On 15 March, Chancellor of the Exchequer Jeremy Hunt revealed his much-anticipated 2023 budget amid the worst economic turmoil experienced during the 13 years of the Conservative government so far.
Facing a spike in inflation, a cost-of-living crisis and levels of industrial action not seen for decades – due in part to the decisions of former Prime Minister Liz Truss and Hunt’s predecessor Kwasi Kwarteng – the Chancellor’s choices could help to decide the fate of the Conservative Party at the next election.
But what did it actually include? And more importantly, who will see the benefits and where?
Headline budget 2023 measures
The most significant measures outlined in Jeremy Hunt’s budget relate to tackling the cost-of-living crisis and spurring economic growth, and among these several are likely to benefit some areas more than others.
Perhaps the most immediately impactful of the measures announced is the extension of free childcare to 30 hours per week for all children up to two years old from April 2024.
Childcare costs across the UK are prohibitively high for many people – six in ten women who have terminated a pregnancy say childcare costs influenced their decision – so an effective 60% reduction in childcare costs for families requiring 50 hours per week will lead to major savings.
According to the 2022 average childcare costs, inner London families unsurprisingly pay the most for childcare, followed by the eEast of England and outer London, which would suggest that they are saving the most in raw terms.
Factoring in the average weekly salary, we can see that some of the lowest-earning areas of the country, such as the north-west and Yorkshire, still see a below-average proportional saving of around 24%. The east of England sees the greatest reduction at 27% and the Midlands, London and the south-west follow closely at 26%.
The end result is that childcare costs as a proportion of wages have been somewhat equalised by the new measure, with the national variance reduced from 6% to 2%, as well as a drop of around a quarter nationwide.
Prepayment meter parity
To tackle this disparity, which often feels punitive towards the less fortunate, the budget will bring prepayment rates into line with direct debits, along with the previously announced ban on forced installation of such meters.
This change will be of particular benefit to many city-dwellers, as these areas see large numbers of homes on prepayment meters – often in privately rented accommodation where landlords seek to stop nonpayment of bills.
For example, many London boroughs (with the exception of west London) have more than 18,000 prepayment meters installed, while Leeds has more than 35,000 and Birmingham more than 73,000. Rural and coastal areas such as Cornwall and the Highlands will also see large numbers of people benefitting.
Though Hunt’s tenure as chancellor began with a concerted effort to distance the Sunak government from the recklessness of Liz Truss, he has nonetheless kept her flagship investment zones policy in some form.
The budget announcement detailed that there will be 12 new investment zones: the West Midlands, Greater Manchester, the North East, South Yorkshire, West Yorkshire, East Midlands, Teesside, Liverpool and four in Wales, Scotland and Northern Ireland.
The investment zone project is designed to spur economic growth in areas with “significant unmet productivity potential” through a combination of resource spend and tax incentives that amount to around £80m over the course of five years.
While there is some question over who benefits within the areas themselves – for instance, business owners may reap the rewards far more than employees due to the structure of the funding – there is certainly strong potential for these zones to help regions outside of London to catch up.
Does Jeremy Hunt’s 2023 budget help the people who need it?
As with any budget, the government has touted its virtues and minimised its shortfalls in the 2023 edition. The policies mentioned above are an example of such virtues, but there are significant omissions nonetheless. Completely absent, for example, was any mention of public sector wages to help with the influx of industrial action, which may continue for months to come.
But the greatest ire directed towards the budget has been because of the removal of the lifetime limit on tax-free pensions. That means that from 6 April 2024, there will be no limit on pension savings before a person is required to pay additional tax, which could make the wealthiest in the UK thousands or even millions better off over their lifetimes.
Jeremy Hunt claimed that he wanted to incentivise senior doctors to remain or even rejoin the NHS to combat the NHS crisis. He told the News Agents podcast: “This is the quickest, most effective way of dealing with the problem of doctors retiring early just when we need them.
“The BMA is not an organisation that I'm on their Christmas card list,” he added, “but the BMA say they have already been contacted this morning by members saying they now want to come back from retirement.”
However, when asked by Emily Maitlis how many doctors he expects to retain or regain from the move, he could not give a direct answer.