Budget 2023: The key points announced by Chancellor Jeremy Hunt

Jeremy Hunt promised a major expansion in state-funded childcare and tax breaks for businesses in Budget measures aimed at boosting economic growth.

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

In an effort to remove barriers to work, he promised up to 30 hours a week of free childcare for eligible households in England with children as young as nine months, instead of three and four-year-olds under the current policy.

The phased policy, which will be fully introduced by September 2025, will be worth up to £6,500 a year for working families.

He also pledged an expansion in wrap-around care at the start and finish of the school day for parents with older children and changes to staff-to-child ratios in England to expand supply of childcare.

The Chancellor also used the improved economic picture to promise an extension of support for household energy costs.

As part of a package aimed at helping with the cost of living, the Chancellor said the energy price guarantee, which caps average household bills at £2,500, will be extended at its current level from April to June.

At a glance

Here are the main points from Chancellor Jeremy Hunt’s Budget statement in the House of Commons.

• No recession – The Chancellor said the Office for Budget Responsibility (OBR) now forecasts that the UK will not enter a technical recession this year

• Inflation down – The OBR expects inflation in the UK will fall from 10.7% in the final quarter of last year to 2.9% by the end of 2023

• Energy help –  The energy price guarantee will be extended for another three months, and households on prepayment meters will get help as their charges will be aligned with direct debit charges

• Free childcare – The Chancellor announced 30 hours of free childcare for all under-fives from the moment maternity care ends, where eligible

• Nursery funding – Mr Hunt said he also increase funding paid to nurseries providing free childcare under the hours offer by £204 million from this September, rising to £288 million next year.

• School care – Mr Hunt also said he wants all schools to be able to offer wrap-around care either side of the school day by September 2026

• Staff ratio – The minimum staff-to-child ratio will change from 1:4 to 1:5 for two-year-olds in England, though this will remain optional

• Childcare suppliers – The Government will pilot incentive payments of £600 for childminders joining the profession – £1,200 if they join through an agency

• Pension changes – the lifetime allowance limit on pensions to be abolished and the pensions annual tax-free allowance to be increased from £40,000 to £60,000.

• Help for pools – The Chancellor will provide a £63 million fund to “keep our public leisure centres and pools afloat” in response to high costs, and £100 million will be given to support thousands of charities and community organisations

• Draught beer tax change – The draught relief for pubs will see the duty on draught products in pubs up to 11p lower than the duty in supermarkets from August

• Petrol tax frozen – Fuel duty will remain frozen and a 5p reduction will be maintained for a further year

• Potholes fund increased – The Government’s Potholes Fund – which previously provided £500 million a year to councils – will be increased to £700 million in the 2023/24 financial year

• Defence spending – The Government will add £11 billion to the defence budget over the next five years

• Investment zones – There will be 12 new investment zones, and they will potentially be in the West Midlands, Greater Manchester, the North East, South Yorkshire, West Yorkshire, East Midlands, Teesside and Liverpool

• Corporation tax up – The planned increase in corporation tax to 25% will be going ahead, but announced a new policy of “full capital expensing” over the next three years, which will mean every pound invested in IT equipment, plant, or machinery can be deducted immediately from profits

• Business boost – The Chancellor will introduce a new tax credit for small and medium-sized firms that spend 40% of their expenditure on research and development. Tax reliefs for film, TV and video gaming will also be extended

• Green fund – Up to £20 billion will be allocated for the early development of carbon capture and storage

• Back to work – The Chancellor also revealed sanctions reforms aimed at getting people on Universal Credit benefits into work, but for those working low hours the Government will increase the earnings threshold from the equivalent of 15 hours to 18 hours.

• Disabled workers – There will be the “biggest change to our welfare system in a decade”, Mr Hunt said, with reforms aimed at supporting more disabled people into work