CHANCELLOR Jeremy Hunt yesterday unveiled a bumper package of childcare support in his Budget designed to get Britain working.
But he sparked an angry backlash over handing the wealthiest earners a £3.8billion tax cut on their pensions to stop just 15,000 of the over-50s retiring early.
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Vowing to “tear down the barriers” that stop people working, Mr Hunt extended the 30 hours a week of free childcare to all youngsters from nine months old until they start school.
It marks a huge expansion of the scheme, currently only available to three and four-year-olds — and will save eligible working mums and dads an average £6,500 a year.
The staggered policy — to fully kick in by September 2025 — is hoped to encourage 60,000 parents into employment and make a dent in the country’s record vacancies.
Hailing the £4billion giveaway, Mr Hunt said: “I don’t want any parent with a child under five to be prevented from working.
“It is damaging to our economy and unfair, mainly to women.”
Campaigners welcomed the changes last night, with Mumsnet boss Justine Roberts declaring it “hugely significant”.
Pregnant Then Screwed founder Joeli Brearley added: “Parents of young children felt ignored but this will restore their faith in democracy, so we thank ministers for hearing our cry.”
It comes alongside an increase in childcare allowance for parents on Universal Credit from £646 a month for one child to £950, and from £1,108 for two to £1,630.
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Payments will be made upfront rather than in arrears — in a win for The Sun’s Make Universal Credit Work campaign.
Nurseries will be given flexibility to loosen staff-to-child ratios from 1:4 to 1:5 to ease crippling costs.
To recruit more childminders, a pilot scheme will give new staff a sign-on bonus of £600, or £1,200 if they register with an agency.
An extra £289million will be injected to fund childcare provision in schools from 8am to 6pm.
Mr Hunt, who visited Busy Bees Nursery in Battersea, South London, after his Budget, said the measures were the most significant in a decade and would “build a childcare system comparable to the best”.
He added: “We have one million vacancies and over seven million adults of working age not in work.
“That is a potential pool of seven people for every vacancy.
“We believe work is a virtue.
“We agree with the road haulage king Eddie Stobart who said: ‘The only place success comes before work is the dictionary’.”
To encourage over-50s not to retire early, he announced an expansion of skills boot camps, mid-life MoTs and tailored short apprenticeships to help them retrain — dubbed “returnerships”.
But he sparked a row with a controversial policy to let high earners save an unlimited amount into their lifetime pension tax free.
The Chancellor faced fury for ditching the lifetime pensions allowance, which stood at £1.07million, in a bid to get senior doctors to carry on working in the NHS.
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Mr Hunt told MPs more than 80 per cent of health service doctors would no longer receive a tax charge as a result of the changes and it incentivised the most experienced to stay in the job longer.
Measures also include hiking the annual allowance people can put in their pension pots tax free from £40,000 to £60,000, to keep workers clocking on for longer.
By 2026/27, those giveaways will cost the Treasury over £1.1billion, but there was scepticism over how many people would stay working.
Shadow Chancellor Rachel Reeves said last night: “A hand-out for the richest one per cent and their pension pots shows how out of touch this government is.
“Instead of boosting growth and helping ordinary working people with taxes, this is the choice they make. Outrageous.”
Labour said big earners with a £2million pension pot will get a tax cut of £275,000 when they take out their tax free lump sum.
Institute for Fiscal Studies director Paul Johnson said it would “encourage a relatively small number of better-off workers to stay in the workforce a bit longer”.
And former pensions minister Steve Webb said raising the limit would be like using a “sledgehammer to crack a nut”, to stop medics leaving the NHS.
But Dr Vishal Sharma, chairman of the BMA pensions committee, said: “Scrapping the lifetime allowance will be potentially transformative as senior NHS doctors will no longer be forced to retire early.
“The rise in the annual allowance will mean far fewer doctors will receive large punitive pension tax bills and will significantly reduce the perverse incentive to reduce hours due to pension tax.”
ENERGY BILL RELIEF: £2,500 CAP KEPT ‘TIL JULY
FAMILIES will save another £160 after ministers kept energy bill help in place for another three months.
The Chancellor said he will scrap a planned rise in the Energy Price Guarantee, keeping it at £2,500 until July for typical households.
After that, costs are set to tumble below the cap, with the average household bill expected to be £2,200 by the end of the year.
But businesses reacted with fury after Jeremy Hunt ruled out further assistance for them.
He also confirmed yesterday that, from April 2024, energy firms will no longer be able to charge extra fees for people with prepayment meters. The move will cut costs for millions by around £45 a year.
LIVING STANDARDS: SPARE CASH IN RECORD FALL
LIVING standards in the next two years are set to see the biggest fall since records began.
Real household disposable income will drop by nearly six per cent by the end of 2024, according to the gloomy predictions.
Economists blamed the struggling economy, high energy bills and wages failing to keep up.
Meanwhile, the tax burden is rising to record post-war highs — reaching 37.7 percent of GDP by 2028. Only Germany has suffered a bigger tax rise.
Thankfully, inflation is set to tumble from 10.1 per cent now to 2.9 per cent by the end of 2023.
And in a glimmer of hope, the UK is expected to dodge a recession.
DEFENCE SPENDING: £11BN EXTRA ‘STILL TOO LOW
DEFENCE cash will rise by £11billion over the next five years — but top brass fear it is still not enough.
Only £5billion will be handed over in the next two years, half of what Defence Secretary Ben Wallace had asked for.
He was desperate to stop soaring inflation eating into the defence budget.
Army chiefs say they are worried the cash will not be enough to reverse years of Armed Forces cuts. Of the new money, £3billion will go to the UK’s Aukus nuclear submarine pact with Australia and the US.
The remaining £1.9billion is earmarked for replenishing the weapons stockpile, particularly replacing arms sent to Ukraine to fight Russia’s invasion.
BOOZE AND FAGS: BEER CHEER, WINE WHINE
THE duty on pints pulled in pubs will be 11p lower than for beer sold in supermarkets.
The Chancellor said the move was part of a new “Brexit pubs guarantee”.
He said: “British ale may be warm, but the duty on a pint is frozen.”
But tax on other alcohol will soar by 10.1 per cent in line with inflation.
Diageo GB’s Nuno Teles, said the move was a hammer blow, especially for the Scotch industry that supports tens of thousands of jobs. He added: “We urge the Chancellor to reverse this punitive and inflationary tax hike.”
Ending an alcohol duty freeze will also put up a bottle of wine by 44p.
A packet of cigarettes will rise to £14.39, with a two per cent levy on pre-rolled tobacco products.
BUSINESS TAXES: BIG WHACK… WITH BREAKS
BUSINESSES will be given huge tax breaks on their investments despite the rate of corporation tax being raised next month.
Entrepreneurs can use a new scheme where every pound used to buy items such as machinery or IT equipment can be deducted from taxable profits.
The government claims the full expensing rule, which will initially be brought in for three years, is the equivalent of a corporation tax cut worth £9billion a year.
Chancellor Jeremy Hunt told MPs without the move the UK would have “fallen down international league tables on tax competitiveness”. He said the UK will still have the lowest corporation tax rate in the G7.
GROWTH IS BETTER: RECESSION DODGE RELIEF
BRITAIN is expected to dodge a recession this year — but analysts argue the Chancellor’s so-called Budget for growth will fail to reinvigorate the sluggish economy.
Jeremy Hunt said the Government was “proving the doubters wrong” as he revealed more upbeat forecasts from the Office for Budget Responsibility.
The OBR now expects the economy to contract by just 0.2 per cent, compared with its previous estimate in November of a 1.4 per cent dip. This means the UK economy will avoid a technical recession which requires six months of shrinking.
Mr Hunt said the boost to forecasts was because of changing international factors. The economy is expected to grow by 1.8 per cent in 2024.
