Budget Summary 2023: Who are the winners and losers from changes to taxes, pensions, and childcare costs?

Jeremy Hunt has promised a major expansion of state-funded child care and tax breaks for businesses in budget measures aimed at boosting economic growth.

In a bid to remove barriers to work, he promised up to 30 hours a week of free childcare for eligible families in England with children as young as nine months old, instead of three and four under the current policy.

He also pledged to expand universal care at the beginning and end of the school day for parents with older children and changes to staff-to-child ratios in England to expand the provision of childcare.

The chancellor said a recession would be avoided and inflation would fall dramatically as the economy was “proving the skeptics wrong”.

In response, Sir Keir Starmer said that Britain was “the sick man of Europe again” and that the budget showed that “the expiration date looms larger than ever” for the Conservatives.

He added, “After 13 years of his rule, our economy needed major surgery, but like millions across our country, this budget leaves us stuck in the waiting room still on hand.”

But who are the real budget winners and losers?

winners

1. People with children pay for childcare. Mr. Hunt’s changes will undoubtedly help parents who need them to pay for childcare, and for all ages from babies up to nine months. At best, it looks like it might be worth around £6,500 a year for full-time working parents with two children. The help of schools and nurseries to provide universal coverage from 8am to 6pm would also be most welcome. However, for some parents who work part-time and/or have low-paid shift work, the changes will be less beneficial.

2. Get ahead of high-tech companies that want to invest. Although major corporate tax rates will not be cut, very generous allocations for investment in information technology, plant and machinery would be welcome and should boost economic growth. The hurdle is how long these investment bonuses will last — the goal is to make them permanent, but there are no guarantees.

3. The oldest and wealthiest NHS consultants – and NHS patients. The elimination of a lifetime allowance on the value of the retirement pot is intended to keep older, more experienced and efficient workers in their place, leading to growth. One particular group that has stopped early or reduced working hours in recent years has been senior NHS doctors who will now not face an exorbitant tax fee, in fact, for releasing their eggs. Good news for those who need quality professional healthcare from a brilliant surgeon or GP – shorter wait times and some reassuring gray to complement the wise bedside manner.

4. buzzers. That is, alcoholic beverages in “alcoholic beverages.” Personifying the tabloid caricature of the working man, Mr. Hunt took great pride in making a pint of “warm British ale” comparatively cheaper in the “great British pub” than the heavily discounted alcohol available in supermarkets. What is more serious and valuable is that this step, if continued, will help the tavern trade, an essential and distinctive part of national life, and in many villages about the only remaining place of societal focus. It may just reduce harmful drinking at home and on the street.

5. bots. Joking aside, the large subsidies (£2.5 billion) that will be available for research and development in AI, quantum computing should at least give the country a chance to realize the government’s ambition to make Britain a leader in this rapidly expanding field, with its revolutionary industrial potential. The £1 million prize for AI innovation, named after the first British computer (built in that city in 1946), is a nice populist touch. So someone smart will be a millionaire by this time next year.

losers

1. Everyone earning more than £12,000 per annum. The previously announced freeze in personal tax benefits is a hidden tax that actually means most basic taxpayers stand to lose around £500 a year in net income, rising to £1,000 a year for higher rate taxpayers, because wage inflation pushes more of their earnings into higher rates of tax. It is the single largest financial factor in pressure on living standards (that is, apart from general inflation and mortgage rates).

2. Small businesses that don’t have big investment plans to fund. A typical example might be a small cleaning company, for example, whose financing is run through a corporation and which now faces much higher taxes on its earnings and profits, and which has relatively little scope to make the most of generous investment allowances.

3. Buy to let realtors, investors and people selling their businesses. Once again, a previously announced and quite drastic change to the capital gains tax (and the tax on dividend income) will make it worse off sooner or later.

4. savers. The ISA savings limit of £20,000 per annum, while generous, will be frozen for another year, a substantial drop in light of current inflation. Small increases in interest rates on savings will not make up for this.

5. Practically every public sector. Total departmental spending will increase by about 1 percent of total spending annually over the next few years. Given that the NHS and the Defense will likely get a larger share of what’s available, some departments, especially those without strong lobbies to protect them, will face real cuts again – another era of austerity, perhaps in areas such as criminal justice, the courts, and local government. , housing and, above all, non-state childcare and non-state pensions (“triple lock”) elements of social security.