Budget 2023 for pensions and families: Lifetime tax-free pension allowance scrapped and free childcare boost in ‘back to work’ budget
Jeremy Hunt has abolished the lifetime tax-free pensions allowance and introduced free childcare for youngsters under three in a budget aimed at getting people back to work.
The chancellor announced his budget plans on Wednesday to get older people back in work and to help parents, mainly women, who cannot afford to go back to work due to high childcare costs.
For older people – who he said he preferred to describe as “experienced” – Mr Hunt has increased the annual tax-free pension allowance and abolished the Lifetime Allowance.
Click here for our budget calculator to see if you are better or worse off
The changes to pensions are:
• Annual tax-free pension savings allowance increased by 50% from £40,000 to £60,000
• Lifetime Allowance on pension savings scrapped so people will now be allowed to put aside as much as they can in their private scheme without being taxed (currently a £1m threshold)
Read more on the budget:
Budget live: Hunt announces ‘crowd pleasers’ – as pension and childcare changes go further than expected
The key points of Chancellor Jeremy Hunt’s speech
There will be no tax-free limit on private pensions
On childcare, Mr Hunt announced:
• Ratios of two-year-olds to staff at nurseries can be increased from 1:4 to 1:5 – this is optional
• Parents on Universal Credit who are moving into work will have their childcare costs paid upfront by the government
• The maximum Universal Credit parents can claim will be increased to £951 for one child and £1,630 for two children – an increase of almost 50%
• Schools and local authorities will be funded to increase wraparound care so parents can have their children looked after between 8am and 6pm by September 2026
• In households where all adults work at least 16 hours, every child from nine months old to school age will get 30 hours of free childcare per week by September 2025
There will be a staggered introduction:
• 15 hours of free care a week for two-year-olds, from April 2024
• 15 hours of free child care for all children from nine months and up, from September 2024
• The free child care will not apply to those who work less than 16 hours a week, those studying or training.
The timetable for free childcare may never be realised
Jeremy Hunt’s childcare announcement is the rabbit out of a hat it was billed to be – 30 free hours for children from the age of nine months to the start of school.
But before parents of toddlers get excited about saving some of the eyewatering costs, take a look at the timetable.
Working parents of two-year-olds will get half of that – 15 subsidised hours – in a year’s time, from April 2024.
An election is expected that summer or autumn, with a deadline of January 2025.
And the full policy – including the most expensive bit, which is free hours for babies who have the highest staff-to-child ratios at one adult for every three children under two – will not be delivered until well after the election, in September 2025.
If Labour are in power then, they will need to find the money to deliver it. Their shadow education secretary Bridget Phillipson has already said Labour’s plans for a modern childcare system would not involve the “free hours” system which she says fails parents and providers.
The Office for Budget Responsibility, which provided a financial forecast alongside the budget, said the childcare changes would mean around 60,000 parents of young children would enter employment by 2027-28.
Talking at a nursery after delivering the budget, Mr Hunt admitted many more nurseries and childminders are needed to fulfil the 30 hours commitment.
“We’re willing to start it as soon as possible, but the advice we’ve had is this is such a big change in the market that it wouldn’t be possible to do it overnight,” said the chancellor.
While the Tories lauded the announcements as Mr Hunt’s “rabbit out of the hat” moment of the budget, childcare providers had a mixed reaction.
Neil Leitch, CEO of the Early Years Alliance, said changing the staff-to-child ratios is “appalling” and it is an economic decision that parents and teachers do not want.
“It’s not just about economics, children are not commodities, we’re talking about children’s lives,” he told Sky News.
He added that there is currently not enough funding for three and four-year-olds, who are entitled to some free childcare already, so this will simply place more pressure on providers.
“They should have done this a long time ago, parents are on their knees, providers are on their knees,” he said.
Jeremy Hunt visited a nursery in Battersea after delivering the budget. Pic: Rory Arnold / No 10
Joeli Brearley, founder of Pregnant then Screwed, said the campaign group is “really pleased in the significant investment” in the childcare sector as it will make “an enormous difference to parents who are really struggling to pay for those eyewatering fees”.
However, she said they are concerned about the strategy for workers who are “leaving in droves” due to being paid “appallingly badly” due to years of underfunding.
“Without the workforce, those places are impossible to deliver,” she told Sky News.
“There’s no point in rolling out free hours if we don’t ensure the providers can deliver them.”
Please use Chrome browser for a more accessible video player
Mums react to free childcare news
Labour hit out at the pension plan, with Sir Keir Starmer saying: “The only permanent tax cut in the budget is for the richest 1%. How can that happen?”
He accused the Conservatives of a plan for “managed decline, Britain going backwards, the sick man of Europe once again”.
“After 13 years of Tory sticking plaster politics… working people are entitled to ask am I any better off than I was before?” he said.
“The resounding answer is ‘no’ – and they (Tories) know it.”
Mr Hunt said he had decided to make the pension changes in reaction to senior NHS clinicians saying unpredictable pension tax charges are making them leave the NHS early “just when they are needed most”.
“I have realised the issue goes wider than doctors. No one should be pushed out of the workforce for tax reasons,” he said.
Business
‘Absolutely gutted’: £16,500 Glastonbury packages won’t be fulfilled after company goes bust
Glastonbury ticket holders have been left thousands of pounds out of pocket after a luxury glamping company went bust.
Festival-goers who booked their tickets and accommodation with Yurtel have been told the company can no longer fulfil its orders and has ceased trading with immediate effect.
Money: Read all the latest news here
Some had spent more than £16,500 through Yurtel, with hospitality packages starting at £10,000.
In an email, Yurtel said it was unable to provide customers with any refunds, advising them to go through a third party to claim back the money once the liquidation process had started.
To add insult to injury, customers found out that Yurtel had failed to purchase the tickets for the 25 -29 June festival that they thought had been booked as part of their packages.
In a letter to customers, Yurtel’s founder Mickey Luke said: “I am deeply sorry that you have received this devastating news and am writing to apologise.
“Yurtel is a hospitality business who pride themselves on looking after our customers, delivering a unique product and striving to create a better client experience year on year. Due to a culmination of factors over the past years, we have failed to be able to continue to do so and are heartbroken.”
The Money blog has contacted Yurtel to see if the business has anything to add.
Several people have also reported that they were unable to pay by credit card at the time of booking, with the company instead asking for a bank transfer.
This means they are unable to use chargeback to get a refund. You can read more about that here…
Pic: PA
‘I feel really ripped off’
One of those customers was Lydia, who told Money she was “absolutely gutted” after spending thousands.
This year’s festival was “really important” to her as she was forced to miss out last year despite having tickets due to a health issue that left her needing an operation.
“We tried to get Glastonbury tickets through the normal kind of route and couldn’t get them,” the accountant said.
She ended up booking with Yurtel in November, sending over all the funds a month later.
“It’s super expensive. It was really, really important to us. Last year was gutting with the surgery and the whole situation around that was very traumatic, so it was a very special thing to then get the opportunity to go this year. It’s really gutting,” she said.
“I feel really ripped off and I’m really disappointed in the festival, to be honest. I think that response is just pretty rubbish.”
More from Money:
Chef’s top steak tip
Secrets of a London cabbie
How roaming fees compare by network
Yurtel did not pay for festival tickets, Glastonbury says
Glastonbury said Yurtel was one of a small number of campsites local to the festival site – Worthy Farm – with limited access to purchase hospitality tickets for their guests in certain circumstances.
But, it had not paid for any tickets for the 2025 festival before going into liquidation, and so no tickets were secured for its guests, it added. Every year, Glastonbury’s website says that ticketing firm See Tickets is the only official source for buying tickets for the festival.
“As such we have no records of their bookings and are unable to take any responsibility for the services and the facilities they offer,” the festival said.
“Anyone who has paid Yurtel for a package including Glastonbury 2025 tickets will need to pursue any potential recompense available from them via the liquidation process as outlined in their communication to you.
“We are not able to incur the cost or responsibility of their loss or replacement.”
Instead, the festival has urged Yurtel customers to contact Yurtel@btguk.com to confirm their consent for personal data and details of their party to be shared with Glastonbury.
“We will then be able to provide details of alternative potential sources for those customers to purchase tickets and accommodation for this year’s festival,” the festival added.
‘Only option’ on offer is ‘pretty weak’
Lydia said she agreed for her details to be passed on to Glastonbury, and the festival has told her the only option is to pay for the tickets again from another provider.
“They are not giving us the opportunity to buy the tickets at face value. We would then have to go again and spend another stupidly unreasonable amount of money to be able to go. It’s pretty disappointing,” she added.
“It’s pretty weak that the only option they’re giving people who’ve already lost out on huge amounts of money is to go and spend huge amounts more money.”
It’s left her feeling like she won’t go to the festival this year – and she’s not hopeful about getting her money back.
She said: “To be honest, I just don’t think I can afford it.
“It’s already so much money wasted, and I’m not at all optimistic we’ll get anything back.”
Business
Federal judges rule Trump tariffs can stay in place for now – as president rages at trade court’s ‘country threatening decision’
A federal appeals court has ruled that Donald Trump’s sweeping international tariffs can remain in place for now, a day after three judges ruled the president exceeded his authority.
The Court of Appeals for the Federal Circuit (CAFC) has allowed the president to temporarily continue collecting tariffs under emergency legislation while it considers the government’s appeal.
It comes after the Court of International Trade blocked the additional taxes on foreign-made goods after its three-judge panel ruled that the Constitution gives Congress the power to levy taxes and tariffs – not the president.
The judges also ruled Mr Trump exceeded his authority by invoking the 1977 International Emergency Economic Powers Act.
The CAFC said the lower trade court and the Trump administration must respond by 5 June and 9 June, respectively.
Trump calls trade court ‘backroom hustlers’
Posting on Truth Social, Mr Trump said the trade court’s ruling was a “horrible, Country threatening decision,” and said he hopes the Supreme Court would reverse it “QUICKLY and DECISIVELY”.
After calling into question the appointment of the three judges, and suggesting the ruling was based on “purely a hatred of ‘TRUMP’,” he added: “Backroom ‘hustlers’ must not be allowed to destroy our Nation!
Please use Chrome browser for a more accessible video player
Trump asked about ‘taco trade’
“The horrific decision stated that I would have to get the approval of Congress for these Tariffs. In other words, hundreds of politicians would sit around D.C. for weeks, and even months, trying to come to a conclusion as to what to charge other Countries that are treating us unfairly.
“If allowed to stand, this would completely destroy Presidential Power — The Presidency would never be the same!”
The US president unveiled the controversial measures on “Liberation Day” in April, which included a 10% tariff on UK imports and caused aggressive sell-offs in the stock market.
Mr Trump argued he invoked the decades-old law to collect international tariffs because it was a “national emergency”.
Please use Chrome browser for a more accessible video player
From April: ‘This is Liberation Day’
Tariffs ‘direct threat’ to business – Schwab
The trade court ruling marked the latest legal challenge to the tariffs, and related to a case brought on behalf of five small businesses that import goods from other countries.
Jeffrey Schwab, senior counsel for the Liberty Justice Center – a nonprofit representing the five firms – said the appeal court would ultimately agree that the tariffs posed “a direct threat to the very survival of these businesses”.
Read more:
Trump reduces Chicago gang founder’s sentence after Ye lobbying
‘I was going to die with this’: Ex-Diddy assistant breaks down
Trump furious over ‘TACO’ dig – what inspired the phrase?
Listen to The World with Richard Engel and Yalda Hakim every Wednesday
US treasury secretary Scott Bessent also told Fox News on Thursday that the initial ruling had not interfered with trade deal negotiations with partners.
He said that countries “are coming to us in good faith” and “we’ve seen no change in their attitude in the past 48 hours,” before saying he would meet with a Japanese delegation in Washington on Friday.
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports1 year agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business3 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway