Jeremy Hunt has promised a major expansion in state-funded childcare and tax breaks for businesses in Budget measures aimed at boosting economic growth.
The chancellor said a recession would be avoided and inflation would fall dramatically as the economy was “proving the doubters wrong”.
In an effort to remove barriers to work, he promised up to 30 hours a week of free childcare for eligible households in England with children as young as nine months, instead of three- and four-year-olds under current policy.
The phased changes, which will be fully introduced by September 2025, will be worth up to £6,500 a year for working families.
He also pledged an expansion in wrap-around care at each end of the school day for parents with older children.
The lifetime allowance for pensions savings, which stands at just over £1m, will be abolished, a major tax break for the wealthy.
And the pensions annual tax-free allowance will rise from £40,000 to £60,000.
The chancellor also promised an extension of support for household energy costs.
But Labour leader Sir Keir Starmer said the Budget was “dressing up stagnation as stability”, claiming it put the country “on a path of managed decline”.
Budget ‘does not come close to legal climate and nature goals’
Conservationists say the budget did not “come close to delivering on the UK’s legally binding climate and nature goals”.
“We need to see policies that drive down emissions, restore nature and provide meaningful support for the public in the cost-of-living crisis,” said Kate Norgrove, WWF’s executive director of advocacy and campaigns.
“At every Budget we need to see the Government publish a net-zero tracker, showing whether public spending is in line with their legal climate and nature commitments.
“Until the government take the meaningful steps to rewire our economy to deliver on climate and nature action, we will continue to see budgets that fail to meet the challenge to save our wild isles.”
Corporation tax hiked despite Tory rebel warning
Jeremy Hunt faces a backbench Tory rebellion over the rise in corporation tax in the Budget. Influential MPs on the right have warned that raising the rate from 19 to 25 per cent would “hammer” businesses and curb growth:
Key points at a glance
From the economy to alcohol and tobacco, and from tax and benefits changes to defence, here are the key points Jeremy Hunt announced:
Government papering over the cracks, says shadow chancellor
Shadow chancellor Rachel Reeves said the Chancellor’s budget was “just papering over the cracks”.
“This Budget was a chance for Government to unlock Britain’s promise and potential,” she tweeted.
“But with growth downgraded, the hit to living standards the largest since records began, and a tax cut for the top 1% they are just papering over the cracks.
“Labour will build a better Britain.”
Childminders to receive £600 ‘golden hellos’
Hunt announces free childcare for under-fives
Tax cut helps only richest 1% in society, says Sir Keir
Labour leader Keir Starmer said the one tax cut in the Budget, scrapping the pension lifetime allowance, helped the richest 1% in society.
Pointing out there was nothing extra for the NHS in the Budget, he said Britain could not afford the Tories.
And the Conservatives’ endless infighting on tax meant no progress, he said.
Tories dressing up stagnation as stability, says Labour leader
The chancellor’s Budget was “dressing up stagnation as stability”, Labour leader Sir Keir Starmer said, claiming it put the country “on a path of managed decline”.
Working people who were earning less under the Tories deserved better than “cheap tricks from government of gimmicks”, Sir Keir went on, as he attacked Mr Hunt’s measures.
Opportunities had been missed for a proper windfall tax, and working people were being made to pay for Tory mistakes, he said, to cheers from his backbenchers.
Government will increase funding paid to nurseries providing free childcare
Jeremy Hunt said the government will increase funding paid to nurseries providing free childcare under the hours offer by £204 million from this September and rising to £288 million next year.
He said: “This is an average of a 30% increase in the two-year-old rate this year, just as the sector has requested.”
Mr Hunt added: “We will change minimum staff-to-child ratios from 1:4 to 1:5 for two-year-olds in England as happens in Scotland, although the new ratios will remain optional with no obligation on either childminders or parents to adopt them.”
Mr Hunt said he also wants to help 700,000 parents on Universal Credit who had limited requirements to look for work.
He explained: “Many remain out of work because they cannot afford the upfront payment necessary to access subsidised childcare. So for any parents who are moving into work or want to increase their hours, we will pay their childcare costs upfront.
“And we will increase the maximum they can claim to £951 for one child and £1,630 for two children, an increase of almost 50%.”
Hunt announces huge reform in childcare to help parents get back into work
The chancellor has confirmed a huge reform in childcare- but has said it will be implemented in stages.
The government will change minimum staff-to-child ratios from 1:4 to 1:5 for two-year-olds in England but make it “optional”, the chancellor said, as he announced an increase in funding for nurseries.
Jeremy Hunt said he wanted to reform the childcare system, warning: “We have one of the most expensive systems in the world. Almost half of non-working mothers said they would prefer to work if they could arrange suitable childcare.
“For many women, a career break becomes a career end. Our female participation rate is higher than average for OECD economies, but we trail top performers like Denmark and the Netherlands. If we matched Dutch levels of participation, there would be more than one million more women who want to work, in the labour force. And we can.”
On childminders, Mr Hunt said he wanted to address the 9% decline in one year in England, adding: “I have … decided to address this by piloting incentive payments of £600 for childminders who sign up to the profession, rising to £1,200 for those who join through an agency.”
