Chancellor Jeremy Hunt will today announce details of his first spring budget since taking office last October.
Mr Hunt is set to announce free childcare for under-threes and tax incentives for people to pay into pensions for longer in his ‘Budget for Growth’.
He is also expected to announce in the House of Commons this afternoon additional support for households to pay high energy bills.
The Chancellor has already confirmed that the Energy Price Guarantee, which caps bills at £2,500 for the average household, will be extended at its current level from April to June – as Britons continue to be squeezed by the cost of living crisis.
It was due to reach £3,000 in April and the cost of scrapping the planned 20% increase will cost the Treasury around £3billion.
Chancellor Jeremy Hunt (centre; Prime Minister Rishi Sunak left; Environment Secretary Therese Coffey right) will announce details of his first spring budget today
What time will the Chancellor present the budget today?
Mr Hunt is due to deliver his first budget to MPs in the House of Commons at 12.30pm this afternoon.
It will come directly after Rishi Sunak was quizzed by Labor leader Sir Keir Starmer during Prime Minister’s Questions at noon.
Today is the Chancellor’s second financial plan after his November 17 autumn statement, which effectively reversed many of the measures introduced by Liz Truss and her predecessor Kwasi Kwarteng in their September mini-budget.
Following Mr Hunt’s statement, Shadow Chancellor Rachel Reeves will respond to the plans in the Commons.
Will the Chancellor announce more free childcare?
One of the key elements of the budget is expected to be a package of measures to remove barriers to work, the bulk of which is expanding levels of free childcare.
The current provision of up to 30 hours a week of funded childcare in England for parents of three- and four-year-olds is set to be extended to also cover one- and two-year-olds, if both parents earn each less than £100,000.
According to Mr Hunt’s plans, the program will be massively expanded so that working parents can benefit from 30 free hours a week when their children are one and two years old.
The underfunding of the 30-hour benefit has caused nurseries to close, while others have pushed the costs onto parents of younger children
It should also increase the hourly rate that the government pays to suppliers.
Childcare costs in the UK are among the highest in the world, with soaring costs in areas such as energy and food forcing nurseries to raise fees to levels some parents can no longer afford afford.
Yet the underfunding of the 30-hour benefit has led to nurseries closing, while others have passed the costs on to parents of younger children.
Paul Johnson, head of the independent economic think tank Institute for Fiscal Studies, said sweeping childcare reform was needed.
He said: “Many will welcome the extension of free childcare. Look for funding though – current fee funding has been cut 13% since 2017.
“As universal aid has expanded, targeted aid to the most needy children has contracted. The whole system is extremely complex. Needs proper review.
Jeremy Hunt is also expected to announce that childcare assistance will be paid out of Universal Credit in advance, rather than in arrears, with an increased amount that can be claimed.
Prime Minister Rishi Sunak hosts a Cabinet meeting before the Chancellor of the Exchequer presents his budget today
Chancellor Jeremy Hunt pictured preparing his spring budget last night
Will tax cuts be announced in the budget?
The Chancellor is set to announce some tax jerks in the budget but these are unlikely to go as far as some Tory MPs would like as he is set to raise corporate tax rates .
Despite months of lobbying by MPs and businesses, the Chancellor will press ahead with raising corporation tax from 19% to 25% and Rishi Sunak’s ‘super-deduction’ scheme is coming to an end. He will also snub calls for early tax cuts.
However, there will be new tax relief for businesses investing in the UK, with claims worth up to £11billion a year.
Changes to pensions are also expected, with the chancellor likely allowing workers to put more money into their pension fund before being taxed by scrapping the lifetime retirement allowance.
The lifetime allowance on pensions will be increased from £1.07million to £1.8million, after complaints that many employees felt it wasn’t worth working because of tax penalties.
While resisting pressure from Tory backbenchers for deep tax cuts, Jeremy Hunt will unveil a series of policies designed to stimulate the economy.
He is expected to reject the “decline narrative” and pledge to build on the country’s competitive advantages to spread wealth and opportunity.
Official figures yesterday showed vacancies across the UK fell for the eighth month in a row as businesses withheld hires amid the difficulties in the wider economy.
Mr Hunt will offer an olive branch to businesses with plans for 12 low-tax ‘investment zones’ and will try to encourage older workers to stay in employment with boot camps, training and “quarantine MOTs”.
Will help with energy bills be announced in the budget?
The Treasury confirmed early this morning that a planned £500 hike in average energy bills, which was due to come into effect next month, had been scrapped.
Instead, the level will remain at £2,500 for at least three more months – extending the power price guarantee from April to June – by which time prices are expected to have fallen.
Action is also due on prepayment meters, with Mr Hunt scrapping the so-called ‘prepayment premium’ – which sees those with meters charged more than those on direct debit – from July.
Prime Minister Rishi Sunak said: “We know people are worried about their bills rising in April, so to reassure people, we are keeping the power price guarantee at its current level until in the summer, when gas prices are expected to fall.
“Continuing to cut energy bills is part of our plan to help hard-working families with the cost of living and halve inflation this year.”
Falling global energy prices mean the current level will be extended to “fill the gap” until costs fall below the cap.
Mr Hunt said: ‘High energy bills are one of the biggest concerns for families, which is why we are maintaining the energy price guarantee at its current level.
“With energy bills set to drop from July, this temporary change will close the gap and ease the strain on families, while also helping to reduce inflation.”
Will fuel taxes remain frozen after the budget?
Jeremy Hunt is expected to maintain the fuel duty freeze for a 13th consecutive year in today’s budget.
The “temporary” reduction of 5 pence per liter of the tax should also be maintained.