Budget 2023: Jeremy Hunt says help with energy costs will continue ...

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Edited by Andrew Humphrey

All times stated are UK

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In about an hour's time, Jeremy Hunt will become just the second of the last five chancellors to actually hold the famous red box outside Number 11 this morning.

Those five chancellors were in post for less than four years in total, with an average tenure of nine months. But for most of that period the Treasury was run by Rishi Sunak.

The previous five chancellors to them were in place over a 26-year period.

This piece of Westminster trivia points to an important defining piece of context for this Budget statement - the attempt to return to stability after rolling crises.

And the key admission in the Budget documents will be about two structural weaknesses in the UK economy - the size of the workforce, and low business investment.

That lack of normality and stability has had an impact.

Some will blame the corporation tax rises, but they are only just getting going, so can’t be to blame for the recent poor record on investment.

The recent volatility on financial markets after the collapse of some US banks are also pointed to as vindication by some in the Treasury for a tough line on tax and spend, since the mini-Budget.

Long gone are the days of summer, when forecasters were derided by Liz Truss as "declinist bean counters".

The Office for Budget Responsibility are very much at the centre of things right now, and will deliver an instant verdict on whether the policy changes announced will shift the dial on the economy, or the number of workers.

One of the key things Chancellor Jeremy Hunt will be hoping to set out in today's Budget is his plan for economic growth. But some Tory MPs believe his plan to increase corporation tax will stifle this target.

Discussing the issue on Radio 4's Today programme earlier, Kitty Ussher, chief economist at the Institute of Directors and a former Labour Treasury minister, says the prospect of growing the economy is possible while taxes on businesses are raised.

She says we will be able to tell how likely growth is when the Office for Budget Responsibility (OBR) releases its forecast after the Budget's policy announcements later today, arguing that if the OBR raises its growth forecast as a result of the Treasury's measures, that will be a good indicator of the likelihood of growth.

She adds that last year's growth forecast was "a bit pessimistic", and so she would expect an "automatic upgrade" to the growth forecast this time round.

Today presenter Nick Robinson points out that OBR forecasts aren't always accurate, to which another guest on the programme, chair of the Natwest group Sir Howard Davies responds by stating that economic forecasts aren't perfect, but it is reasonable for the OBR to point to a change that might come if a specific measure is put in place.

"Then comes the question of what the actual outcome is," he adds.

Chancellor Jeremy Hunt unveiled tax rises and spending cuts worth billions of pounds as part of his Autumn Statement in November.

Here’s a summary of the main measures:

Tax: Main National Insurance, inheritance, income tax personal allowance and higher rate thresholds frozen for further two years, until April 2028. The threshold for the additional 45% rate of income tax cut from £150,000 to £125,140 Energy: Energy price cap extended for one year beyond April. Windfall tax on profits of oil and gas firms increased from 25% to 35% and extended until March 2028 Minimum wage: Minimum wage for people aged over 23 increased from £9.50 to £10.42 an hour from next April Benefits and pensions: State pension payments and means-tested and disability benefits increased by 10.1%, in line with inflation Capital gains tax: Tax-free allowances for dividend and capital gains tax cut

Read our full guide to the key points from the Autumn Statement here.

It is always worthwhile keeping across what is said in the Budget and what lurks in the red book of policies and costings.

But remember that some of the biggest decisions affecting your finances in April and beyond have already been made.

It was in November that Chancellor Jeremy Hunt said benefits and the state pension would rise in April by 10.1% and there will also be further cost-of-living payments.

But, really importantly, income tax thresholds will be frozen for most people for another five years.

That means any kind of pay rise could drag you into a higher tax bracket. Even if it does not, it will almost certainly mean a greater proportion of your income is taxed.

Image caption: Health Secretary Steve Barclay arrives at 10 Downing Street, for a Cabinet meeting ahead of the Budget

A short while ago, Rishi Sunak's top government ministers headed into No 10 for what's presumably a pretty jampacked Cabinet meeting.

When that's wrapped up, we'll see Chancellor Jeremy Hunt leave 11 Downing Street - his official residence next door to Sunak in No 10 - with the signature Red Box in tow.

The PM will then head to his weekly Prime Minister's Questions (PMQs) session at the House of Commons, which runs between 12:00 and 12:30 GMT, before Hunt delivers the Spring Budget.

It's a busy day but be rest assured we'll bring you all the latest with timely updates and analysis. Stay tuned.

There has been a debate raging in government about how best to achieve economic growth.

Some Conservatives – many of whom supported Liz Truss – want tax cuts to boost spending.

In particular, they are concerned about corporation tax going up to 25%.

But I think they are going to be disappointed today.

We’re not expecting significant tax cuts. Corporation tax will definitely go up – although there will be some mitigations through investment tax breaks.

The chancellor’s argument is that it’s also crucial to bring inflation down – and that means no new borrowing to fund tax cuts.

Labour say the Conservatives are guilty of using sticking plasters instead of finding proper solutions.

In futher reaction to the energy price cap announcement this morning, the SNP is calling the government's decision to keep energy bills at the same level "truly pathetic".

In a statement, SNP economy spokesperson Stewart Hosie claims the government has "ample resources" to cut energy bills, and that families are being ripped off.

"With energy companies making record profits, and the wholesale price of gas falling, there is no excuse for this shameful Tory decision, which will hammer household incomes and push even more families into poverty, hardship and debt," Hosie says.

He adds that many families will be "worse off" as a result of the additional £400 energy bill support payment coming to an end.

The Liberal Democrats have criticised the government's extension of the Energy Price Guarantee, stating that it "does not go far enough".

"Instead of a sticking plaster for another three months, we need meaningful action now," the party's Treasury spokesperson Sarah Olney says.

She calls on the government to cut energy bills by £500 per household, making the case that such a move would make a "significant difference" to households.

"The government can afford to do it, they are choosing not to," she states.

"In three months time families will once again be facing a cliff edge of unaffordable heating bills."

Some of you might be wondering what is the Energy Price Guarantee we've been talking about.

Let's back track a bit first. Every three months the UK energy industry's regulator, Ofgem, sets a price cap for the maximum price suppliers can charge households per unit of energy on a standard - or default - tariff.

But after energy prices soared following Russia's invasion of Ukraine last year, the government brought in a Energy Price Guarantee which was lower than Ofgem's cap.

The Energy Price Guarantee stands at £2,500 for a typical household, though the amount you pay varies depending on how much energy you use.

Under the scheme, the government compensates energy providers for any extra energy bill costs households incur above the £2,500 average limit.

The main reasons for not working vary according to age.

Most of the 2.7 million people under 25 who aren't in the jobs market are students, according to the Office for National Statistics(ONS). The majority of them don't want a job

The main reasons that 3.5 million over-50s are out of the job market are illness and early retirement.

Almost nobody who has retired early says they want to return to work.

Among 25- to 49-year-olds, 1.1 million people don't work because of caring responsibilities (about a million of whom are women).

About 940,000 people in this age group are not working because of illness (more evenly split between men and women).

Read more here.

Expect to hear the phrase “back to work” a lot in Jeremy Hunt’s Budget. He wants to entice people who have left the workforce to rejoin.

There are currently around nine million “economically inactive” people in the UK. These are people aged between 16 and 64 who are not in work and are not seeking a job.

There are a few reasons why this number is so high. Many are students, some are full-time carers, others are suffering from long-term illnesses. And there are some over 50s who have chosen to retire early.

Meanwhile, there are 1.1 million job vacancies in the UK. While that number has been coming down, there are still 328,000 more vacancies than before the Covid pandemic struck in March 2020.

It is this gap that Hunt wants to fill.

Ahead of today's Budget, Labour's shadow chancellor Rachel Reeves says Labour would secure the highest growth in the G7 were it in power, and states that today's Budget must show similar ambition.

"Britain has huge promise and potential. But 13 years of Tory economic mismanagement has left us lagging behind," Reeves writes in a tweet.

"Labour’s mission to secure the highest growth in the G7 will make us lead the pack again. This is the ambition we must see from the government in the Budget today."

The extension of the current Energy Price Guarantee in England, Wales and Scotland had been widely expected and will benefit millions of people.

But there are questions over the thinking behind the policy.

It is universal help. In other words, everyone gets it, irrespective of how big an issue energy bills are in their home.

Critics say the £3bn extra it will cost would be better spent if targeted at those who really need it.

Energy bills were rising even ahead of Russia’s invasion of Ukraine – but the premium due to that war has been eyewatering.

Analysts at Cornwall Insight monitor the implications of market movements for domestic bills, with a good track record. In early February 2022, it calculated that the dual fuel price cap imposed in the autumn for the average home would be around £2300. In the event, in the midst of war, that price cap nominally rose to £3549 in October – and then £4279 this January. In theory, then, the cap for the average home is almost £2000 higher than estimated prior to the war.

The government schemes sheltered us from much of that spike . But at a considerable cost to the public purse of many billions.

The good news is wholesale gas prices have dropped in such a way that the cost to the Treasury of this latest round has dropped sharply – and homeowners can still expect bills to fall later this year but perhaps not as far as which we’d hope.

More now on the news that the £2,500 average household cap on energy bills is set to continue for another three months, but what about the other support the government has been providing?

The additional £400 winter discount - which households have been receiving since October - will still come to an end in April.

The Treasury points out that while that will effectively see bills rising, it announced some extra support for those most in need in its Autumn Statement in November. The measures included:

A further £900 cost of living payment for UK households on means-tested benefits A £300 cost of living payment for pensioner households across the UK A further £150 disability cost of living payment for people across the UK on non-means-tested disability benefits, to help with the additional costs they face.

The short answer is "better than they were".

Ahead of Jeremy Hunt’s Autumn Statement back in November, there was a lot of talk about a £30-50bn "black hole" in the public finances - though not everyone agreed the hole existed.

More recently there has been talk of "headroom" for government spending, as the government has borrowed less than was forecast this financial year

This is partly because wholesale energy prices have dropped faster than expected, meaning the help we've been getting with our energy bills has cost the government less.

Also, January brought another boost, with record receipts from self assessment tax returns.

But the government is still sounding cautious, stressing its target of reducing government debt and warning that "uncertainty and volatility" remain.

A possible increase in fuel duty has been pencilled in for April 2023, and according to the Office for Budget Responsibility (OBR) it would see petrol prices rise by about 12p a litre.

But we don't know if this will happen. It's possible the chancellor could choose to freeze the duty – at the cost of about £6bn – or raise it by a different amount.

In theory, fuel duty should go up every year. However, in March last year Rishi Sunak - who was chancellor at the time - cut the tax by 5p, following concerns about rising prices.

The OBR assumes that 5p cut will end as planned in March, and it has factored in a scheduled rise of 7p on top of that.

Read more here.

Prime Minister Rishi Sunak says the decision to keep the Energy Price Guarantee in place for a further three months will not only "help hardworking families" with the cost of living, but will also help the government reach its target of halving inflation this year.

In a statement, he says: “We know people are worried about their bills rising in April, so to give people some peace of mind, we’re keeping the Energy Price Guarantee at its current level until the summer".

The Chancellor Jeremy Hunt says the extension of energy bills support into the summer "will bridge the gap and ease the pressure on families, while also helping to lower inflation".

Justifying the decision, he says in a statement that high energy bills are "one of the biggest worries for families".

Here's more on the government's decision to extend the Energy Price Guarantee for another three months now.

Over the colder months, the government has been limiting average household bills to £2,500 a year, plus a £400 winter discount.

Typical household energy bills had been due to rise to £3,000 a year from April, but instead the cap will be kept at £2,500 until the end of June.