The House was predictably packed for Chancellor Jeremy Hunt’s first Spring Budget on Wednesday last week. Unsurprisingly, the statement was, overall, a relatively quiet affair. The global economy is, after all, still fragile. This was evident from the collapse, a few days earlier, of the US Silicon Valley Bank, followed a few days later by two other American banks and then, shockingly, by the near-failure of Credit Suisse, one of the world’s most powerful financial institutions, which was rescued only by a forced marriage with its principal Swiss rival, UBS.
No, this was no time for fiscal pyrotechnics; and, broadly speaking, there weren’t any. That is not to say there was no good news. The latest forecast from the Office for Budget Responsibility (OBR) indicated that wholesale energy prices, which have been so problematic since the Russian invasion of Ukraine, are now expected to average £1.50 per therm in 2023, less than half the £3.40 predicted as recently as last November. The consequence, says the OBR, will be that the predicted contraction of the economy will be no more than 0.2 percent, giving the Treasury more fiscal headroom than anticipated.
The Chancellor was thus able to extend the Energy Price Guarantee at £2,500 to June – a move that will be welcomed by householders. Energy costs are then expected to moderate anyway, reflecting the rapid fall in wholesale prices since the beginning of the year. A welcome additional move was the reduction of energy prices for those with prepayment meters to the level paid by direct debit customers.
England-only measures that will also be hugely welcomed included the expansion of free childcare to working parents of nine-month to two-year-old children. Importantly, this should see the return of more parents to the workforce. The measure will result in Barnett consequentials for the Welsh Government, who should urgently adopt the policy in Wales.
There was more good news for North Wales with the announcement of an allocation of up to £20 billion of support for the early development of carbon capture and storage, an innovative intervention aimed at addressing climate change. One of the first projects to benefit from the funding will be located in North Wales, which will thereby share in the 50,000 green jobs predicted to be created.
I was one of the many Conservative MPs calling for the increase in Corporation Tax scheduled for April to be shelved. The Chancellor, however, decided to proceed with it, but to sugar the pill by allowing full expensing for capital investment. This will be welcomed by capital-intensive industries and should result in a degree of stimulation for the business engaged in producing the assets that will qualify for the 100 percent capital allowances. The measure will be in place for three years, at the end of which it must be hoped that the predicted economic growth will allow the Chancellor to move to the lower tax regime expected of Conservative Governments.