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15 March 2023

What to expect from Jeremy Hunt’s Budget

Announcements on childcare support and encouraging people back to work could represent the pinnacle of the Chancellor’s career.

By Rachel Wearmouth

Jeremy Hunt is packing up his red box at HM Treasury and preparing to deliver the spring Budget. His central aim is to get people back into the labour market and accelerate economic growth.

The big reveal, according to a report in the Guardian, will be a £4bn expansion of the government’s 30 hours of free childcare to cover one- and two-year-olds. Right now only three- and four-year-olds receive free care. But as the chief executive of the National Day Nurseries Association, Purnima Tanuku, pointed out on Newsnight last night (14 March), the amount being spent on 15- and 30-hour schemes for children aged three and four is £3.9bn, meaning it is unclear how the system will work if only an extra £4bn is added.

The current system is pushing up prices for children of other age groups because of government under-funding, leading to patchy provision. Meanwhile, many of those working in early-years care are quitting because of low pay, scant training opportunities and high stress.

The Guardian also expects Hunt to relax the staff-to-child ratio for two-year-olds, bringing it from 1:4 to Scotland’s 1:5. This would help lower the cost, but it would be controversial among workers. As a survey from the Early Years Alliance shows, 87 per cent of childcare providers are opposed.

[See also: What would make Jeremy Hunt’s Budget a green success]

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Labour may make the case that accelerating the model as it is risks further nursery closures, higher childcare prices and the crashing of the labour market. But the policy’s full details, including how it will be paid for (could Hunt reach into the child tax credit budget?), will not be known for sure until the Chancellor delivers the Budget this afternoon (15 March).

Hunt is expected to focus his “back to work” Budget on encouraging long-term sick and disabled into employment (a trend that Anoosh has investigated in detail), and to stop people from retiring early. The government is reportedly going to increase the pension cap to £1.8m, and raise the most a worker can save in their pensions before paying tax to £60,000 a year. The move would affect a small number of wealthy people but is said to be targeted at consultants and doctors who are leaving the NHS post-Covid. There have also been reports that the state pension age rise to 68, originally scheduled for the 2040s, could be brought forward to the end of the 2030s.

If there is to be a fight between the government and Tory backbenchers it will likely centre on Hunt’s refusal to reverse the corporation tax increase, from 19 per cent to 25 per cent. One MP said this move is “not quite a severe threat, but not to be ignored”. It remains to be seen whether the creation of 12 low-tax investment zones to power the tech industry, a key demand of Trussites, placates this group.

Hunt’s first Budget, last autumn, was overshadowed by the disastrous actions of his predecessor Kwasi Kwarteng. With today’s, the Chancellor is looking to cement his position in No 11. Rishi Sunak is looking ahead to a highly competitive general election battle and is no doubt weighing up whether stability or a more strident chancellor would appeal to the electorate. Hunt, who was a Remainer, entered the cabinet under David Cameron in 2010 and is not a natural ideological ally of the Prime Minister’s.

Considering Hunt has lost two leadership races, this chancellorship – perhaps even this day – may mark the pinnacle of his political career.

This piece first appeared in the Morning Call newsletter; subscribe here.

[See also: I’m a civil servant – here’s why I’m striking on Budget day]

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