The Chancellor’s spring budget featured a range of measures aimed at boosting the economy and easing the financial burden on families. These included a tax cut of £27 billion for businesses, along with several freezes designed to support households with their cost of living. While some of these measures apply across the UK, others will have specific benefits for Scotland, Wales and Northern Ireland. As a result of these decisions, the Welsh Government is set to receive £180 million in funding over the next two years.

Employment

The Chancellor has outlined a comprehensive plan to address the barriers to work faced by individuals on benefits, those with health conditions, and older workers. This includes increasing the pensions annual allowance from £40,000 to £60,000 for experienced workers such as senior doctors, and abolishing the Lifetime Allowance to simplify the pension tax system. The midlife MOT program will be expanded to provide financial, health, and career guidance to individuals ahead of retirement, with an enhanced digital tool and in-person sessions for Universal Credit claimants over 50.

A White Paper on disability benefits reform will abolish the Work Capability Assessment in Great Britain and separate benefit entitlement from an individual’s ability to work. Additionally, a new voluntary employment scheme called Universal Support will provide up to £4,000 per person to find suitable roles for disabled individuals and those with health conditions, supporting 50,000 places per year.

Other measures include strengthening work search and preparation requirements for lead carers of children aged 1-12 claiming Universal Credit, increasing the Administrative Earnings Threshold, and enforcing the Universal Credit sanctions regime. The government also plans to attract international talent through a new migration package that includes adding construction occupations to the Shortage Occupation List and expanding the range of short-term business activities covered under the UK’s six-month business visit visa offer.

Enterprise

The Chancellor proposed a plan to drive business growth, encourage innovation, and reduce energy costs. The plan includes:

•        A “full expensing” policy and an extension to the 50% first-year allowance, worth £27 billion over five years, to support capital investment by businesses from 1 April 2023 until 31 March 2026.

•        A package of £500 million per year to support research and development for 20,000 businesses through changes to R&D tax credits.

•        Tax relief reforms for the creative industries, including theatres, orchestras, museums, and galleries, to help protect against economic pressures and support more world-class productions in the UK.

•        £10 million in extra funding over two years for the Medicines and Healthcare products Regulatory Agency (MHRA) to accelerate patient access to treatments, including the introduction of new, swift approvals systems from 2024.

•        Acceptance of all recommendations from Sir Patrick Vallance’s review of digital technology regulation to encourage innovation.

•        £900 million in funding for an AI Research Resource and an exascale computer, as well as a commitment to a £2.5 billion ten-year quantum research and innovation programme through the government’s new Quantum Strategy.

Levelling Up

The government’s focus is on boosting growth across the UK and providing equal opportunities to all by giving more power to local communities.

More areas will benefit from the expansion of business rates retention in the next Parliament, giving local communities greater control over their economic destiny. The government plans to establish 12 Investment Zones across the UK, including four in Scotland, Wales, and Northern Ireland, and will support local growth projects in every nation of the UK. In addition, the government is investing £20 million to support the restoration of Holyhead Breakwater in Wales, safeguarding hundreds of jobs supported by this port, and £175,000 to save the last remaining pub in a village community in Denbighshire.

Childcare

The government has proposed significant changes to childcare that will eliminate obstacles for parents receiving Universal Credit and unable to work due to caring duties. The new policy is aimed at reducing discrimination against women and will have positive economic implications.

Under the new plan, parents on Universal Credit who are moving into work or increasing their hours will receive upfront payments for their childcare costs instead of being reimbursed afterwards. The maximum claim for one child will be raised to £951, while that for two children will be £1,630, an increase of nearly 50%.

Secretary of State for Wales David TC Davies said:

“This is a Budget which supports the UK Government’s ambitions for Wales while continuing to tackle the huge challenges we face.

“The measures announced by the Chancellor to drive down inflation, extend the energy price guarantee and support people back into work will help thousands of families across Wales.

“And we continue to invest directly in Welsh projects with £20 million for the Holyhead breakwater, at least one new investment zone for Wales and funding for carbon capture which will hugely benefit Welsh industry. Measures for England announced in the Chancellor’s Budget mean the Welsh Government will also receive £180 million more to add to its record £18 billion a year funding settlement.

“Our goal is to create long-term financial stability for the UK which will spread growth, encourage investment and build a stronger economy in the years to come.”

The Chancellor’s Spring Budget included measures to support households facing cost-of-living pressures. The government will pay upfront the childcare costs of parents on Universal Credit moving into work or increasing their hours, and the maximum claim will be raised by around 50%. The Energy Price Guarantee will be maintained at £2,500 for three months, and over 4 million households paying for prepayment meters will no longer pay a premium. The planned 11 pence rise in fuel duty will be cancelled, and the 5p cut will be extended for another twelve months. The Draught Relief has been extended from 5% to 9.2%, providing support for 2,000 pubs and bars in Wales.

The Chancellor also outlined plans to remove barriers to work for those on benefits, with an increase in the pensions Annual Allowance and the abolition of the Lifetime Allowance. To support business investment, a new ‘full expensing’ policy will be introduced, which makes the UK joint first in the OECD for competitive capital allowances. The package of measures is predicted to lead to economic growth, halve inflation this year, and reduce debt. There were no new tax rises announced in the Spring Budget.