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Charities give Spring Budget a lukewarm welcome

15 March 2023

UK Parliament/Andy Bailey

Jeremy Hunt announces the Government’s Spring Budget on Wednesday afternoon

Jeremy Hunt announces the Government’s Spring Budget on Wednesday afternoon

CHARITIES have welcomed new support for childcare in the Spring Budget, announced on Wednesday afternoon, but criticised the Government’s spending priorities.

In a speech that lasted more than an hour, the Chancellor, Jeremy Hunt, outlined plans to offer free childcare provision for under-threes, though the changes will not be fully implemented until 2025.

The energy-price guarantee has been extended until the end of June, keeping the average bill at £2500, but the direct payments made to households this winter will not be renewed.

Mr Hunt also announced that the annual limit for tax-free pension contributions would rise by 50 per cent, and that the £1.07 million tax-free ceiling on pension pots would be removed.

Corporation tax is to increase by six per cent from April, meaning that businesses that make more than a £¼ million of profit are to be taxed at 25 per cent. But the investment allowance for business will also increase, granting a tax break on money that is put back into the company.

After the announcement, the executive director of Debt Justice, Heidi Chow, criticised the Government’s priorities. “Instead of offering support to tackle record energy debt, the Chancellor prioritised tax breaks for higher-earning pension savers and subsidies for big business,” she said. “The end of the Energy Bill Support Scheme will mean most households will still pay more just to heat and light their homes.”

The director of external affairs for Christians Against Poverty (CAP), Gareth McNab, referred to a YouGov poll that suggested last month that two-thirds of UK adults believed that rising costs would put a “significant burden” on their finances this year.

“Poverty won’t just disappear if we stay silent about it and hope it goes away. We need the UK Government to commit to bold initiatives that set out to end UK poverty, working alongside people with direct experience of poverty and those organisations who support them,” Mr McNab said.

The JustMoney Movement described the budget as “deeply disappointing”, and said that, while some of the changes “sound encouraging”, changes to the pension allowance and rules around business investment were “measures that help the best-off in society while the most vulnerable continue to suffer”.

The expansion of childcare provision was welcomed by the Children’s Society. In a post on Twitter, the charity’s chief executive, Mark Russell, said: “The childcare system isn’t currently working well for parents; so we’re pleased to see the expansion of free hours and removal of upfront costs, that will help many balance work and children.

“Teenagers are still children, too, and direct support for them has been decimated at the same time as we’ve seen their mental health and well-being plunge to record lows and the complexity of risks they face grow.”

The executive director of the Food Foundation, Anna Taylor, also praised the Government’s support for the childcare system, but regretted a lack of funding for free school meals.

“Child food poverty has doubled in the last year — yet calls for Government to extend the threshold for free school meals is falling on deaf ears . . .

“If the Government is serious about levelling up it needs to act urgently to make sure every child in the country receives a nutritious meal at school,” she said.

In January, the Food Foundation said that the high cost of fruit and vegetables was contributing to a health gap between rich and poor (News, 20 January).

Funding free school meals also made economic sense, Ms Taylor said: “Analysis shows for every £1 invested, £1.38 would be returned, through social, health and educational benefits.”

Church aid agencies also criticised the spending priorities announced in the Budget on Wednesday afternoon.

Christian Aid’s Chief of UK Advocacy, Sophie Powell, criticised the Budget for failing to protect those most vulnerable to conflict and climate change. “Not only has the aid pot been stunted and raided by other government departments, but it has also lost its focus on tackling poverty and its causes.

“That’s why it’s even more urgent for the Government to release new resources, starting by getting private creditors such as the big banks to cancel the debt of countries on the front line of these crises,” she said.

The Roman Catholic aid agency CAFOD criticised the £11-billion increase in the defence budget, saying that it was “unforgivable when millions face famine in East Africa”.

CAFOD’s director of advocacy, Neil Thorns, said in a statement: “It cannot be right for the UK to cut its aid budget despite the region experiencing its worst drought in four decades. Countries such as the UK have caused these climate-related droughts and our aid can save the lives of those affected.”

The Trussell Trust welcomed the announcement of a White Paper on disability benefits, to separate benefit entitlements from the ability to work, which, Mr Hunt said, would incentivise recipients to take up employment.

“We agree with the Chancellor that disability benefits need to be reformed to provide more effective support,” the Trussell Trust’s chief executive, Emma Revie, said.

“It is vital that these reforms do not leave disabled people worse off. We ask the government to work closely with people who will be affected to make sure that the changes do not perpetuate the need for foodbanks.”

Mr Hunt said that Universal Credit sanctions would be pursued “more rigorously”, language that, Ms Revie said, prompted “cause for concern, as we know that sanctions can contribute to people needing to use foodbanks and can cause significant hardship for people in receipt of social security”.

 

THE UK will not technically enter a recession this year, Mr Hunt said as he announced the budget.

The Office of Budget Responsibility (OBR) forecasts that the economy will contract by 0.2 per cent this year, but that there would not be two consecutive quarters of decline. In November, Mr Hunt had warned that the UK was likely to enter recession in 2023 (News, 17 November 2022).

The OBR made the forecast based on “changing international factors” as well as measures taken by the Government, Mr Hunt said on Wednesday. “We are following the plan and the plan is working,” he told MPs.

Responding to the budget, the Leader of the Opposition, Sir Keir Starmer, said that the Government was “dressing up stagnation as stability”.

He said that Mr Hunt’s “opening boast was that things aren’t quite as bad now as they were in October last year”, and accused the Government of being out of ideas: “The same old Tory choices; sticking-plaster politics; no growth for the many; working people pay.”

Mr Hunt said that reduction of taxes on pensions would “incentivise our most experienced and productive workers to stay in work for longer”.

Under a new scheme, the Government expects to spend up to £4000 per person to help to find appropriate jobs for people with disabilities.

In a Twitter post published as Mr Hunt finished announcing his budget, the OBR announced that living standards were predicted to fall by six per cent over the next year, a slight improvement on the forecast in November. Nonetheless, this amounts to the largest two-year fall since records began in the 1950s, the OBR said.

Among other measures announced on Wednesday were a freeze on fuel duty and a reduction on the duty on drinks served on pubs compared with alcohol duty in supermarkets, a measure that he described as part of a “new Brexit pubs guarantee”.

“British ale may be warm, but the duty on a pint is frozen,” he said.

Mr Hunt announced £100 million of extra funding for the Department for Digital, Culture, Media and Sport, to provide support for civil-society organisations. Mr Hunt said that this would “support thousands of local charities and community organisations do their fantastic work”.

Mr Hunt announced that the defence budget would be increased by £11 billion, and is set to rise to 2.25 per cent of GDP by 2025.

On the environment, he announced up to £20 billion in support for developers of carbon capture technology, and said that nuclear power would be reclassified as “environmentally sustainable”, enabling the sector to take advantage of further investment incentives.

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