SUPPORTING THE COST OF LIVING: UPDATES FROM THE RECENT BUDGET ANNOUNCEMENTApr 04 2023
The UK government has recently made significant announcements on energy costs, childcare, and state pension benefits. The Energy Price Guarantee scheme has been extended until the end of March 2024, giving households and businesses in Great Britain and Northern Ireland access to discounted energy bills. Meanwhile, new childcare initiatives have been introduced to provide working parents with additional support. The State Pension has also seen a significant increase in benefits, with most pensioners expected to receive £10,600 in 2023/24. In this article, we will take a closer look at the latest updates and what they mean for households, businesses, and individuals across the country.
The Energy Price Guarantee (EPG) brings a typical household energy bill in Great Britain down to around £2,500 per year. It has now been announced that the £2,500 EPG will be extended by 3 months to 30th June 2023, before increasing to £3,000 until the end of the EPG period on 31 March 2024. This extra 3 months at £2,500 will be worth £160 for a typical household.
In Northern Ireland, a similar scheme operates, reducing typical household energy bills to around £2,109 per year. This has also been extended at the same rate until 30th June 2023.
A new scheme for businesses, charities and the public sector has been confirmed. The Business Energy Bills Discount Scheme will run until 31 March 2024, giving non-domestic customers discounts on their gas and electricity bills.
Additional support is being provided towards childcare costs in what the UK government describe as a ‘childcare revolution’. This includes 30 hours of free childcare for every child over the age of 9 months, with support being phased in until every eligible working parent of under 5’s gets this support by September 2025.
For Universal Credit claimants, the government will also pay childcare costs in advance rather than arrears, when parents move into work or increase their hours. The maximum they can claim will also be boosted to £951 for one child and £1,630 for two children, an increase of around 50%.
These changes apply in England and we are yet to hear how the Scottish Government plan to spend the Barnett Formula consequential they will receive from this measure applying to England.
Benefits and State Pension
As confirmed in the Autumn Statement 2022, the government will also increase benefits, including the State Pension, paid to recipients in the tax year to 5 April 2024 by 10.1%.
This increase in the State Pension means that most pensioners will receive £10,600 in 2023/24, where they have 35 qualifying years. Individuals are being urged to check their contribution record on their Government Gateway account and consider making Class 3 voluntary National Insurance (NI) contributions in respect of missing qualifying years. Normally it is only possible to make voluntary NI contributions for the past 6 tax years, but until 31 July 2023, it is possible to go back as far as 6 April 2006 and pay additional contributions at the 2022/23 Class 3 rate of £15.85 per week.
In-year Class 3 contributions for 2023/24 will increase to £17.45 per week.