Budget Q&A: When do pension and childcare changes start? How have markets reacted? Are Tories improving in polls?
Business presenter Ian King, deputy political editor Sam Coates, political correspondent Liz Bates and financial expert Kalpana Fitzpatrick have answered all your budget questions below.
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12h ago
14:10
Goodbye and thanks for following
That’s the end of our Q&A on the budget and what it means for you and your money, businesses and the broader UK economy.
Thank you to Sky’s business presenter Ian King, deputy political editor Sam Coates and political correspondent Liz Bates and financial expert Kalpana Fitzpatrick for answering the questions.
And a big thank you to everyone who sent questions in – and sorry if we didn’t have time to get to yours.
For more live coverage of the budget, head to the Politics Hub where we will bring you all the latest reaction…
Budget news – live: Pension and childcare changes go further than expected – but have we seen ‘giveaway to rich’?
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12h ago
14:08
How will this budget go down with Tory backbenchers and rebels?
John Mac
How will this budget go down with Tory backbenchers and rebels?
Liz Bates, political correspondent: There is plenty in it to keep Conservative MPs happy.
Many will welcome the tax breaks to encourage businesses to invest and the removal of the pension lifetime allowance as it will shore up the Tory base and should give the economy a boost as well as bringing senior doctors back to the NHS.
Increased defence spending and more support for veterans will also go down well. Some Tories will be unhappy, though, at the lack of tax cuts and those in red wall constituencies will likely be disappointed that levelling up seems to have been sidelined.
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12h ago
14:05
Will I be able to retire at 67?
Amanda
I’m 55 next week – will I be able to retire at 67?
Ian King, business presenter: Hello Amanda – I can’t really answer that without knowing your overall circumstances but assume you are asking me whether you will be able to collect a state pension at the age of 67.
As things stand, the answer to that is yes, although your entitlement to the full state pension will of course depend on the extent of your national insurance contributions.
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12h ago
14:02
Do the changes to the pension lifetime allowance apply to pension pots already above the existing limit?
Robin
If the pension lifetime allowance is raised, will the new rate apply to pension pots already above the existing limit?
Ian King, business presenter: It’s even better than you had hoped, Robin, because the lifetime allowance has been scrapped, not merely raised.
You may carry on saving now to your heart’s content – provided, of course, you don’t breach the annual allowance of £60,000.
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12h ago
13:59
Will the increase in tax-free pension contributions apply this financial year?
James R
Can we expect the increase of £40k to 60k for tax free pension contributions to apply to the current financial year or just the next one beginning in April?
Kalpana Fitzpatrick, digital editor on MoneyWeek.com: The changes to the lifetime allowance and annual pension allowance will be effective from April (the new tax year).
The pensions boost will help people stay in work for longer who may face the disincentive to working longer in fear of breaching the allowances and paying more tax.
This will certainly help people work longer, but may also help higher-paid workers or those in defined benefit schemes with a long service.
It is also hoped that the move will simplify the pensions system.
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12h ago
13:55
Will there be clear policy for the topic of taxation in day trading?
Jeremy Simson
With the growing volume of people rejecting 9-5 roles and opting for FX /Crypto trading, will there finally be a clear policy for the topic of taxation in day trading?
Ian King, business presenter: I wouldn’t hold your breath. There was certainly nothing today.
In recent days, there have been calls for the Treasury to address stamp duty on share dealing – something that increases the cost of capital for quoted companies and generally reduces liquidity in the UK equities market.
But it brought in £4.4bn last year for the Treasury and accordingly the latter seems reluctant to do anything to alter that.
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12h ago
13:53
How would changes to the pension lifetime allowance affect people who have triggered their pension?
Pete
Should the chancellor raise the pension lifetime allowance, how would that affect people who have triggered their pension because they had breached the £1.07m threshold? I started taking my pension last month as I passed the threshold. Will my tax liability now reduce? Can I re-start a pension?
Ian King, business presenter: The chancellor has scrapped the lifetime allowance altogether, Pete, so you should be able to carry on saving with confidence.
But bear in mind that, as you have begun drawing a pension, your future contributions attracting tax relief will be limited under the so-called Money Purchase Annual Allowance (MPAA).
The good news for you is that these were previously restricted to just £4,000 a year – but the allowance has been raised today to £10,000 a year.
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12h ago
13:49
When can we expect an election?
Jeremy Morgan
Lots of this looks like electioneering with draught beer, pensioners and childcare changes – when can we expect an election?
Sam Coates, deputy political editor: I disagree that the budget looks like electioneering. Jeremy Hunt spent a lot of money in this budget – more than £20bn pouring into the economy for both of the next couple of years, taking him within a whisker of breaking his own fiscal rules.
Yet there was not a lot here that will help large numbers of voters directly – the most expensive measures are the softening of the corporation tax rise for companies, and childcare changes.
They are designed to boost growth, and the benefits are felt by voters slower than measures like tax cuts. The pension changes only affect the very wealthiest, again not a wider base. I wonder if the criticism from Tory backbenchers is that this budget isn’t election focused enough.
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12h ago
13:46
Why is government allowing banks and energy firms to make massive profits at taxpayers’ expense?
Rebecca
Why is the government allowing banks and energy firms to make massive profits at taxpayers’ expense? Banks are not passing on interest rate increases to savers and energy companies are announcing larger than ever profits while the British people struggle to afford life.
Ian King, business presenter: Hello Rebecca. In the case of the energy firms, don’t forget those “massive profits” are being aggressively taxed, to the extent that a lot of these companies are now looking to invest in other countries rather than the UK.
The likes of BP and Shell, which I assume you have in mind, have both made clear that they regard countries like the US as a much better place to invest these days than the UK due to windfall taxes.
It is also becoming an issue for energy generators such as ScottishPower which are investing billions of pounds in the energy transition but are now finding those plans threatened by the new levy on generators.
It also needs to be stressed that household energy tariffs in the UK tend to be much lower than in European countries such as Germany. It is just that the UK’s old, draughty housing stock means that energy consumption tends to be higher.
As for the banks, you do have a point in that some of them have not been passing on the full extent of recent interest rate rises to customers, but there is plenty of choice out there and some institutions – such as the Skipton Building Society, which recently appeared on Ian King Live – are offering some genuinely competitive rates.
And don’t forget that, also, there is an implicit price attached to having your savings with a safe institution that you can trust. I don’t know whether you were a saver during the financial crisis but many thousands of British savers who had deposited their money with IceSave because it offered markedly higher rates than high street competitors got a nasty shock when it went bust and it took months for them to get their money back.
Bear in mind also that banking profits have been crushed during 15 years of near-zero interest rates. Some would say it is good that they are making a reasonable profit again. Lots of people grumble at banking profits but, if the financial crisis taught us anything, it is that profitable banks are infinitely better for us all than unprofitable ones.
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12h ago
13:43
Will new pension plans apply to those in drawdown?
William S
Pension lifetime allowance (LTA) was £1.8m in 2006 and subsequently reduced to £1.07m affecting even those who were already in drawdown regardless of work status. By abolishing the LTA today, will it apply to all those who are in drawdown and not just those who have retired since the pandemic?
Ian King, business presenter: That is not my understanding of the situation. Sorry to be the bearer of bad news.
No one already drawing a private pension – not just those who began doing so since the pandemic – will benefit from this move.
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12h ago
13:41
Why is extending free childcare affordable now?
Harry H
How come extending free childcare to children over nine months is affordable now when it wasn’t judged so previously?
Liz Bates, political correspondent: The chancellor had more money to spend than he thought he would just a few months ago as global energy prices have fallen and the UK’s growth forecast has improved.
He has also been convinced that this policy will deliver wider economic benefits by allowing many parents to rejoin the workforce, which should drive future growth.
Watch Jeremy Hunt give more details of the government’s boost to childcare below…
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12h ago
13:38
What would happen if the UK ever defaulted on its debt?
Phillip
What would happen if the UK ever defaulted on its debt?
Ian King, business presenter: It’s never happened yet. And pray that it never does, because the consequences would be horrendous.
It would mean a loss of confidence among bond investors and would mean that the UK’s future borrowing costs would be higher.
That would leave the government of the day less money to spend on other things or force it to put up taxes.
The pound would probably fall, too, pushing up import inflation. And in a worst-case scenario, external investors would withdraw capital from the UK, potentially leading to the closure of businesses and a rise in unemployment.
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12h ago
13:36
Will this budget give Tories a poll boost?
Matilde
Do you think this budget will be giving the Tories a big poll boost?
Sam Coates, deputy political editor: What’s interesting about this budget is that it affects voters indirectly – helping companies to boost growth – and the measures aimed directly at voters such as the childcare overhaul do not directly affect that large number of voters.
There isn’t, for instance, a tax cut helping most working people. So maybe this budget won’t be remembered in the public mind, or change the polls much.
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12h ago
13:30
Are OBR forecasts better than anticipated and is the cost of living crisis over?
Janine
Are the OBR forecasts better than we anticipated? Is the cost of living crisis over?
Ian King, business presenter: They are better than expected, yes.
Or, at the very least, they are considerably more optimistic than the forecasts the OBR published as recently as November – in particular the fact that it is not now predicting a prolonged downturn for the UK economy.
As that wise old owl Paul Johnson of the Institute for Fiscal Studies told Sky News earlier today, the chancellor will be grateful that it is the OBR marking his homework, rather than the most pessimistic types at the Bank of England.
As for whether that means the cost of living crisis is over – I think it is far too early to say.
If inflation falls in line with the projections set out today by the OBR, then yes, the pressure on households should start to lift.
But the lesson learned during the 1970s and early 1980s in the US and UK is that, once the inflationary genie is out of the bottle, it is difficult to force back in.
Inflation has a nasty habit, especially in the UK, of proving to be more sticky than expected.
To that end, the situation apparently engulfing the banking sector is rather worrying.
If central banks like the US Federal Reserve, the European Central Bank and the Bank of England conclude that the Silicon Valley Bank saga and the associated share price falls we are now seeing point to deeper rooted vulnerabilities in the banking sector, they may well decide against raising interest rates as aggressively as we were expecting even a few weeks ago.
This chart shows interest rate forecasts are falling
And that would, all other things being equal, leave inflation sticking around for longer than expected. It’s a personal view but I think the OBR is being slightly too optimistic about the rate at which inflation is going to fall. But that’s maybe because I remember the 1970s.
Read more on the Silicon Valley Bank crisis and the sale of the UK branch of the bank here…
HSBC’s SVB UK buyout: The codenames and secret talks that averted a banking disaster
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13h ago
13:26
Does Jeremy Hunt get on with PM?
Tuchel
How much of this budget is led by Jeremy Hunt? Is he a powerful chancellor like Gordon Brown or is this led by Rishi Sunak? And do they get on unlike some of their predecessors?
Sam Coates, deputy political editor: Rishi Sunak and Jeremy Hunt do work closely together and remarkably, given the political turbulence, there have been no stories about disagreements.
Rishi Sunak has made a virtue of being a details man – he’s something of a Mr Spreadsheet – and of course is a former chancellor, so this is even more remarkable.
When I was speaking to Mr Sunak in the US on Monday, he confirmed Mr Hunt will be in post until the election, removing that possible source of tension.
Rishi Sunak and Jeremy Hunt share a moment in the Commons
Rishi Sunak and Jeremy Hunt share a moment in the Commons
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13h ago
13:22
How will extending price energy cap affect those off-grid?
Emmanbee
How will extending the price energy cap affect those off-grid? These people are usually rural dwellers using oil for heating
Kalpana Fitzpatrick, digital editor on MoneyWeek.com: So far, the Treasury has not given any further details other than the Energy Price Guarantee will be extended for another three months – this sets a limit on the rate households pay for energy and means the average bill, based on typical use, can expect to pay around £2,500 a year.
If you are off-grid, then your energy support will be different.
Last month, the government said it would make a payment of £200 to households by 10 March.
If you have not yet received it, you can claim at gov.uk/apply-alternative-fuel-bill-support-if-not-automatic.
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13h ago
13:20
Was there anything in the budget to help encourage buyers back into the market?
Lloydfletcher77
I’m a self-employed construction worker for new homes specifically. We have seen a sharp decline in the last few months in buyers. Was there anything in the budget to help encourage buyers back into the market?
Ian King, business presenter: Not specifically – don’t forget the government has done a lot in recent years to support homebuyers, unfortunately with the effect of stoking demand for homes while doing nothing to strengthen housing supply.
I may have missed something but the news I spotted today that was really pertinent to housebuilding was that the government has published a call for evidence on options to reform the VAT relief for the installation of energy saving materials in the UK.
The call for evidence will consider the inclusion of additional technologies and the possible extension of the relief to include buildings used solely for a relevant charitable purpose.
Of course, the chancellor will argue that trying to bear down on inflation while spurring productivity will ultimately support getting homebuyers into the market by putting more money in their pockets. But that could take years.
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13h ago
13:18
Will there be any movement on £50,000 threshold for child benefit claims?
Bryan Pengleberry
With inflation and wages going up, will there be any movement on the £50,000 threshold for child benefit claims? I have three children and I am likely to find myself having to take unpaid leave to keep my wages below £50,000. My wife earns £15,000, but I am unable to use her excess.
Kalpana Fitzpatrick, digital editor on MoneyWeek.com: No changes to the thresholds relating to child benefit payments were announced.
This is a complex system which triggers some parents having to complete a self-assessment tax return if they reach a certain threshold in their income.
But as it stands, this is how it works:
– If you or your partner earn more than £50,000 a year, you will have to pay the High Income Child Benefit Charge, which you pay by completing a tax return. You pay a charge that is equivalent to 1% for every £100 of earning between £50,000 – £60,000.
– If you or your partner earn over £60,000, then the High Income Child Benefit Charge is equivalent to the full amount you received in payments.
You can potentially reduce your taxable income by, for example, by making pension contributions using salary sacrifice via your employer.
Speak to your HR department to see if this could be an option.
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13h ago
13:16
Will there be a new UK banking crisis?
Katie Gill
Is there any danger of a new UK banking crisis as in the US?
Ian King, business presenter: As things stand, no. And I wouldn’t say there was a US banking crisis as such.
The issues at the likes of Silicon Valley Bank and Signature Bank were very specific to those lenders.
At the risk of making oneself a hostage to fortune, there is nothing as yet to point to general contagion in the US banking sector.
As for the UK, the main lenders are much better capitalised than they were in the financial crisis and have been through rigorous stress tests since.
The way that the banks got through the pandemic and were able to carry on lending in that period ought to give comfort to people. That said, the markets clearly have concerns about the health of some European lenders, notably Credit Suisse.
One can argue that, in the case of Credit Suisse, this is a bank with very specific problems of its own – but if there do prove to be deep-rooted problems that is not to say some UK lenders with exposure to it might not face write-downs in the value of some assets or contracts.
And here, I must also defer to Larry Fink, the chairman of BlackRock, the world’s biggest asset manager, who has today published his annual letter to investors in which he has raised the possibility of some financial institutions with large amounts of illiquid or hard-to-sell assets on their balance sheets running into difficulty. So investors should be vigilant.
My colleague Ed Conway wrote about how the SVB issues affect is all yesterday – you can read his piece here…
How Silicon Valley Bank chaos has had a bearing on us all – and why we’re in for a bumpy few months
Sky News
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13h ago
13:14
Will anything in the budget unlock housing?
John Edward
Will anything in the budget unlock housing? Is Michael Gove blocking planning reform or does the budget indicate the government will pursue populist housing policies sooner rather than later?
Sam Coates, deputy political editor: This was not a budget where housing featured.
