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Key announcements from the Spring Statement

15 March 2023

The Chancellor of the Exchequer, Jeremy Hunt, has today announced the government’s Spring Statement and the Office for Budget Responsibility fiscal plan for the next year. Anticipation for this budget has been building over a number of weeks, as we head into another year in the aptly named cost of living crisis.

Many business owners will be looking to today’s announcement in the hope that further measures will be available to them to support their business through a crisis which continues to impact business and personal finances equally. Read on to find out more about the key announcements from today’s budget which could impact your business over the coming months.

Downing street
The key announcements from the Spring Statement are listed below, including changes to policy and support packages which have been announced. Some of today’s announcements were very much expected, whilst others will certainly be a surprise for many business owners. The announcements give us clear insight into how the government plans to restart the country’s economy which has been struggling as a result of turmoil, including several political changes, a health crisis and an energy crisis. This economic plan hopes to provide a better and more fruitful outlook for UK businesses, although it seems for now at least, there’s still a long road ahead despite Mr Hunt announcing that the UK is no longer expected to head into a recession later this year, with the economy forecast to grow 1.8% next year.

Perhaps one of the most talked about topics prior to today’s announcement is a proposed extension to the governments energy price guarantee, which has now been extended for a further three months. Prior to this announcement, average energy bills were set to rise by an additional £500.00, costing the average household £3,000.00 per year.

It is expected that by July 2023, as a result of falling energy prices the average energy bill will drop below the current price cap which is why the government has only announced this extension until June. In addition to this there will also be a cut to fuel duty, something which has been announced by every chancellor since 2011. The 5p per litre cut which was announced by Rishi Sunak in March 2022 will continue this year. For businesses specifically, Mr Hunt announced a national ambition to reduce energy use and announced further funding which can be used to help support businesses in their drive towards net zero.

The Chancellor has announced a multibillion pound expansion of childcare provision to parents of one and two year olds. Parents of very young children will be entitled to 30 hours per week of free childcare. Prior to this announcement, only parents with three year old and four year old children would be eligible for this. The government has also proposed a £288m increase in the existing free childcare funding which they expect to be available by 2024-25.

This announcement could have a significant impact on small businesses, mostly by allowing for more parents to enter work or start to work longer hours. Likewise, investment in the childcare sector will be welcomed by those businesses and services who provide for it. 

Today the treasury has announced a new programme designed to get early retirees back into work in order to address problems with gaps in the labour market. Skills and training will be offered to over-50s with the aim to reskill people to help boost employee availability in areas such as construction and technology. This is part of a bigger focus by The Chancellor to get ‘Britain back to work’ to help reboot the economy.

Further investment in talent pools and the opportunity to recruit experienced people may be welcomed by businesses, especially those which operate within the construction and technology industries. Funding will also be provided to disabled people who are able to work but are currently unemployed to help them gain the necessary skills and access in order to get into work.

Pension tax reforms and new tax-free allowances have also been announced in order to encourage people who are close to retirement age to work longer with the view to keep paying into their pension and boost its value ahead of retirement. 

A heavily debated topic and one which many business owners had predicted would happen. Corporation tax is set to rise by 6%, from 19% up to 25%. This will impact businesses with profits of more than £250,000.00 per year. Businesses who profit between £50,000.00 and £250,000.00 will receive relief on this tax. Businesses who profit less than £50,000.00 will remain on the previous 19% corporation tax rate. The announcement stated that less than 10% of companies would pay the full 25% rate.
Mr Hunt announced that business investment in IT equipment, plant and machinery will now be deductible from taxable profit by UK businesses in a bid to create a better tax climate for business owners and investors. Other credit policies have also been announced for small and medium sized businesses who may be able to receive funding when they invest in areas such as science, research and technology.

The Chancellor has also announced 12 investment zones which are set to receive additional funding and tax relief over the next five years. These zones include areas such as Greater Manchester, Liverpool and Yorkshire, as well as other zones across England, Wales, Scotland and Northern Ireland. This aims to assist with business growth in those areas, putting money into the local infrastructure to make it more attractive for businesses and customers alike. The Chancellor referred to these zones as ’12 potential Canary Wharfs’.

Further environmental investment has also been announced as part of the governments drive towards net zero, which includes the announcement of a 20-year plan for carbon capture, which could create up to 50,000 skilled jobs.

Today’s announcement included confirmation that the treasury will be providing a £65m fund to help keep leisure centres and community swimming pools open which have felt the brunt of rising energy costs as a result of high running costs. This investment is designed to ensure people have access to such facilities in their local communities but also aims to stop community sports and leisure centres from closing, in turn protecting local jobs.

One of the biggest announcements of the day came as The Chancellor introduced Great British Nuclear and a plan to boost the UK’s nuclear industry in order to sure up power security in the wake of the on-going energy crisis. Great British Nuclear aims to provide new jobs for people and new opportunities for businesses in the science and technology industries.

In addition to providing jobs and opportunities for businesses, this also falls into part of the government’s charge for net zero and has been announced to reinforce the treasuries drive towards investing in the environment.

Overall, the treasuries spring statement delivers an optimistic outlook, starting with an announcement that the UK is no longer expected to enter a recession in the new year. According to The Chancellor, the economy is expected to see growth next year. Plans to boost the labour market and to provide financial assistance to businesses who invest in certain industries will be welcomed by many businesses, however as it stands the world remains a very uncertain place, even with growth now firmly the focus for The Chancellor.

For more information on today’s budget announcement, the support available to businesses and the UK’s fiscal plan, visit gov.uk.

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