By Fatma Younis
Chancellor John Healey will deliver his first budget on Wednesday, acknowledging the UK faces a “difficult moment” as global economic turbulence drives up energy prices and household costs. Healey said the budget aims to provide “fresh hope for the future” while sticking to Labour’s self‑imposed fiscal rules.
Modest measures amid fiscal constraints
The chancellor has limited room for major giveaways because stretched public finances have been worsened by market turmoil linked to the Iran conflict. Healey insisted the government would ease cost‑of‑living pressures “responsibly” and signal longer‑term reforms to make Britain more resilient to global shocks.
Energy bills and cost‑of‑living relief
Healey is expected to announce temporary support for poorer families ahead of a steep rise in typical energy bills in January. The budget will also pledge energy market reforms aimed at lowering bills for all households over time, including a possible abolition of the gas standing charge – a fixed daily levy that would shift costs to heavier users. As part of “everyday fixes,” the chancellor plans to end the carers’ allowance cliff edge that penalises unpaid carers for exceeding earnings limits by even a few pence, and to cancel January’s scheduled increase in fuel duty.
Defence spending and devolution plans
The budget will confirm more investment in defence industries as a “downpayment” toward the target of 3% of national income by 2030, though the detailed timetable will wait until next year’s spending review. Healey will also set out a roadmap for devolving more tax revenues to local leaders, moving spending power away from Whitehall, with further details expected in a forthcoming white paper.
Tax changes and opposition response
To offset the hit to public finances from higher borrowing costs, Healey is poised to raise taxes on banks, potentially reversing cuts to the bank surcharge made by his predecessor Jeremy Hunt, which could raise over £2 billion annually. Online retailers will become responsible for collecting tax owed by firms selling on their platforms. The minimum wage will rise nearly 4%, but the increase for workers under 21 will be slowed after warnings they are being priced out of jobs – a move critics say breaks a Labour manifesto pledge. The government also plans to shield nearly one million pensioners and savers from income tax and make the revived Help to Buy scheme more generous.
Conservative shadow chief secretary Richard Fuller warned that a “do‑nothing” budget would not solve a spiralling welfare bill, mounting debt and rising global threats. Liberal Democrat deputy leader Daisy Cooper said families are being squeezed from all sides and basic joys have become unaffordable.
