Chancellor announces first Budget with Energy Price Guarantee extension and childcare reforms

Chancellor Jeremy Hunt announced his first Budget on 15 March 2023, six months after taking the job¹. The Budget extends the Energy Price Guarantee by three months to the end of June, restructures Universal Credit childcare payments so that help with costs is given in advance, adds five construction occupations to the Shortage Occupation List and scraps Work Capability Assessments¹.

The Bevan Foundation, an independent Welsh think tank, said the energy decision "will come as a relief to many" and that if energy price forecasts are correct and prices fall over the summer, the worst of any increases may be behind households¹. It added that the extension will not lead to an immediate reduction in the cost of gas and electricity from levels that saw 39% of people in Wales report going without heating in the three months to January¹.

On childcare, the foundation said the current system, in which low-income parents pay in advance and claim back fees, "is not fit for purpose"¹. It said moving to advance payment "will remove barriers to work" and give more children access to childcare's educational benefits¹. It remains to be seen whether the extension of universal free childcare to children aged 9 months to 2 years will be introduced in Wales¹.

The foundation said scrapping Work Capability Assessments could make it easier for disabled people to return to work without fear of losing their benefit, but that introducing the change will be complex¹. On immigration, it said the Chancellor added five construction occupations to the Shortage Occupation List, with a full review of the list to be undertaken by the autumn¹.

The foundation also said the Chancellor did not uplift Local Housing Allowance rates to at least the 30th percentile of rents, and that its own research had found an acute shortage of properties to rent at LHA rates in Wales¹. It said there was very little in the Budget to support households beyond the energy guarantee, despite UK Government announcements in the autumn on additional support for low-income households in the next financial year¹.

Why it matters for households

The Energy Price Guarantee now runs to the end of June rather than ending in March, so the cap on the unit cost of gas and electricity stays in place for three further months¹. The foundation notes this holds prices at their current levels rather than reducing them¹.

For parents on Universal Credit, the change means childcare help is to be paid in advance instead of being claimed back after fees are paid¹. The foundation describes the existing upfront-payment system as not fit for purpose¹. Whether the extension of free childcare to younger children applies in Wales has not been settled¹.

Work Capability Assessments are to be scrapped, a change the foundation says could affect disabled people's confidence in returning to work, though it says the detail is still awaited¹. Local Housing Allowance rates were not raised in the Budget, which the foundation says is likely to worsen an existing shortage of homes rented at LHA levels in Wales¹.

What happens next

The Energy Price Guarantee extension runs to the end of June¹. A full review of the Shortage Occupation List is to be undertaken by the autumn¹. The foundation says more detail is needed on the Work Capability Assessment change and on the immigration measures¹.