Spring Budget 2023: The verdict on Chancellor Jeremy Hunt’s announcements from political and business leaders in Cambridge
Jeremy Hunt has unveiled his Spring Budget to a mixed response.
While Conservatives cheered changes on childcare and pensions, plus incentives for research and development, Labour and the Lib Dems complained it failed to address the cost-of-living crisis.
You can see our at-a-glance guide to what was announced here.
And here’s what political and business leaders made of the Chancellor’s announcements.
Politics: ‘We needed an A-grade Budget but got four Es’ complains Daniel Zeichner
Jeremy Hunt focused his announcements around four Es: enterprise, education, employment and everywhere.
But Daniel Zeichner, the Labour MP for Cambridge, suggested: "What the country needed today was a Budget worthy of four As but instead it got one of four Es.
“This Budget will do little to help people or businesses in Cambridge. The stop-start economic chaos of the Conservatives has left us all poorer.
“Wages are lower in real terms than in 2010, which is why so many are out on strike, while tech and research businesses increasingly see better opportunities abroad.
“The Tories offer short-term fixes to problems they created - what Cambridge needs is Labour’s long-term green transformation plan which will be good for the economy, good for the planet and good for Cambridge.”
But South Cambridgeshire’s Conservative MP Anthony Browne was impressed, posting on Facebook: “Just coming out of the Budget announcement. Here are some of the top-level highlights for me:
- Changes to research and development tax relief - a huge benefit for our life science companies!
- 30 hours of free weekly childcare for working parents extended to cover children below the age of three
- Abolishing the Lifetime Allowance - previously set at £1.07m - is something I have been discussing with local doctors
- An increase in the Annual Investment Allowance to £1m, meaning 99% of all businesses can deduct the full value of all their investment from that year’s taxable profits
- Duty on a pub pint frozen again - as is fuel duty, with the 5p cut remaining in place and being passed to consumers.
- Nuclear power reclassed as 'environmentally sustainable' - a big indicator for the industry, and on top of £20bn in support for carbon capture, something I have championed nationally.
“In short - three cheers from me! But much more to come for our area specifically as I go through the fine details in the red book - now off to my office to read it through!”
He added that he was “glad to see that the scrapping of the lifetime pensions savings cap has been welcomed by the BMA”.
“It is a tax penalty that has been forcing many doctors around Cambridge to retire early, exacerbating the shortage of doctors and NHS backlogs. It is something I have worked hard on with medical groups and the Treasury to resolve,” said Mr Browne.
Culture secretary Lucy Frazer, the Conservative MP for South East Cambridgeshire MP, tweeted: “Great news for our sectors in today's Budget
- £100 million support package for frontline charities
- £63 million to keep swimming pools afloat across England
- £8.6 million to support Edinburgh’s festival economy
- Extended tax reliefs for theatre, music, museum, TV & film”
But Pippa Heylings, the Liberal Democrat Parliamentary candidate for South Cambridgeshire, was left unimpressed.
“It shows that the Conservative government is completely out of touch with the people in South Cambridgeshire,” she said.
“Despite the biggest fall in living standards since the 1950s there was little to nothing on the cost of living.
“I was outside Addenbrooke's this morning talking to junior doctors who have found themselves having to strike. They deserve more than just a clap. That's why I was shocked to hear nothing new at all in this Spring Budget on fairer pay for our NHS doctors and nurses.
“The Chancellor's refusal to inject more cash into our struggling local health services and crumbling hospitals is shameful.
“Local people tell me it feels almost impossible to see a GP or NHS dentist around here. Local health services are doing what they can but they are struggling more than ever. We can't go on like this any longer.
“Yet again, local people are being taken for granted by the Conservative government with no help with the cost of living or for struggling local health services.”
Business: No investment zone for the East - but leaders welcome full capital expensing
The Chancellor made several moves to encourage investment.
A new policy of “full capital expensing” will be introduced over the next three years, which will mean every pound invested in IT equipment, plant, or machinery can be deducted immediately from profits.
And there will be a new tax credit for small and medium-sized firms that spend 40 per cent of their expenditure on research and development. Tax reliefs for film, TV and video gaming will also be extended, the Chancellor said.
Meanwhile, Cambridge ears pricked up as the Chancellor announced an annual £1million prize for AI research over the next 10 years, called the “Manchester Prize”.
There was, however, disappointment that the East of England missed out entirely on the new investment zones announced.
And the only mention of East West Rail was to confirm that the Bedford-Cambridge route will be confirmed in May.
James Palmer, chair of the Eastern Powerhouse, and former Tory mayor of Cambridgehire and Peterborough, described it as “a budget that was much heralded, delivered in an hour but sadly for the East of England, not offering a great deal in terms of investment and sustenance - 17 mentions for the North, compared to two for the East tells the familiar story for our region”.
He added: “A lot of effort went in to trying to get government to commit to Ely North railway junction, not just by the Eastern Powerhouse but also local government representatives too but it seems that, yet again, we will have to wait; no mention here.
“We do welcome tax breaks and initiatives for important sectors here in the East, life science, green energy, digital technologies and advanced manufacturing. These changes will make a significant difference, particularly to start-ups. The £20bn investment for carbon capture schemes, many of which could be off the East Coast, is a welcome initiative and answers a request put to the energy secretary in a letter from the Eastern Powerhouse last month.
“Of great concern, however, is the lack of an investment zone. Given that almost all the other English Combined Authorities have been allocated a zone, it is hard to fathom why the East has missed out, particularly given the significant opportunity here to build on all of the key industries mentioned in the budget. We can only hope that the new mayoral areas in Norfolk and Suffolk and the potential devolution deal for Essex cultivates future opportunities here.”
He noted “better news for Tendring and East Suffolk, who receive £11m between them for regeneration projects but they are the only recipients in the East” but described it as “overall, a very mixed bag that underlines the lack of a strategy for the region”.
Mr Palmer concluded: “The East could do so much more than the government currently recognises. We will continue to lobby Westminster for strategies to be produced that will better inform them for future Budgets.”
Richard Tunnicliffe, CBI East of England Director, said: “Our first-class universities are a catalyst for growth and an investment zone would’ve provided them much needed funding and support for R&D.
“There will also be some disappointment among businesses in the East of England not to see any announcements on East West Rail.
“Companies wanting to grow and invest in our area will want to see the government is committed to growth right across the UK and has policies to deliver on that."
Matthew Fell, CBI interim director-general, said: “This Budget is a strong second act in the Chancellor’s plan for stability and growth.
“The CBI called for action on people and productivity and the government has delivered support for both. Measures to help households and businesses will secure the growth we need to boost living standards for all.
“Full capital expensing will keep the UK at the top table for attracting investment and puts us on an essential path to a more productive economy.
“Boosting childcare provision is a big win for businesses struggling to recruit and retain, and parents balancing care and career needs.
“Alongside support for occupational health to help people stay in work, it shows the Chancellor is listening to business on reducing economic inactivity and easing a tight labour market.
“New investment zones focused on economic clusters will drive growth across the country and increased support for quantum is a further step towards making the UK the science and technology superpower it aspires to be.
“Giving the go-ahead to carbon capture and nuclear are important steps that will keep the UK’s green growth story on track. With our closest rivals raising their game on green growth, moving further and faster in the months ahead is key.”
James Brown, managing partner at Grant Thornton UK LLP in the East of England, said: “This was a Budget without fireworks. Mid-market businesses called for measures that would ensure stability and certainty and that’s what we got.
“Replacing the Super Deduction with a tax incentive that goes further – allowing all businesses, irrespective of size, to write-off 100% of their investments in plant and machinery against their tax bill – is a strong statement towards encouraging investment.
“This, and the £1.8bn package of support for SMEs investing in R&D, should go a little way towards sugaring the bitter pill of the incoming rise in Corporation Tax.
“The lack of new investment zones in the East of England is disappointing, however. Levelling up is a UK-wide challenge but this will do little to dissuade businesses that it is more than a policy for the North.”
Chris Sanger, EY’s head of tax policy, said: “This is an incentives-based, help-yourself Budget, where business is asked to do as the Chancellor directs to get the reliefs on offer. Whether you’re a big business investing and getting full expensing, a small business spending 40 per cent of more on R&D or a company investing in a designated zone, you’ll benefit from the Chancellor’s announcements today. Otherwise, businesses are left with a corporation tax rate that increases to 25 per cent from April.
“The largest of these new measures is the immediate capital expensing, costing over £10bn in 2024-25. The Chancellor has delivered this for three years and vowed to extend when it can be afforded. This measure helps the Chancellor to balance his books and actually generates extra tax receipts in 2027-28 as the timing effect reverses, but uncertainty over the longevity may limit the effectiveness.
“These large projects take time to become ‘shovel ready’, not least due to planning and other requirements. The sooner the Chancellor can achieve his aspiration and reassure businesses that this incentive will cover projects with long lead times, the greater the investment the UK is likely to attract.”
