Spring Budget 2023 announced

The Chancellor presented the Spring Budget on 15 March 2023, grouping measures under what he described as four priorities: Employment, Education, Enterprise and Everywhere¹. The Budget was accompanied by a policy paper, Transforming Support: The Health and Disability White Paper, published at the same time¹.

On childcare, the Budget set out staged increases in free hours for working parents in England, alongside higher monthly caps on help with childcare costs under Universal Credit¹. The Universal Credit maximum rises from July 2023 to £951 a month for one child, up from £646, and to £1,630 a month for two or more children, up from £1,108¹. Those monthly amounts will also be increased by CPI inflation each year until 2027/28¹. From summer 2023, a parent moving into work or increasing their hours will be able to claim help with their first month's childcare costs before paying for childcare¹.

The free hours apply to parents in England working over 16 hours a week, with both members of a couple needing to meet that threshold¹. On Universal Credit conditions, lead carers of children aged 1 and 2 will need to meet a work coach to prepare for returning to work, and parents of children aged 3 to 12 will need to look for work or increase their hours to meet their claimant commitment¹. The Administrative Earnings Threshold rises from the equivalent of 15 hours of earnings at the national living wage to 18 hours, and the couple rule requiring 24 hours of earnings between them is removed so each person must meet the 18-hour rules individually¹. The Work Capability Assessment will be abolished for disabled people making new claims for Universal Credit, and a voluntary scheme called Universal Support intends to help up to 50,000 disabled people a year find more work¹.

On energy, the Energy Price Guarantee is extended for three more months, so the typical bill amount remains at £2,500 until the end of June 2023¹. From July, households will pay the lower of the Ofgem Price Cap or the £3,000 typical EPG until the end of March 2024¹. The £2,500 surplus earnings threshold for Universal Credit stays in place for another year, and the transitional element for Severe Disability Premium claimants will be increased by CPI inflation in April 2023 and each year until 2027/28¹.

Why it matters for households

Working parents in England with children under three gain access to free hours in stages from April 2024 to September 2025, while parents already claiming Universal Credit see the monthly childcare cost caps rise from July 2023¹. Parents claiming Universal Credit also face changed work-related conditions, with the earnings threshold rising to 18 hours and the couple rule removed, and lead carers of children aged 1 and 2 required to meet a work coach¹. Households' energy bills remain capped at a £2,500 typical amount until the end of June 2023, after which the £3,000 typical EPG applies alongside the Ofgem Price Cap until the end of March 2024¹. The freeze to Local Housing Allowance for private renters remains in place, which the Budget did not revisit¹.

What happens next

The Universal Credit childcare cost increases and the first-month childcare claim change take effect from July 2023 and summer 2023 respectively¹. The free childcare hours roll out from April 2024, September 2024 and September 2025¹. The Energy Price Guarantee extension runs to the end of June 2023, with the £3,000 typical EPG then applying until the end of March 2024¹. The Health and Disability White Paper's proposals could take years to be implemented, if they ever are¹.