Chancellor’s Spring Budget announcement

spring budget 2023

Growing the Economy

The Chancellors first budget contained much which had already been trailed over the previous days. Although there was some better news on the economy when compared to the Autumn statement, it’s clear that we are still in difficult times. The Office of Budgetary Responsibility (OBR) forecast that the UK will avoid a technical recession and inflation will fall from 10.7% at the end of 2022 to 2.9% by the end of this year. However it also reports household disposable income will fall by 5.7% over the next two financial years with the sharpest fall in living standards since the 1950’s.

The Chancellor was keen to dismiss those who talked the UK down and cited the World Bank which has declared the UK the best place to do business as well as ‘global chief executives’ who say it is the best place to invest after the USA and China.

Keir Starmer’s rejoinder was that people have the highest tax burden in 70 years at a time when their earnings were decreasing, and that improvements in the economy were down to the public paying for them. He went on to accuse the Chancellor of dressing up stagnation as stability.

The Chancellor set his overall theme as one of ‘growing the economy’, perhaps a rather normal aspiration for a government budget. It was clear he views the opportunities for that growth as being in the medium term. He also suggested it was a ‘back to work’ budget with key measures on childcare and pensions. The full terms are available in the Red Book, with key points summarised below.

Office of Budgetary Responsibility (OBR)

By 2024, it is expected that inflation will fall to 0.9% for the following two years, and then return to the 2% target by 2027-28. GDP will fall by 0.2% on an annual basis across 2023. The unemployment rate is predicted to increase to 4.4% which is 0.5% lower than that forecast in November 2022. The OBR also forecasts that business investment will fall by 2.8% in 2023 but will grow by 1.3% in 2024 and 6.1% in 2025. They note that the outlook is ‘somewhat brighter’ compared to November.


As expected, the energy price guarantee has been extended for three months to keep the typical household costs to £2,500 per year instead of raising it to £3000 from April. This guarantee will remove the premium paid by those on pre-payment meters from July 1.

The Climate Change Agreement is extended for 2 years to allow eligible businesses to claim tax relief on energy efficiency measures.

For businesses and other non-domestic energy users, the Energy Bills Discount Scheme will continue until March 2024. The scheme will also provide businesses in sectors with high levels of energy use and trade intensity with a higher level of support.

There is £100m to support charities and community organisations, and £60m for the Swimming Pool Support Fund to support public swimming pools to help with financial pressures and investment in energy efficiency.

The Climate Change Agreement scheme will be extended for two years. Participants that meet agreed energy efficiency targets will be entitled to reduced rates of Climate Change Levy in 2025-26 and 2026-27. The Department for Energy Security and Net Zero will consult on details on the extension and proposals for any potential future Climate Change Agreement scheme.

In addition to the measures in the Spring Budget, the Government will set out further action later this month to ensure energy security in the UK to meet current net zero commitments.

The Chancellor also announced the launch of Great British Nuclear (GBN) to address constraints in the nuclear market and support new nuclear builds. The Government will also provide up to £20bn funding for early deployment of Carbon Capture, Usage and Storage (CCUS). A shortlist of projects for the first phase of CCUS deployment will be announced later this month.

Investment zones

There will be 12 new investment zones around the UK. Eight potential areas are identified in England: West Midlands, Greater Manchester, the North-East, South Yorkshire, West Yorkshire, East Midlands, Teesside and Liverpool, with at least one in each of Scotland, Wales and Northern Ireland. Businesses will have access to £80 million of support including for skills, infrastructure, tax reliefs and business rates.

The Government will provide funding for an additional 30 projects as part of the Community Ownership Fund. There was also a cheer in the house for an additional £200m to deal with potholes in the roads.

Defence funding

This has increased by £11bn over five years and the Chancellor announced that defence spending will rise to 2.25% of GDP by 2025.


The pensions lifetime allowance of £1.07 million has been abolished with the aim of enticing doctors to come out of retirement. The annual allowance for saving into a pension without being taxed has also risen from £40k to £60k before incurring tax.

Business taxation

As announced in the Autumn budget, the top-line rate will increase from 19% to 25% on April 1, although the Chancellor took pains to emphasis that only 10% of companies will pay the full 25%. In addition, companies can deduct the full cost of investment in IT equipment, plant or machinery from taxable profits.

Companies across the UK will be able to write off the full cost of qualifying plant and machinery investment in the year of investment from 1 April 2023 until 31 March 2026. Companies investing in special rate (including long life) assets will also benefit from a 50% first-year allowance during this period.

R&D incentive for small or medium sized businesses amounting to up to £27 per £100 pounds announced where that business spends 40% or more on R&D.

Tax avoidance

The Government is investing £47.2m to improve HMRC’s capability to collect tax debts, including supporting those who are temporarily unable to pay. There will be a consultation on making failure to stop promoting tax avoidance a criminal offence. There will be another consultation on speeding up disqualification of company directors in businesses which promote tax avoidance.

Tax simplification

The Government is to collaborate with businesses and representative bodies to undertake a systematic review of tax guidance and forms for small business over the next 24 months to make it easier for small businesses to interact with the tax system as they set up and grow.

Work & Welfare

Getting people back into work was a central theme. The Chancellor announced a range of measures designed to reduce the barriers to employment. The commitments to expanding access to free childcare, pension relief reform and investing in occupational health all aim to tackle the underlying causes of economic inactivity. Long term sickness is one of the key factors driving unemployment, hence the Government’s introduction of a new ‘Universal Support’ to try and help people with disabilities and long-term health conditions back into work. A commitment to abolishing the Work Capability Assessment could constitute a radical reform to the current benefits system, meaning that claimants don’t have to worry about losing their entitlements if they try to re-enter the labour market. There was also support for carers announced as well as reforms to Universal Credit.


A major announcement, from September 2025, all eligible working parents of children ages 9 months up to 3 years will be able to access 30 free hours per week. From April 2024, working parents of two-year-olds will be able to access 15 hours of free childcare per week. This will be extended to working parents of 9 months to 2 years from 11 September 2024.

Barriers to work

The Government will expand the digital element of the midlife MOTs and the Department for Work and Pensions will expand access to its in-person offer. There is additional funding to research what works to improve labour market outcomes. A call for evidence was also announced for the Summer to understand flexible working options between employers and employees and employees will gain the right to request their job be done flexibly from day one.

Education and Skills

Over 50s were the target group for training opportunities and the introduction of Returnerships will be key although there is no timeline for when this new apprenticeship scheme will be introduced. This will be supported by £63m for an additional 8,000 Skills Bootcamps places in 2024-25 in England, and 40,000 new sector-based Work Academy Programme placements across 2023-24 and 2024-25 in England and Scotland.

Science and Technology

Today’s Budget demonstrated the Government’s desire to encourage research and development by introducing a new tax relief which means that SMEs will now receive £27 for every £100 they invest in R&D, on the condition that R&D spending contributes 40% of their total expenditure. This shows the Chancellor’s willingness to listen to calls not to disincentivise investment and innovation in this sector. There is also a focus on driving progress in artificial intelligence and technology with a yearly £1m reward programme for AI researchers, along with significant support for a new quantum research programme. However, there was little light shed on how the Government will prepare the ground for Horizon Europe association if this partnership is delivered.

All the recommendations on regulation of emerging digital technologies from Sir Patrick Vallance’s report have been accepted. Green industries will be covered in the coming weeks and there will be reviews into creative industries and advanced manufacturing overseen by Professor Dame Angela McLean.

The Government is pursuing accelerated transfer of the £364bn Local Government Pension Scheme assets into pools to support increased investment in innovative companies and other productive assets. The Government will shortly come forward with a consultation.

Health and Social Care

Where health was mentioned, it was in relation to the Chancellor’s mission to get people back into work. The measures to expand occupational health programmes and to focus specifically on musculoskeletal and mental health (the two most common occupational health hazards) underpin this commitment to reduce barriers to employment. Challenges in the NHS and social care were not covered.

Employee Share Plans

Finally, there were a number of measures announced for employee share plans.

The government published its response to the EMI consultation and announced changes to simplify the process to grant options under the Enterprise Management Incentives (EMI) scheme.

Companies granting EMI options on or after 6 April 2023 will no longer be required to set out, within the option agreement, details of any restrictions on the shares that can be acquired; or to declare that an employee has signed a working time declaration when they are issued an EMI option. It does not remove the working time requirement itself. These changes will also apply to options granted before 6 April 2023 but which have not been exercised.

The Government also announced a call for evidence on all employee SIP and SAYE plans with a view to improving and simplifying them. This is a measure I have campaigned on for the last 18 months and it was pleasing to see it included in the Red Book.

David Mortimer, Head of External Affairs, CGIUKI

ESG Summit: 2 May 2024 Download this year's course catalogue Introduction to Corporate Governance Engage Governance podcast series Company Secretarial Practice for Support Staff Join our upcoming training for governance professionals

Search CGI