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Spring Budget update March 2023

March 16, 2023 – Wendy Alcock
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Like most years, news reports over the last few days may have drip fed us most of the announcements we heard in today’s Spring Budget but, on the day, there’s often a little more devil in the detail.

The themes of the Budget were split into what the Chancellor described as his four E’s - Employment, Education, Enterprise and Everywhere (i.e. levelling up) – his key priorities to support the country’s economic growth.

After listening to the Chancellor’s speech and ploughing through the supporting documents I’ve listed the policy changes I think you’ll find useful below.

Help with childcare costs

The extra help to cover increasing childcare costs being made available to working parents claiming Universal Credit are threefold:

Increased free hours for children under three

For parents in England working over 16 hours a week (if in a couple, both will need to be working these hours) they will eventually be able to receive up to 30 hours free childcare a week for 38 weeks a year.

This will be rolled out in stages with dates varying by a child’s age so nurseries have time to plan for the increase in demand, although we know this is easier said than done because the sector is already struggling. The stages are:

  • From April 2024, all working parents of 2-year-olds can access 15 hours childcare a week
  • From September 2024, all working parents of children aged 9 months up to 3 years old can access 15 hours childcare a week
  • From September 2025 all working parents of children aged 9 months up to 3 years old can access 30 hours free childcare a week

At the moment, families get free childcare for 38 weeks for three and four years olds, either for 15 hours a week or 30 hours a week based on their circumstances. Some families can receive 15 hours a week for some two year olds.

Increased maximum amounts per month

From July 2023 the maximum amount of help available with childcare costs under Universal Credit will be increased to £951/month (from £646) for one child and £1,630/month (from £1,108) for two or more children.

The maximum childcare costs amount has not increased since the inception of UC nearly ten years ago, and was itself based on the tax credit limit that was set in 2005, which partly explains the 47% increase now. The monthly amounts will also be increased by CPI inflation each year until 2027/28.

Helping to pay for childcare in advance

From the summer of 2023,when a parent moves into work or is increasing their hours, they will be able to claim for help with their first month’s childcare costs before having to pay for their childcare. At the moment, fees usually need to be paid upfront and reclaimed.

On the flip side of this earlier and increased financial support, lead carers of young children (aged 1 and 2) will need to meet a work coach so that they can prepare for returning to work, and parents of older children (aged 3-12) will need to look for work or increase their hours to meet their claimant commitment.

Helping more people into work

Another area that came under the Employment theme was helping the 7 million working age adults (excluding students) who are not currently in work.

We’d heard faint whispers of changes to the Universal Credit taper rate and/or work allowance, which would allow earners to keep more of their earnings, but unfortunately this was not included.

Again, there were three main announcements of interest:

Disabled people

A new policy paper called Transforming Support: The Health and Disability White Paper was released at the same time as the Budget. The paper outlines the government's plans to help more disabled people (and people with health conditions) to start, stay and succeed in work.

As a White Paper, the policy areas included could take years to be implemented (if they ever are) but the main idea is that the assessment of the level of an individual’s disability will be separated from whether they are working, so that disabled people will be able to work if they want to without fear of their benefits being adversely affected.

The headline announcement in the White Paper is that the Work Capability Assessment (WCA) will be abolished for disabled people making new claims for Universal Credit. This was described by the Chancellor as the biggest reform to the welfare system in a decade.

At the moment people need to have a WCA and be found too ill to work in order to receive a higher level of help from Universal Credit, but the proposal is to link this to their existing disability benefits instead, which they will have already passed an assessment for.

Like most policy amendments there are winners and losers of these changes, but it’s still early days and so we will be watching this space as the paper is debated over the next few months/years.

A new voluntary scheme called ‘Universal Support’ also intends to help up to 50,000 disabled people a year find more work.

Over 50 year olds

The number of people in this age group who are not working is increasing (it is currently 8% higher than the level before the pandemic) and so the government are responding through expanding the ‘mid-life MOT’ scheme and by creating a new ‘Returnership’ scheme (think Apprenticeships for older people).

People without health conditions

Those in the ‘All work-related requirements’ group of Universal Credit will have their Administrative Earnings Threshold (the minimum amount they can earn without needing to have increased meetings with their work coach) increased from the current equivalent of 15 hours of earnings at the national living wage to 18 hours.

This is one reason the government expect sanctions to increase and have planned accordingly for this in their costings (including paying for more training for work coaches to ensure they are applying sanctions effectively). Sadly, this is despite evidence suggesting sanctions are not an effective way of encouraging people to increase their earnings.

The AET rules for couples are also changing. At the moment couples need to earn the equivalent of 24 hours of earnings at the national living wage between them, but this is being removed so that each person will need to meet the new 18 AET rules individually.

Help with household costs

The only announcement here was that the current Energy Price Guarantee (EPG), which places a limit on the amount we can be charged per unit of gas or electricity, is being extended for three more months.

The EPG currently subsidises a typical household’s energy bill limiting it to £2,500 a year, but this was planned to increase to £3,000 from April 2023. The typical bill amount will now remain at £2,500 until the end of June 2023. From July, households will pay the lower of the Ofgem Price Cap or the £3,000 typical EPG until the end of March 2024.

One change we had hoped to see, but which was regrettably missing, was a revisit of November’s announcement to the freezing of the Local Housing Allowance for private renters. The freeze will remain and so private renters may not have increases in rent covered by their benefits in the new year. If this applies to you, you may be able to apply for a (Discretionary Housing Payment} from your local authority to cover any shortfall.

Other areas announced

And, finally, a few less shouted about changes before I wrap up this year’s review:

Surplus earnings

The current £2,500 surplus earnings threshold for Universal Credit (above which excess earnings can be carried forward into a later assessment period) will stay in place for another year. It was planned to reduce to £300 at some point but the policy of a much higher limit has in practice been extended each year.

Transitional element for Severe Disability Premium (SDP) claimants

This top up payment for people who were getting an SDP before being moved to Universal Credit will be increased by CPI inflation in April 2023 and each year until 2027/28. The payment has so far been £120, £285 or £405 per month (without increasing each year) based on circumstances (see our Transitional Element help page for more info).

For further info on the Spring Budget see the Spring Budget supporting and related documents on

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