swinney called for Hunt to provide targeted support to help more families out of poverty by reinstating the uplift to Universal Credit, increasing it to £25/week and extending it to means-tested legacy benefits.
Swinney said vulnerable households should not have to bear the burden of soaring energy prices, and called for windfall tax revenues to fund support.
Farming families
The insurance branch of the NFU, NFU Mutual called urged Hunt to help farming families by thawing frozen tax thresholds.
The rural insurer said it was concerned the government’s policy of keeping income tax, inheritance tax and child benefit tax thresholds unchanged for years despite high inflation affecting the personal finances of farming families.
Sean McCann, chartered financial planner at NFU Mutual, said: “Rising incomes and asset prices mean more and more farmers are being drawn into 40% and 45% income tax rates, the child benefit tax charge, and inheritance tax.
“Thawing some of these frozen thresholds in the spring budget by uprating them in line with inflation will help many, including farmers, deal with rising bills.”
McCann said inheritance tax is unnecessarily complicated and ripe for reform.
“Getting rid of the myriad of gifting allowances in favour of one annual gifting allowance of £15,000 would help simplify the tax for the increasing number of families who fear being caught by inheritance tax,” he said.
