News & Insights

Read and share Parliament Hill insights and news on the tips, trends, and key developments we’ve identified for benefit management and member satisfaction.

What does the 2023 budget mean for members?

There is always far too much analysis after a budget speech and, to save you time, it might be useful to pick out specifically what it means for membership organisations. After Jeremy Hunt's first budget, will members see their benefits differently, use them and value them more or less than before?

Strangely the Chancellor had little to offer on sustainability or green incentives and the headlines were dominated by measures to get more people back to work through changes in pensions, training and childcare. I suspect existing members will be more interested in the Chancellor's extension of the domestic energy price guarantee to 30 June 2023 with a better deal for those with pre-payment meters to hold down rising energy costs, a further deferral in the planned 5p per litre rise in fuel duty and a freeze on the duty on a pint of beer (sadly other alcohol and tobacco duties are going up). On their own, these would have a positive impact on disposable income, giving more to spend on leisure travel, holidays and therefore on enjoying a wider range of member benefits.

BUT there is a big BUT. Shrewd advice at budget time is to listen carefully to what the Chancellor doesn't say. Inflation is falling, recession avoided, but the gap between wage increases and rising prices has widened leading to the Office for Budget Responsibility forecasting 'the biggest fall in household incomes in generations.' Another downside is 'fiscal drift', where a freeze on tax allowances announced in 2022 means more of pay rises will go on taxes where taxpayers move into a higher tax band.

Savvy members will know this already and most will notice when deductions appear on their payslip, but many don't know yet whether the budget makes any real difference to them. An Opinium survey showed approximately 1 in 5 (18%) of the UK population thought it was a good budget for them, 1 in 3 (33%) thought it was bad, but almost half (49%) were unsure if the budget was good or bad. The brutal truth is even if they win an inflation busting pay rise or promotion, most members are not out of the woods just yet. Offering better benefits might soften the blow as firms struggle to keep pay in line with inflation, but if members put a premium on getting out to enjoy their leisure time post-pandemic, with less disposable income available it points to them searching even harder for deals, focusing on benefits that squeeze more value out of every pound they spend.

The signature features of the 'back to work' budget also deserve scrutiny. There was a raft of measures designed to attract people back into employment through 'returnships', pensions and additional funding for childcare. This could be a rich area of focus for benefits as it is unlikely fiscal measures alone will lure workers back, but better benefits might complement these inducements to return. Sausage maker Heck has built a dog hotel to encourage their workers to bring their dogs to work – that is exceptional – but it shows how innovative thinking on benefits might deliver happier workers who want to stay.

Removing the pension pot tax limit got headlines, but realistically this and changes to pension fund releases will benefit comparatively few given the average private pension pot of a UK worker is just under £38,000. Other help to overcome barriers to employment has wider appeal. This includes scrapping the work capability assessment, new schemes for disabled people and support for mental and physical health. For over 50s, there are 'mid-life MOTs' and a new apprenticeship, called 'Returnships'. Many commentators like me doubt whether many who have been out of the job market for months or even years will be tempted back unless these are associated with flexible hours that reflect the real world of carers, with hybrid working and member benefits that make staying in work more attractive.

This is particularly true for the Chancellor's major expansion in state-funded childcare: 30 hours a week of free childcare for eligible households in England for children as young as nine months old. It looks a game changer for those juggling family and work, but before we celebrate too much, a phased introduction means it will be unlikely to benefit many quickly and many children who will benefit have not yet been born. A recent survey by 'Pregnant then Screwed' revealed three quarters (75%) of mothers who pay for childcare said it did not make financial sense to work and 870,000 mothers said they were unable to work because of childcare costs and availability issues. 'Working Families' say this funding for childcare finally treats affordable childcare as a "vital component of economic growth", but still 'falls short of delivering on the promise of a fully supported system from nine months to four-year-olds'. It is a no-brainer that this initiative will only succeed if accompanied by better funding and availability of nursery staff and places, and real-world changes that connect childcare hours with the working day to benefit all families.

At the weekend after the budget speech, I went shopping with my family in a budget clothing store in Central London and I thought it was a cheeky analogy for things members will look for in their benefits for some time to come. The store was buzzing: a broad demographic with tills running hot. What customers were telling me is they still like to go out shopping as well as buy online, they want a choice of essentials and fashionwear at a competitive price. It is classic value proposition when money is tight – they still want to consume and enjoy life, they know their purchases are not quite as glitzy as premium brands, but are still attractive to buy at affordable prices.

Author: Dr Mark Pegg, Director, Chalfont Associates

Get in touch

To make an online enquiry, please fill in the form below