Key events
Steven Swinford from the Times says he is hearing that parents might have to wait a while for the extension of free childcare being announced by the chancellor today.
Several big unanswered questions on Jeremy Hunt’s free childcare offer for one and two year olds
First, when will it kick in? Hearing suggestions it may not be for some time
Second, how will it be funded and what will happen to funding for three and four year olds?
— Steven Swinford (@Steven_Swinford) March 15, 2023
These are from Ed Conway, economics editor at Sky News.
As Chancellor @Jeremy_Hunt gears up for his first Budget there are fresh fears for the financial system.
Credit Suisse shares have collapsed after the Saudi National Bank said they wouldn’t be putting any more funds in.
Down 18% today. Down 97% from their all time high… pic.twitter.com/9Uy0Y6Cx70— Ed Conway (@EdConwaySky) March 15, 2023
FTSE down 2.2%. Financials (chart👇) down 4.2%.
Not the happiest backdrop for the Budget. On the bright side, this time around the financial turbulence isn’t being caused BY UK policy… pic.twitter.com/Svg5Z1hEHQ— Ed Conway (@EdConwaySky) March 15, 2023
According to the Telegraph, Jeremy Hunt faces a Tory backlash over his decision to press ahead with the rise in corporation tax from 19% to 25% in the budget. This will take effect from April this year. The increase was first announced by Rishi Sunak when he was chancellor, in his spring budget two years ago.
In theory Hunt could have abandoned the rise, but for the last two years (apart from when Kwasi Kwarteng scrapped the increase during his short-lived time as chancellor) Treasury spending plans have been based on the assumption of extra revenue coming from 25%, and so junking it would have been hard.
In their Telegraph story Ben Riley-Smith and Daniel Martin report:
Mr Hunt will also try to take the sting out of the rise [to 25%] by unveiling a multi-billion pound scheme allowing businesses to reduce their tax bills by investing in the UK.
But there is already a growing backlash, as Conservative MPs warned that the tax increase would have a “chilling effect on the whole economy” if not abandoned …
Simon Clarke, the Tory MP and former Truss cabinet minister who helped set up the pro-tax cuts Conservative Growth Group, issued a warning shot on Tuesday night.
Mr Clarke told The Telegraph: “There are some very welcome policies in this Budget, but it is also the case that there is real concern about the corporation tax rise in particular.
“This is a tax on jobs and growth. It is very hard to see how it doesn’t have a chilling effect on the whole economy in a way which will cost every family in the country.”
Riley-Smith and Martin also says Boris Johnson is among the Tories who have called for the 25% increase to be abandoned “even though it was initially announced when he was prime minister”.
In its budget polling (see 9.55am), YouGov found that voters are more likely to think the increase will be good for the economy than bad for the economy.
Jeremy Hunt has now left Downing Street for the House of Commons. On his way, he posed for the traditional photographs with his budget red box, and his ministerial team.
Although policy specialists have welcomed the news that the budget will include a £4bn expansion of free childcare for one- and two-year-olds in England (see 9.08am), some experts are sceptical.
The Labour MP Stella Creasy says £4bn will not be enough to fund the scheme.
🚨🚨If this is true, it’s asking childcare providers to offer more hours at a loss as it’s only half the money needed to deliver this promise. Would be the same as help to buy scheme which pushed up house prices because it didn’t increase supply 🚨🚨https://t.co/nPwRI8HfZy
— stellacreasy (@stellacreasy) March 14, 2023
And the Sutton Trust, the social mobility charity, has sent out a briefing note pointing out that poorer families have less access to the current 30 hours of free childcare available for three- and four-year-olds (which is conditional on both parents working at least 16 hours a week) than wealthier ones. It wants to know if the same problem will apply to the new provision for one- and two-year-olds.
The Sutton Trust also says Hunt will have to assure the industry that that this pledge is properly funded. It says:
If not, the expansion will likely exacerbate provider financial problems and risk the sustainability of many. Many providers currently cross-subsidise underfunded “free” hours with hours charged at higher prices to parents elsewhere. With an expansion of free hours to one- and two year-olds, there will be fewer places where providers can make up these costs.
Some budgets measures show Labour ‘setting the agenda’, says Pat McFadden
Pat McFadden, the shadow chief secretary to the Treasury, has said today’s budget shows that Labour is “setting the agenda”.
In an interview with GB News, he cited action on childcare, extending the energy price guarantee and freezing fuel duty as policies in the budget that Labour was already advocating. He said:
I do think we’ve set the agenda for some of this. We called for example, for an extension of the cap on energy prices for another few months.
We called for the freeze in fuel duty to be carried over for another year and we’ve been talking about childcare for quite a long time.
So I’m quite pleased that Labour is setting the agenda. If the government wants to follow our lead, I don’t mind that.
It does mean the next time you hear a government spokesperson saying Labour is not fit to run the country, then maybe we should question that, because if they’re adopting so many of our policies, then it suggests that we’re not as reckless as they sometimes suggest.
But McFadden also suggested the government was not doing enough on growth. He said:
If you look, first and foremost, at the green transition, this is what’s powering growth in the United States right now, with President Biden’s Inflation Reduction Act, we’re just not on the pitch in the UK compared to what they’re doing in the United States right now.
Only one voter in 10 is confident that the budget will provide them with enough help with the cost of living, according to new polling from YouGov.
But almost four out of five people said extending the energy support guarantee, which is happening, would be helpful.
Earlier I said in a post that the Treasury did not release the normal pre-budget photograph last night of the chancellor working on his speech with aides. I’ve taken it down, because it turned out they did; it was just hard to find them, because they weren’t in the usual place. Here’s one. The caption does not say what Jeremy Hunt and his aides were looking at on the phone, but perhaps it was the news that the Guardian was splashing their big announcement.
Overnight the Treasury released an extract from Jeremy Hunt’s budget speech. He will say:
In the autumn we took difficult decisions to deliver stability and sound money.
Today, we deliver the next part of our plan: a budget for growth.
Not just growth from emerging out of a downturn.
But long term, sustainable, healthy growth that pays for our NHS and schools, finds good jobs for young people, provides a safety net for older people.
…all whilst making our country one of the most prosperous in the world.
Today I deliver that by…
… removing the obstacles that stop businesses investing;
… tackling the labour shortages that stop them recruiting;
… breaking down the barriers that stop people working;
…and harnessing British ingenuity to make us a science and tech superpower.
Hundreds of thousands of workers are on strike today in what threatens to be the biggest strike since the current wave of industrial action started last year, PA Media reports. PA says:
Members of several trade unions will take action, mounting hundreds of picket lines across the country amid continuing anger over issues including pay, jobs, pensions and conditions.
Those striking include teachers, university lecturers, civil servants, junior doctors, London Underground drivers and BBC journalists.
Despite talks being held between unions and the Westminster government, the public sector strikes remain deadlocked.
Some of the strikes, such as those by teachers, will only be held in England as progress has been made in Wales and Scotland.
Treasury extends energy price guarantee for three months, but opposition parties say bills should be cut instead
The SNP and the Liberal Democrats have both issued statements this morning saying the Treasury’s decision to extend the energy price guarantee at its current rate for another three months does not go far enough.
Stewart Hosie, the SNP’s economy spokesperson, said:
It’s truly pathetic that the chancellor has failed to cut energy bills, despite having ample resources to do so. The Tories are ripping families off by keeping bills at such exorbitantly sky-high levels, with many families forced to pay three times what they paid a year ago.
With energy companies making record profits, and the wholesale price of gas falling, there is no excuse for this shameful Tory decision, which will hammer household incomes and push even more families into poverty, hardship and debt.
And Sarah Olney, the Lib Dem Treasury spokesperson, said:
This does not go far enough. Instead of a sticking plaster for another three months, we need meaningful action now.
The Liberal Democrats are calling on the chancellor to cut energy bills by £500 per household. This would make a significant difference to households and the government can afford to do it, they are choosing not to.
In three months time families will once again be facing a cliff edge of unaffordable heating bills.
Jeremy Hunt prepares to unveil budget as experts welcome plan for £4bn expansion of free childcare
Good morning. Last year we had a series of huge fiscal announcements from the Treasury, as well as perhaps the most consequential “mini-budget” of all time (it brought down a PM), but we never an actual, proper budget. Today’s will be the first real once since autumn 2022. Jeremy Hunt will deliver it at 12.30pm.
Rather, deliver what is left of it. The Treasury itself has already briefed many of the significant measures in it. It sent out at least eight budget-related press notices in recent days, and another one arrived this morning, confirming that under the energy price guarantee energy unit costs will be capped for another three months, so that the average household faces an annual bill of £2,500. The cap was due to rise at the end of April, pushing an average bill up to £3,000. There is more coverage of this on our business live blog.
Chancellors always pre-announce some of the second-order budget announcement, because otherwise they will get no coverage on the day, but they like to save up something popular for the day itself. Conventionally, this is described as the “rabbit” being pulled out of the hat. Yesterday the Guardian got hold of the rabbit, and we yanked it out ourselves. Hunt is going to announce a £4bn expansion of free childcare for one- and two-year-olds in England. You can read the details here.
Magicians pull rabbits out of hats by means of an illusion; it’s fake. Budget announcements are meant to be a bit more credible, and so far the reaction to the childcare news has been positive.
James Bowen, director of policy for school and nursery at NAHT, the union for headteachers, said:
While we will need to look closely at the detail, if the government does increase the hourly funding rates to early years providers this will be welcome news. We know that the funding settings currently receive from government is woefully inadequate and many providers simply cannot afford to operate at those levels.
Paul Johnson, director of the Institute for Fiscal Studies, said the news was welcome, but that a wider review in this area was needed.
Many will welcome extension of free childcare.
Look for funding though – funding current entitlement has been cut 13% since 2017.
As universal support has expanded, targeted support for children most in need has contracted.
Whole system is hugely complex. Needs proper review https://t.co/yFoHnrW55b
— Paul Johnson (@PJTheEconomist) March 14, 2023
Abby Jitendra, a family policy expert at the Joseph Rowntree Foundation, also applauded the announcement, while saying wider change was needed.
Very good news on childcare!🐇🎩
Expanding free childcare for 1 and 2 year olds should have a big impact on women’s likelihood of working post-pregnancy. Positive signs that per-hour funding will increase too (or else fees would go up elsewhere). https://t.co/DE2crEcgK6
— Abby Jitendra (@abbyabhaya) March 14, 2023
Hope this (& UC costs announcement already trailed) helps drive up take-up of support from low income households, who we know are excluded from formal childcare:
📈 Universal free hours takeup – 90%+
😐 Low income 2 years support takeup – 72%
😵 UC costs takeup – 13%— Abby Jitendra (@abbyabhaya) March 14, 2023
Now we need to change the system itself…
It’s dysfunctional, with serious gaps in availability for parents working irregular hours or additional needs. There’s poor financial oversight of extractive private providers & there’s little incentive to shape good local systems.
— Abby Jitendra (@abbyabhaya) March 14, 2023
Sebastian Payne, who runs Onward, a right-leaning thinktank, also praised the announcement.
This will be utterly fantastic news – a critical step for helping mothers back to work and providing necessary early years support – backing up @ukonward‘s recent research 🎉 https://t.co/PQPWHlOhWj
— Sebastian Payne (@SebastianEPayne) March 14, 2023
And this is from Justine Roberts, founder of the Mumsnet website.
If you will forgive the mangling of two hackneyed political cliches, Hunt may be pulling out a rabbit, but shooting the fox. Labour has made it clear that it wants to make a big childcare promise part of its “retail offer” to voters at the next election. Hunt is now making that harder. In an initial response to the story, Rachel Reeves, the shadow chancellor, told LBC last night.
If it’s a serious package that’s going to make a difference to working parents, we’ll back it.
I will be covering the budget announcement with my colleague Graeme Wearden, who normally writes the business live blog, and bringing you analysis and reaction afterwards. Here are the key times for the day.
12pm: Rishi Sunak faces Keir Starmer at PMQs.
12.30pm: Jeremy Hunt delivers the budget.
2.30pm: Richard Hughes, chair of the Office for Budget Responsibility, holds a press conference.
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