Spring Budget 2023 – update for employers

16 March 2023

In the Chancellor's Spring Budget, the government has announced a number of measures which it says will "support people to enter work, increase their working hours and extend their working lives", but may also assist employers facing recruitment and retention difficulties.

Working parents

A number of changes to childcare support have been announced including:

  • Extending the 30 hours per week of free childcare to children from the age of 9 months until they start school. This allowance is for 38 weeks of the year but parents will be able to spread it across the full year.
  • Providing funding to set up 'wraparound childcare' for school age children

These changes will be introduced in stages from April 2024 so may support staff, who are due to go on maternity or shared parental leave soon, to return to work.

Disabled people and those with long-term health conditions

A number of changes to encourage people who are not working due to long-term sickness have been announced, including:

  • Bringing forward consultations on how best to encourage the use of occupational health services for employers.
  • Providing additional funding for the forthcoming pilot for occupational health services for small and medium-sized enterprises.
  • Setting up musculoskeletal hubs in existing community and leisure centres so that people can access treatment more quickly and return to work

Older workers

The following changes have been introduced to encourage older workers return to work, or to work for longer:

  • An increase to the Annual Allowance (the annual limit of pension savings which receive tax relief) to £60,000 from April 2023.
  • An increase to the Money Purchase Annual Allowance (the annual limit of pension savings which receive tax relief once defined contribution pension savings have been accessed) from £4,000 to £10,000.
  • Removal of the Lifetime Allowance. 

This is likely to have limited impact for the majority of employers, as it is specifically targeted at high earners and in particular doctors who have retired early because they had already reached the existing pension limit


In addition to various training support measures, placements on Sector-Based Work Academy Programmes (SWAPs) will be significantly increased. The purpose of the programme is to match individuals who are out of work with training (fully-funded by the government) and work experience in sectors facing high demand.

Full details of the labour market measures are available here.

Changes to statutory pay rates and compensation limits

The annual increase to national minimum wage and statutory pay rates has been announced, with significant increases across the board. Our fact sheet for the 2022/2023 rates is available here.

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