Ruth Edwards looks at what the Spring Budget means for households and businesses in Rushcliffe.
Ruth writes:
Budget day is always a big day in the parliamentary calendar. The chamber is packed, and we struggle to get all of the Cabinet and Treasury ministers on the front bench, resulting in some interesting choreography! It is also unusually quiet, with MPs listening to how their constituents and constituencies will be affected.
Despite the enormous challenges of the past year, the UK economy is proving to be more resilient than many thought. The Office of Budget Responsibility is now forecasting that the UK will avoid a recession and that inflation will fall to 2.9% by the end of this year. Whilst this is good news, we still have significant challenges to deal with. In particular, the current high level of inflation is making everyone poorer and acting as a drag on growth. We also have a very tight labour market and low levels of business investment.
Striking the right balance between helping households and businesses and reducing inflation is a difficult challenge that the budget addresses.
The Chancellor has committed a £94 billion support package over this year and next, to help with the cost of living.
This includes extending the Energy Price Guarantee until July, so that the price households pay is capped, with the average bill at £2,500. Further detail on how the scheme works can be found here.
After July, the regulator Ofgem expects to see energy bills fall, in line with the decrease in wholesale prices. I am also delighted that the Government is ending the premium paid by over four million households on prepayment meters who currently pay more for their energy. This is something I campaigned on when I was a member of the Business and Energy Select Committee and it is great to see the chancellor acting to protect households, often households on low incomes, who have pre-payment meters. The budget also maintains the 5p cut in fuel duty and freezes fuel duty too. Saving the average driver £200 since fuel duty cut was introduced last year.
As we help households and take action to reduce inflation, it is also vital that we lay the groundwork to grow the economy. Two of the things businesses in Rushcliffe have told me are holding them back are high taxation and difficulty recruiting.
The headline rate of corporation tax is going up, but it’s important to remember that once the exemptions for small and medium businesses are factored in, only 10% of businesses will pay the 25% rate. Alongside this, we are introducing a tax cut for business investment, so that businesses that invest in machinery or equipment can write that cost off against their tax bill.
This tax relief will put £25 billion back into the pockets of businesses over the next three years and we plan to make it permanent. It’s also great to see that the East Midlands is one of the regions that will benefit from an Investment Zone, with access to measures worth £80 million over five years. We will be able to tailor our investment zone plan to suit East Midland’s economy, taking advantage of tax relief for businesses who invest in our region and grant funding to support skills, apprenticeships and infrastructure investment. This is great news and builds on the investment we have already had in the East Midlands Freeport.
Finally, as I know from my ‘Best Pub in Rushcliffe’ competition, our local pubs are businesses that are close to all of our hearts. So I’m delighted that the Chancellor has made Draught Relief more generous – in short a pint in the pub will have 11p less duty on it than the duty in supermarkets. Cheers to that!
On a personal note, I am also really delighted by the investment in green industries such as the £20 billion for the early deployment of Carbon Capture, Usage and Storage in projects across the UK. The launch of Great British Nuclear and the first competition for Small Modular Reactors (SMRs), to be held this year, is also a great step forward to achieving our net zero targets and increasing our energy security.
With the focus on growth, comes an increase in job creation, but many of the businesses I visit in Rushcliffe tell me that they are struggling to recruit staff. We have one million vacancies in the UK waiting to be filled, but we also have 7 million people of working age (excluding students) who are economically inactive. The budget is addressing this by removing barriers that are stopping people who want to work from working. These reforms include:
- better support for those who have a disability or a long-term health condition,
- encouraging older workers (or experienced as many of us prefer!) back into the workforce, including through changes to pension tax charges which are causing an exodus in the most experienced and skilled people from public services such as the NHS.
- Introducing 30 hours of free childcare per week for children between the ages of nine months and four years old.
The last reform on childcare is wide-ranging. It also includes an increase in the hourly rates paid to providers of free childcare and introduces a childminders’ grant to help with start up costs and encourage more people to enter the sector. The choices families make about working and raising their children should be personal ones, not choices forced on them by cost. I hope that these new reforms will give many more families the freedom and flexibility they need.
• Spring Budget 2023: All the details from the Chancellor’s statement on the economy
