April 13, 2024

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Did the last budget bring growth and cheap beer?

Did the last budget bring growth and cheap beer?
  • Written by Anthony Rubin
  • Verified by BBC

Image source, Parliament of the United Kingdom / Andy Bailey

Chancellor Jeremy Hunt will set his budget on March 6, almost a year after his first spring budget.

In Budget 2023, he announced measures – including on growth, inflation and childcare – which were highlighted in a Government press release.

How did the government proceed with handing them over?

Budget for growth

Mr. Hunt introduced His speech On March 15, 2023, under the title “Growth Budget.”

But according to official figures, the economy has not grown since then.

For the rest of 2023, there was zero growth followed by contractions of 0.1% and 0.3%, meaning the UK economy entered a recession.

Cut inflation in half

Hunt highlighted the Office for Budget Responsibility (OBR) forecast that inflation will halve by the end of 2023.

When he delivered his budget, inflation was still above 10%, and had already halved, reaching 4% by the end of the year.

Help for bars

The Chancellor announced that from 1 August 2023 he would make the relief scheme more generous, describing pubs as a “cherished community institution”.

applies to Alcoholic beverages such as beer and cider that contain less than 8.5% ABV and can be served on draft.

The tax exemption on them was reduced by 9.2%. Mr. Hunt He said: “We are protecting the price of a pint.”

But beer prices continued to rise.

The Office for National Statistics (ONS) said they rose by 7.5% in January 2024 compared to the same month last year, with prices increasing every month of the year, despite the easing of the draft.

But this increase is still less than the increase in beer sales from stores, which rose 8.6% in the same period.

BBPA figures show that almost the same number of pubs closed in the UK in the second half of 2023 (266) as in the first half (265).

Image source, Getty Images

Childcare is free

One of the biggest measures was additional free childcare.

From April 2024, eligible two-year-olds in England will be entitled to 15 hours a week of childcare during term time – and more than 100,000 working parents have signed up for this.

This will be expanded to include parents of children aged between nine months and two years in September 2024 and then increased to 30 hours per week in September 2025.

There have also been warnings of staff shortages.

BBC analysis estimates that demand is likely to rise by around 15% – the equivalent of more than 100,000 extra children in full-time care once babies as young as nine months old become eligible in September 2025.

Think tank Nesta estimates That around 27,500 early years professionals would be needed in England to achieve this.

The total number of childcare workers in England increased by around 13,000 overall between 2022 and 2023.

that was Driven by an increase In workers in private service providers and school nurseries. However, child carers and staff in voluntary groups continue to decline, with 5,600 fewer people in 2023 than in 2022.

In February, the government launched a campaign to recruit more staff, but early years charities said it was too late to help.

He added: “It is a big change; it may mean that we need to employ an additional 40,000 people in this sector, which is why we are introducing it in phases.”

back to work

One way Hunt said he will boost growth is by helping people get back to work, including those who are not working due to disability or long-term illness.

Its measures included vocational training for people over 50, abolishing the lifetime pension allowance and penalizing benefit claimants who choose not to accept a reasonable job offer.

“Excluding students, there are more than seven million working-age adults who are not in work,” he said.

We asked the Treasury what figures he was quoting and were told they were the figures for December-January 2023, taking all people not in work and subtracting students, although this actually gives a figure closer to eight million.

the Official numbers This number appears to have fallen slightly, but there have been changes in the data which means it is not strictly comparable.

Prepaid meters

Mr Hunt also announced measures on energy bills including preventing people using prepaid meters from paying more for their energy than those who pay by direct debit.

“The energy premium paid by our poorest families is coming to an end,” Hunt said.

He did this in two stages – first he changed the energy price guarantee to temporarily remove the differential.

Then in February 2024, the regulator Ofgem announced As of April, standing fee differences previously paid by those using prepaid meters will be removed.

Investing in business

This means that for every pound a company invests, taxes are reduced by up to 25p.

“The impact on our economy will be enormous,” Hunt said, citing the Office for Budget Responsibility as saying it would increase business investment by 3% a year.

The policy went into effect on April 1, 2023 Level of business investment For all of 2023 it was 6.1% higher than in 2022.

Carl Williams, research director at the Center for Policy Studies (CPS), welcomed the increase, saying: “Business investment has remained flat for years, which has contributed to weak economic growth.”

He said that it was too early to determine the percentage of the increase that was due to full spending, but he expected it to eventually increase by about 1.5% annually.

We have asked the Treasury to comment on the implementation of the 2023 budget measures.

She said: “Our childcare reforms will save parents up to £6,500 on average, and because of our long-term decisions – including cutting taxes for 29 million people and cutting corporate taxes by £11bn – we are expected to add 0.5% more. permanent”. of output to the UK economy and an increase in the number of people in work by around 200,000.”

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More coverage on the 2024 budget