Budget 2023: 11 expected announcements and what they mean for ...

Chancellor of the Exchequer Jeremy Hunt will deliver his first Budget tomorrow (March 15) against a backdrop of sky-high inflation that has led to a cost of living crisis and mass industrial action. He will unveil the Government's economic plans in the Commons at 12.30pm on Wednesday.

Mr Hunt was brought in as Chancellor in October last year to address the economic chaos that followed the 'mini-Budget' unveiled by then-Prime Minister Liz Truss and former Chancellor Kwasi Kwarteng. He later delivered his Autumn Statement setting out his plans at that stage.

The financial markets have calmed since the autumn and the economic outlook is now looking a little brighter. But there are still huge problems, with millions struggling with the ongoing cost of living crisis and inflation hovering near a 40-year-high, the Mirror reports.

READ MORE: State Pension warning to 8.5million as retirement age set to rise

There were also fears of a crisis in the banking and tech sectors at the weekend after the US Silicon Valley Bank (SVB) collapsed. However, the government and Bank of England led talks to establish a deal whereby HSBC bought the UK arm of SVB, bringing relief to UK tech firms who could have gone bust without help.

There are also mass strikes continuing to take place across multiple sectors. Junior doctors are currently walking out over three days in a row over pay and conditions, and tomorrow, on the day of the budget, teachers will take industrial action, alongside 100,000 civil servants.

The Treasury never officially confirms what will be in the budget before the Chancellor stands up in the Commons. Vut Mr Hunt is expected to make various announcements tomorrow, including a drive to encourage the over-50s, the long-term sick and disabled, and benefits claimants back into the workforce.

However, in the interest of economic stability, he is unlikely to slash taxes, much to the disappointment of some of his own MPs. Here are some of the measures expected to be announced tomorrow:

A £500 rise in average energy bills is expected to be delayed by three months, in good news for people worrying about putting the heating on. The Energy Price Guarantee currently caps bills for the average household to £2,500 a year, but this had been due to rise to £3,000 in April.

Now it looks like the 20 per cent rise will be paused until the summer, when wholesale gas costs are expected to fall, hopefully bringing energy prices down. It is understood suppliers have been told to prepare for the move.

Personal finance expert Martin Lewis, alongside fuel poverty campaigners, has been calling for the rise to be scrapped, amid fears that millions of people are teetering on the edge of poverty.

Further support will be announced for energy customers on pre-payment meters. These people currently pay more on average than those on direct debits – despite the fact they are normally in lower income houses – because firms pass on the cost of manage the meters.

But from July, prepay customers will no longer pay more, in a move the Treasury says will save households an average of £45 a year. The Chancellor described these customers paying more as “unfair” and said the Government will “put an end” to it.

“From July four million households won't pay more than those on Direct Debits. We've already cut energy bills by almost half this winter, and this latest reform is proof again that we're always on the side of families,” he said.

The tax that businesses pay is expected to rise from 19 per cent to 25 per cent in April, after some amount of flip-flopping. Rishi Sunak announced the hike in 2021 when he was still Chancellor, but it was then scrapped by Kwasi Kwarteng in the 'mini-Budget' last September.

Liz Truss then U-turned in October, saying the tax increase would happen, and Mr Hunt is expected to go ahead with it in his budget tomorrow. The corporation tax super-deduction will also come to an end this month, which had let big businesses cut their tax bill by 25p for every £1 they invest.

Fuel duty has been frozen for 12 years and Mr Hunt would risk sparking fury if he changed that tomorrow. He is also under pressure to maintain a 5p-per-litre cut that was introduced a year ago.

He is unlikely to lift both the cut and the freeze, as this would mean drivers paying around 12p-per-litre more at the pump, forcing Mr Hunt to take a significant political hit. Critics have warned that hitting motorists in this way would pile misery across all sectors of the economy, which the Chancellor will want to avoid.

AA president Edmund King said: “Drivers are out of the hurricane, but are still being lashed by the cost-of-living storm. It would be detrimental to put unnecessary strain on people by increasing fuel duty.

“Most goods and services are transported by road, so waving through higher pump prices onto logistics firms as well as the driving public will hurt everyone. Our message to the Chancellor is that hiking fuel duty will simply fuel inflation, so it is imperative that he keeps the fuel duty freeze for another year.”

Currently, there are different rates of alcohol duty for different drinks, such as beer, cider, spirits and wine. But from the summer, a new system will see drinks taxed based on how much alcohol they contain, although the exact amount is yet to be unveiled.

The price of a pack of 20 cigarettes may rise to £1.15, in line with the Retail Price Index, according to reports. Currently, the duty paid on cigarettes is 16.5 per cent of the retail price, plus an extra £5.26 on a 20 pack. The amount of duty paid usually increases with inflation each year unless the Chancellor intervenes.

Mr Hunt is expected to brand this the 'back-to-work' budget'. This is because the Treasury has been concerned about the number of people signed off as long-term sick, with as many as 2.5 million people off work due to health conditions, according to the latest data.

The Chancellor is also tipped to unveil ways to “encourage” benefit claimants to move into work or increase their hours, party due to a shakeup of Universal Credit. Hundreds of thousands of people will be required to attend more regular meetings with work coaches, while “skills bootcamps” will be expanded and the Work Capability Assessment will be scrapped.

Mr Hunt may also say that people who return to work part time will be able to continue claiming sickness benefit.

The Government is also looking to get more people into work by tackling childcare. Mr Hunt is expected to announce that Universal Credit claimants will be able to claim back more cash for childcare.

According to the Institute for Fiscal Studies (IFS), parents would be able to claim £1,200 for one child (up from £646) or £2,000 for two (up from £1,108), in order to account for rising costs. Reports have also suggested that those on Universal Credit will receive money for childcare in advance, instead of the current system where they claim a refund for costs paid upfront.

Mass public sector walkouts over the past year have led to significant criticism of the Government. Hundreds of thousands of NHS staff, teachers, and civil servants have taken part in strikes over a difficult winter, with industrial action looking set to continue in the coming months.

The Government has said that existing department budgets only allow for a 3.5 per cent public sector pay rise, but some predict Mr Hunt will come up with some more cash. It is estimated that bringing this up to five per cent could cost the Treasury an additional £4 billion.

There is speculation that the pension lifetime allowance – the total amount that workers can accumulate in their pension savings before paying tax – may be increased in the Budget, to try and stop people from retiring early. For most people the figure is currently £1,073,100.

It is also possible that the Chancellor will bring forward a rise in the State Pension age. Earlier this year, reports claimed the Government was considering raising the retirement age to 68 as early as 2035.

Currently, the retirement age is 66, increasing to 67 in 2028. Although a scheduled rise to 68 is not currently due until 2046, Mr Hunt did order a review of it in the Autumn.

Mr Hunt is also expected to promise £1 billion a year for technology which can help capture carbon emissions. It is set to be billed as the 'clean energy reset' and, according to the Treasury, it will help to create up to 50,000 highly skilled jobs.

The £20 billion investment package will be made available over 20 years, with the Government describing it as “unprecedented”. It promised to “rapidly” announce the winners of a competition to build small nuclear power plants in the UK.

There has been a greater focus on long-term energy independence after consumers were left exposed to sky-high bills following Russia's invasion of Ukraine last year.

As he flew off to San Diego for a summit, the Prime Minister told reporters that the UK's defence budget would be boosted by £5 billion in the Budget. However, that is less than half of what Defence Secretary Ben Wallace is said to have demanded.

Mr Sunak said: “The UK is increasing its ambitions when it comes to defence spending. If you look at the track record, when I was Chancellor we announced the biggest uplift in defence spending since the end of the Cold War, that’s something actually I worked on with the Defence Secretary. What we are announcing today builds on that.”

The PM will also set out an ambition to increase defence spending to 2.5 per cent of GDP in the “longer term”, which will be discussed with international allies this summer, No10 said.

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