If there is one thing for certain right now, it’s safe to say that it has been a rather turbulent few months for the UK economy. Last year we saw major leadership changes, record inflation, and a cost-of-living crisis that’s plunged many into hardship.
Announcing the Spring Budget 2023, chancellor Jeremy Hunt said the UK economy will not enter into a recession this year and that we are “on the right track” vowing that he “will not hesitate to take whatever steps are necessary for economic stability."
In his opening speech, Hunt told MPs that key elements of his Budget intends to help businesses grow and tackle labour shortages by “breaking down barriers that stop people working.”
So, what exactly were the key announcements of the Spring Budget 2023 and what do they mean for you?
Is Hunt helping women get back to work after having children?
Childcare costs in the UK are among the highest in the world and the government has been under pressure to provide more help for parents. New ONS statistics have shown that 32,000 women left the workforce last year to look after their children.
The Chancellor announced in the Spring Budget 2023 that for many women, “a career break becomes a career end” and said: "Almost half of non-working mothers said they would prefer to work if they could arrange suitable childcare.”
Who gets your backing?
As part of his childcare reforms, Hunt wants to encourage more childminders by piloting incentive £600 payments for those who sign up, rising to £1,200 for those who join through an agency.
One of the biggest announcements of the 2023 Budget is the 30 hours of free childcare per week being offered for one-and-two year-olds (something that is already in place for three-and-four-year-olds) and this will start from when a child is nine-months-old.
“It's a package worth on average £6,500 every year for a family with a two-year-old child using 35 hours of childcare every week and reduces their childcare costs by nearly 60%,” Hunt said.
The Chancellor said this will be rolled out in stages with working parents of two-year-olds able to access 15 hours of free care from April 2024. From September 2024, that 15 hours will be extended to all children from nine months up, meaning a total of nearly one million parents will be eligible. And from September 2025 every single working parent of under fives will have access to 30 hours free childcare per week.
Gemma McCall, CEO and co-founder of Culture Shift, welcomed the news: She told GLAMOUR: “The expansion of childcare support is a welcome announcement for any parent with young children to hear, especially in the current cost of living crisis where some families are having to make difficult decisions on how they put food on the table.”
She added: “On top of this, making childcare more accessible is vital because too often parents have to make do with balancing their career commitments with their childcare needs. But making do is archaic, especially for women who want to have the opportunity to develop in their careers.”
However, are the reforms too good to be true and how will they actually play out?
It's worth pointing out that new parents will have to wait more than two years for the full 30 hours free childcare because of the time frame in which this is being rolled out which isn't ideal.
We also already know that the childcare system in this country is at breaking point thanks to a combination of pandemic and the fact that the government doesn’t fully reimburse nurseries for the cost of providing free hours for three and four-year-olds which has driven many out of business. Last year, Nursery World reported that 300 nurseries in the UK closed.
Stella Creasy, Labour MP for Walthamstow, told GLAMOUR: “Our childcare system has been underfunded for so long - with parents of younger children paying higher fees to cross subsidise those who currently get free hours - that giving more parents entitlement to free hours without fixing this and properly funding all places could actually collapse the system rather than save it.”
Creasy says parents are right to be worried. "Like Help to Buy which looked like it would get people on the property ladder only to make it more expensive for first time buyers, this scheme risks crashing the childcare sector like the Government crashed the economy because no one will be able to get the places they want for the price they need."
As well as shortage of nurseries, childcare workers are underpaid and leaving the profession so what’s left is huge waiting lists and crippling costs for nurseries not to mention the fact that the Chancellor’s pledge only covers term time (so, parents are expected to find other care for the remaining 14 weeks in the year) and his wraparound care expansion pledge doesn't touch on the early years.
Sharmadean Reid MBE, an advocate for women's empowerment and Founder & CEO of The Stack World, told GLAMOUR that “whilst this is a step in the right direction, the issue isn't magically resolved.”
You don't have to suffer in silence.
"Women are missing out on career progression and opportunities simply because they are parents. Before the most recent budget, the government spent around £4 billion a year for the last five years on childcare – yet we know the economic opportunity of mothers' equal participation in the workforce is worth nearly four times that.
“Many women find it difficult to return to work and re-find their rhythm after maternity leave, and many feel as though their bosses and colleagues don't understand what they have been or are going through mentally and physically. Pay is actually fairly equal until around the average years of childbirth. It is here it begins to diverge drastically. This encompasses workplace discrimination. Free childcare for this age range is huge – but there is still so much work left to be done.”
How is the Chancellor supporting households with rising energy costs?
In his Spring Budget 2023 statement, Hunt confirmed the Energy Price Guarantee, which caps energy costs for households to remain at £2,500 for the next three months (it was scheduled to rise from £2,500 to £3,000 on April 1 so this has been canned). He says this will save the average family a further £160.
The Chancellor has also announced that families in households with pre-payment meters will not pay more for their energy than those on direct debit. Historically they’ve had to pay higher rates to cover the extra costs for firms managing the meters but this is now being scrapped, saving four million households £45 a year on their bills from July.
He said: “Under a Conservative government, the energy premium paid by our poorest households is coming to an end."
What about the cost of petrol?
Jeremy Hunt has frozen the fuel duty for a further year. He said: "Because inflation remains high, I have decided now is not the right time to update fuel duty with inflation or increase the duty. So here's what I am going to do: for a further 12 months I'm going to maintain the 5p cut and I'm going to freeze fuel duty too. That saves the average driver £100 next year and around £200 since the 5p cut was introduced."
The Chancellor has also frozen duty on beer in pubs from August, meaning it’s cheaper than buying in the supermarket.
“Our energy price guarantee, fuel duty and duty on a pint all frozen in today’s budget. That doesn't just help families. It helps the economy too."
Here's what you need to know.
Is Hunt helping female entrepreneurs to grow their businesses in the UK?
In his Spring 2023 Budget, the Chancellor emphasised his commitment to growing the economy and boosting businesses and entrepreneurs.
He wants to create new business hubs in the UK in what he’s dubbed the “12 new Investment Zones, 12 potential Canary Wharfs" including the likes of the West Midlands, Greater Manchester, South Yorkshire and Teesside in hope to create more entrepreneurs across the country.
He also announced a new policy that meant businesses could fully expense IT equipment, plant and machinery from taxable profit.
However, despite wanting to encourage more entrepreneurs, in a major blow to businesses, the Chancellor has announced that corporation tax was rising from 19% to 25% for those with profits of more than £250,000.
"Yes, you have to be strategic; yes, you have to work hard; but it is totally possible to have career success while you are pregnant and beyond."
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Emily Austen, founder and CEO of EMERGE, an award-winning PR Agency, based in London, told GLAMOUR it will have a devastating impact, particularly on female-founded businesses.
“The 6% rise has a significant impact on British entrepreneurs. Female founded businesses already have a long way to go, with women-founded startups raising 1.9% of all VC funds in 2022, a drop from 2021. A hike in corp tax discourages investment.”
She added: “It creates a confusing dilemma for business owners, who need to present profits to their shareholders. The incentive for entrepreneurs to generate large profits to offset the challenges of the last 36 months, fuel growth and provide reasonable negotiating leverage to avoid a down round, evaporates if 25% of that margin is paid to the government. Imagine paying a quarter of your profit immediately to the government. Not to mental health initiatives for your staff, flexible working arrangements or team building off site days for team morale.”
Austen believes that the government’s tax hike will kill small businesses of which form 98% of private sector businesses, “Especially if you are unfortunate enough to have chosen an industry that they’ve previously ignored; hospitality and beauty being easy examples.”
“Why would anyone want to start a UK company in this climate?” she said.
How is Hunt's Budget going to impact my pension?
The lifetime allowance - the total amount workers can accumulate in their pension savings before paying extra tax - has been abolished. The lifetime allowance is currently just over £1m. Hunt said the change meant 80% of NHS doctors would no longer pay taxes on their pensions. “No one should be pushed out of the workforce for tax reasons,” the Chancellor said. The pensions annual tax-free allowance will rise by 50% from £40,000 to £60,000.
How will this actually impact women? Makala Green, Chartered Personal Wealth Adviser at Schroder Personal Wealth told GLAMOUR: “It gives more freedom for those wishing to contribute more towards their retirement, which is an advantage for women as they tend to live longer than men; therefore, they will likely need more funds in retirement to support added years.”
