Spring Budget 2023 speech
Spring Budget 2023 speech as delivered by Chancellor Jeremy Hunt.
Madam Deputy Speaker, in the face of enormous challenges I report today on a British economy which is proving the doubters wrong.
In the autumn we took difficult decisions to deliver stability and sound money.
Since mid-October, 10-year gilt rates have fallen, debt servicing costs are down, mortgage rates are lower and inflation has peaked.
The International Monetary Fund says our approach means the UK economy is on the right track.
But we remain vigilant, and will not hesitate to take whatever steps are necessary for economic stability.
Today the Office for Budget Responsibility forecast that because of changing international factors and the measures I take, the UK will not now enter a technical recession this year.
They forecast we will meet the Prime Minister’s priorities to halve inflation, reduce debt and get the economy growing.
We are following the plan and the plan is working.
But that’s not all we’ve done.
In the face of a cost-of-living crisis we have demonstrated our values by protecting struggling families with a £2,500 Energy Price Guarantee, one-off support and the uprating of benefits with inflation.
Taken together, these measures are worth £94 billion over this year and next – one of the largest support packages in Europe.
That averages over £3,300 of cost-of-living help for every household in the country.
Today, we deliver the next part of our plan.
A budget for growth.
Not just the growth that comes when you emerge from a downturn.
But long term, sustainable, healthy growth that pays for our NHS and schools, finds jobs for young people, and provides a safety net for older people all whilst making our country one of the most prosperous in the world.
Prosperity with a purpose.
That’s why growth is one of the Prime Minister’s five priorities for our country.
I deliver that today …
…by removing obstacles that stop businesses investing;
…by tackling labour shortages that stop them recruiting;
…by breaking down barriers that stop people working;
…and by harnessing British ingenuity to make us a science and technology superpower.
Meeting the Prime Minister’s priorities
I start with the forecasts produced by Richard Hughes and his team at the independent Office for Budget Responsibility whom I thank for their diligent work.
They have looked in detail at the Prime Minister’s economic priorities.
The first of those is to halve inflation.
Inflation destroys the value of hard-earned pay, deters investment and foments industrial strife.
This government remains steadfast in its support for the independent Monetary Policy Committee at the Bank of England as it takes action to return inflation to the 2% target.
Despite continuing global instability, the OBR report today that inflation in the UK will fall from 10.7% in the final quarter of last year to 2.9% by the end of 2023.
That is more than halving inflation.
High inflation is the root cause of the strikes we have seen in recent months.
We will continue to work hard to settle these disputes but only in a way that does not fuel inflation.
Part of the fall in inflation predicted by the OBR happens because of additional measures I take today.
Firstly, I recognise that even though wholesale energy prices have been falling, there is still enormous pressure on family finances.
Some people remain in real distress and we should always stand ready to help where we can.
So after listening to representations from Martin Lewis and other experts, I today confirm that the Energy Price Guarantee will remain at £2,500 for the next three months.
This means the £2,500 cap for the typical household will remain in place when energy prices remain high, ahead of an expected fall in prices from July.
This measure will save the average family a further £160 on top of the energy support measures already announced.
The second measure concerns over four million households on prepayment meters.
They are often the poorest households, but they currently pay more than comparable customers on direct debit. Ofgem has already agreed with suppliers a temporary suspension to forced installations of prepayment meters.
But today I go further, and confirm we will bring their charges in line with comparable direct debit charges. The energy premium paid by our poorest households is coming to an end.
Next I have listened to representations from the hon members for East Devon, North Cornwall, Colne Valley and Central Suffolk and North Ipswich about the risk to community facilities, especially swimming pools, caused by high costs. When times are tough, such facilities matter even more.
So today I am providing a £63 million fund to keep our public leisure centres and pools afloat.
I have also heard from my RHF the charities minister and his Secretary of State about the brilliant work third sector organisations are doing to help people struggling in tough times.
They can often reach people in need that central or local government cannot, so I will give his department £100 million to support thousands of local charities and community organisations do their fantastic work.
I also note the personal courage of one of my predecessors, my RHF from Bromsgrove, in talking about the tragedy of suicide and the importance of preventing it.
We already invest a lot in this area, but I will assign an extra £10 million over the next two years to help the voluntary sector play an even bigger role in stopping more families experiencing such intolerable heartache.
My penultimate cost of living measure concerns one of our other most treasured community institutions, the great British pub.
In December, I extended the alcohol duty freeze until 1 August, after which duties will go up in line with inflation in the usual way.
But today, I will do something that was not possible when we were in the EU and significantly increase the generosity of Draught Relief, so that from 1 August the duty on draught products in pubs will be up to 11p lower than the duty in supermarkets, a differential we will maintain as part of a new Brexit pubs guarantee.
Madam Deputy Speaker, British ale may be warm, but the duty on a pint is frozen.
And even better, thanks to the Windsor Framework negotiated by my RHF the Prime Minister, that change will now also apply to every pub in Northern Ireland.
Finally, I have heard the representations from the Honourable Member from Stoke on Trent North, my Rt Hon Friend for Witham and my Rt Hon Friend from South Thanet and the Sun newspaper about the impact on motorists of the planned 11p rise in fuel duty.
Because inflation remains high, I have decided now is not the right time to uprate 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.
Our Energy Price Guarantee, fuel duty and duty on a pint – all frozen in today’s budget.
Something that doesn’t just help families, it helps the economy too because their combined impact reduces CPI inflation by nearly ¾% this year, lowering inflation when it is particularly high.
I now turn to the Prime Minister’s second priority, which is to reduce debt.
Here too our plan is on track.
Underlying debt is forecast to be 92.4% of GDP next year, 93.7% in 2024-25; 94.6% in 2025-26, and 94.8% in 2026-27, before falling to 94.6% in 2027-28.
We are meeting the debt priority.
And with a buffer of £6.5 billion, it means we are meeting our fiscal rule to have debt falling as a percentage of GDP by the fifth year of the forecast.
As a proportion of GDP our debt remains lower than the USA, Canada, France, Italy and Japan.
And because of the decisions I take today, and the improved outlook for the public finances, underlying debt in five years’ time is now forecast to be nearly three percentage points lower than it was in the Autumn.
That means more money for our public services and a lower burden on future generations – deeply-held values which we put into practice today.
At the Autumn Statement I also announced that public sector net borrowing must be below 3% of GDP over the same period.
The OBR confirm today that we are meeting that rule with a buffer of £39.2 bn.
In fact our deficit falls in every single year of the forecast, with borrowing falling from 5.1% of GDP in 2023-24, to 3.2% in 2024-25, 2.8% in 2025-26, 2.2% in 2026-27 and 1.7% in 2027-28.
Even better in the final two years of the forecast our current budget is in surplus, meaning we only borrow for investment and not for day-to-day spending.
Day to day departmental spending will grow at 1% a year on average in real terms after 2024-25 until the end of the forecast period, and capital plans are maintained at the same level set at Autumn Statement.
We will uprate tobacco duty, and we will freeze the gross gaming duty yield bands. We are also maintaining the starting rate for savings and the ISA subscription limits, and we will bring forward a range of measures to tackle promoters of tax avoidance schemes.
But Madam Deputy Speaker, taken together today’s measures lead to a slightly lower overall tax burden for the rest of the parliament compared to the OBR’s Autumn forecast.
We are reducing borrowing and improving our public finances.
By doing so we make sure we are on track to…
… halve inflation
… get debt falling
…and grow our economy, which I turn to next.
Growth is the Prime Minister’s third priority and the focus of today’s budget.
13 years ago, we inherited an economy that had crashed.
But since 2010 we’ve grown more than major countries like France, Italy or Japan and about the same as Europe’s largest economy Germany.
We’ve halved unemployment…
… cut inequality
…and reduced the number of workless households by one million.
For the first time ever, because of the rises in tax thresholds made by successive Chancellors people in our country can earn £1,000 a month without paying a penny of tax or national insurance.
Those tax reductions have helped lift 2 million people out of absolute poverty, after housing costs, including 400,000 pensioners and 500,000 children.
That averages 80 pensioners and 100 children lifted out of poverty for every single day we’ve been in office.
Today we face the future with extraordinary potential.
The World Bank said that out of all big European countries, we are the best place to do business.
Global chief executives say that apart from America and China, we are the best country to invest in.
We became the second country in the world to have a stock of foreign direct investment worth 2 trillion dollars.
And London has just pipped New York and 53 other global cities to be the best place in the world for female entrepreneurs.
Declinists are wrong about our country for another reason, which is our newfound strength in the innovation industries that will shape this century.
Over the last 13 years we have become the world’s third trillion-dollar tech economy after the US and China.
We have built the largest life sciences sector in Europe, producing a Covid vaccine that saved six million lives and a treatment that saved a million more.
Our film and TV industry has become Europe’s largest, with our creative industries growing at twice the rate of the economy.
Our advanced manufacturing industries produce around half the world’s large civil aircraft wings.
And thanks to a clean energy miracle we have become a world leader in offshore wind.
Other parties talk about a green energy revolution, so I gently remind them that nearly 90% of our solar power was installed in the last 13 years - showing it’s this Government who fix the roof while the sun is shining.
Let’s turn now to what the OBR say about our growth prospects.
In November, they expected that the UK economy would enter recession in 2022 and contract by 1.4% in 2023.
That left many families feeling concerned about the future.
But today, the OBR forecast we will not enter a recession at all this year with a contraction of just 0.2%.
And after this year the UK economy will grow in every single year of the forecast period: by 1.8% in 2024; 2.5% in 2025; 2.1% in 2026; and 1.9% in 2027.
They also expect the unemployment rate to rise by less than one percentage point to 4.4%, with 170,000 fewer people out of work compared to their Autumn forecast.
Madam Deputy Speaker, that return to growth has direct consequences for our role on the global stage.
I am proud we are giving the brave people of Ukraine more military support than anyone else in Europe.
On Monday we were able to go further with my RHF the Prime Minister announcing a £5bn package of funding for the Ministry of Defence, an additional £2bn next year and £3bn the year after.
Today, following representations from our persuasive Defence Secretary, I confirm that we will add a total of £11 billion to our defence budget over the next five years and it will be nearly 2.25% of GDP by 2025.
We were the first large European country to commit to 2% of GDP for defence and will raise that to 2.5% as soon as fiscal and economic circumstances allow.
Following representations from my RHF the Minister for Veterans Affairs, I am today also increasing support for our brave ex-servicemen and women.
We will provide a package worth over £30 million to increase the capacity of the Office for Veterans’ Affairs, support veterans with injuries returning from their service and increase the availability of veteran housing.
But to be Europe’s biggest defender of democracy, we must build Europe’s most dynamic economy.
That means tackling our longstanding productivity issues including two in particular which I address today: lower business investment and higher economic inactivity than other similar countries.
Too often companies struggle to recruit and even when they do, output per employee is lower.
So today I set out the four pillars of our industrial strategy to address these issues.
Colleagues will know from my Bloomberg speech, they all start with the letter ‘E’: Enterprise, Employment, Education and Everywhere.
I start with ‘Everywhere’, our measures to level up growth across the UK.
This government was elected on a mandate to level up.
We have already allocated nearly £4 billion in over 200 projects across the country through the first two rounds of the Levelling Up Fund. A third round will follow.
Since we started focusing on levelling up, 70% of the growth in salaried jobs has come from outside London and the South-East.
Today we take further steps.
Canary Wharf and the Liverpool Docks were two outstanding regeneration projects.
I pay tribute to Lord Heseltine for making them happen because they transformed the lives of thousands of people. They showed what’s possible when entrepreneurs, government and local communities come together.
So today I announce that we will deliver 12 new Investment Zones, 12 potential Canary Wharfs.
In England we have identified the following areas as having the potential to host one: West Midlands, Greater Manchester, the North-East, South Yorkshire, West Yorkshire, East Midlands, Teesside and, once again, Liverpool. There will also be at least one in each of Scotland, Wales and Northern Ireland.
To be chosen, each area must identify a location where they can offer a bold and imaginative partnership between local government and a university or research institute in a way that catalyses new innovation clusters.
If the application is successful, they will have access to £80 million of support for a range of interventions including skills, infrastructure, tax reliefs and business rates retention.
Working together with our formidable Levelling Up Secretary, I also want to give some further support to levelling up areas under the ‘E’ of everywhere.
First, I will invest over £200 million in high quality local regeneration projects across England including the regeneration of Tipton town centre and the Marsden New Mills Redevelopment Scheme.
I am also announcing a further £161 million for regeneration projects in Mayoral Combined Authorities and the Greater London Authority.
And I will make over £400 million available for new Levelling Up Partnerships in areas that include Redcar and Cleveland, Blackburn, Oldham, Rochdale, Mansfield, South Tyneside, and Bassetlaw.
Original article link: https://www.gov.uk/government/speeches/spring-budget-2023-speech
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