All eyes on the Spring Budget 2023
It’s that time again – the Chancellor of the Exchequer, Jeremy Hunt, has delivered the Spring Budget and there were several key points that may be of interest to the dental profession. Much like the previous Budget, the focus is on economic growth, with emphasis on how to support the UK workforce and keep workers in their jobs for longer – a particular point of interest for the dental sector. Let’s break down a few of the leading points that potentially concern dental professionals.
To boost economic growth, Jeremy Hunt shared the pillars with which he plans to support and address certain issues: everywhere, enterprise, employment and education. In particular, the employment pillar saw quite an unexpected bombshell – that the pension lifetime allowance (LTA) is not only being altered, as speculated, but is being abolished entirely. So, this is quite an impressive leap from the original £1,073,100 limit. While this is aimed at the higher earners, in the current tight labour market, this abolishment may help to encourage dentists to stay working for longer, rather than retiring early to avoid the pension trap. They may opt to work longer/additional hours, too, without the worry of going over the yearly limit, which has increased from £40,000 to £60,000. According to Jeremy Hunt, those aged over 50 were seen leaving the workforce in the greatest numbers during COVID-19. By removing the LTA on pensions, the government hopes to see more over-50s extending their working lives. However, the Labour party announced that they would reverse the LTA abolishment if elected, which means there’s a risk for those who would have filled their pension pots as a result of this Budget’s announcement. It’s something to bear mind in going forward.
An apprenticeship scheme for those over 50 was also announced, which could prove useful for recruitment, although there wasn’t a huge amount of information accompanying this.
Another barrier to employment was childcare, a concern that has seen many headlines in recent years. The cost of childcare has skyrocketed with many parents foregoing work to care for their child/children at home. For single parents, the situation is even more dire. As it stands, on average in the UK, 50 hours of day nursery (for a child under two) costs around £263.81 per week, while 25 hours equals around £137.69 per week.[i] Other types of childcare, including afterschool clubs, costs around £63.13 per week – over £2,423 a year during the term time for 5 to 11-year-olds. It’s clear to see how childcare costs eat into parents’ income, often leaving them with the difficult decision to put their careers on hold. Jeremy Hunt highlighted that it’s usually women who end up making this sacrifice. Last year, it’s believed that 32,000 women left the workforce to care for their children.[ii]
Having noted the struggles faced by families across the UK, Jeremy Hunt announced 30 hours of free childcare for children over the age of nine months. This support will be rolled out in phases: 15 hours of free childcare for 2-year-olds as of April 2024 and 15 hours of free childcare for children between 9 months and 3 years in September 2024 – all applicable when both parents are working. The slow phasing is a downside to this announcement, as the impact won’t be felt until next year. With regards to dentistry, many staff members will appreciate this additional support when its time comes round, especially those on lower incomes or who work part-time.
Other key topics
Corporation Tax has been increased to 25%. While the government hastened to add that at 25%, the UK rate of Corporation Tax remains the lowest in the G7, larger practices and mini-groups are likely to the feel this impact. Jeremy Hunt also introduced a new policy that sees 100% first-year relief for plant and machinery investments, being set at £1 million from April 2023. This may be welcome for smaller practices, encouraging them to invest in their businesses, while larger practices and mini-groups/corporates, who likely spend over £1 million on equipment and machinery, won’t garner much benefit. Further announcements include investment zones, which had also been announced in previous budgets. There is little information on this, so it’s looking like a more long-term ambition which we’ll find out more about in the future. The Energy Price Guarantee (EPG) has been extended for an extra three months, potentially providing relief for households. Undoubtedly good news for many, the draft beer tax has been frozen, doing away with the additional 11p per pint!
The long-touted Spring Budget was light on detail – hopefully by the next Budget, there will be more meat in terms of announcements that will affect the dental profession. As always, it’s worth keeping an ear to the ground to see what changes occur over the coming months.
[i] MaPS. (n.d.). Average childcare costs. [online] Available at: https://www.moneyhelper.org.uk/en/family-and-care/becoming-a-parent/childcare-costs [Accessed 15 Mar. 2023].
[ii] www.ons.gov.uk. (n.d.). Labour market overview, UK – Office for National Statistics. [online] Available at: https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/march2023 [Accessed 15 Mar. 2023].