Budget 2023: Jeremy Hunt seeks to tempt parents and over-50s back to work

Chancellor Jeremy Hunt has set out plans to get early retirees and parents of young children back to work to get the economy growing again.

He announced a big expansion of free childcare in his Budget and measures aimed at over-50s who have not returned to work after the pandemic.

He claimed the UK would avoid a recession, with inflation forecast to fall by more than half next year.

But Labour accused him of “dressing up stagnation as stability”.

In a Budget speech lasting more than an hour, Mr Hunt said: “In the face of enormous challenges, I report today on a British economy which is proving the doubters wrong.”

The economy will shrink by 0.2% next year, according to the Office for Budget Responsibility, which is better than previously forecast and does not, technically, count as a recession.

Inflation is forecast to fall from 10.7% in the final quarter of last year to 2.9% by the end of 2023.

Living standards are still expected to fall by the largest amount since records began, according to the OBR, but the decline will not be as bad as it had forecast in November.

Other Budget measures include:

Mr Hunt announced tax breaks for businesses to boost investment but said labour shortages were holding the economy back.

He announced plans to encourage over-50s who have retired early – including 350,000 who have not returned to work after the pandemic – back into the workforce, describing them as “the most skilled and experienced people we have”.

There will be more “mid-life MOT” courses and new “Returnership” schemes to improve skills.

But the big headline announcement was the abolition of limits on the amount workers can build up in pension savings over their lifetime before paying tax.

Mr Hunt said this was aimed at preventing NHS doctors from retiring early but Labour claimed it would only benefit the richest 1%.

The chancellor also announced plans to abolish Work Capability Assessments, which he said would “separate benefit entitlement from an individual’s ability to work”.

And he confirmed plans to expand free childcare in England.

“I don’t want any parent with a child under five to be prevented from working, if they want to, because it is damaging to our economy and unfair, mainly to women,” Mr Hunt told MPs.

He promised up to 30 hours a week of free childcare for eligible households in England with children as young as nine months, instead of three and four-year-olds under the current policy.

The phased policy, which won’t be fully introduced until September 2025, will be worth up to £6,500 a year for working families.

He also pledged an expansion in wraparound care at the start and finish of the school day for parents with older children and changes to staff-to-child ratios in England to expand supply of childcare.

Labour leader Sir Keir Starmer said: “After 13 years of his government, our economy needed major surgery, but like millions across our country, this Budget leaves us stuck in the waiting room with only a sticking plaster to hand.

“A country set on a path of managed decline, falling behind our competitors, the sick man of Europe once again.”

SNP economy spokesman Stewart Hosie said: “It’s truly pathetic that the chancellor has failed to cut energy bills, despite having ample resources to do so.

“The Tories are ripping families off by keeping bills at such exorbitantly sky-high levels, with many families forced to pay three times what they paid a year ago.”