By Basant El-Faramawy
Chancellor John Healey is set to deliver a Budget on 27 October 2026 that will test the government's ability to meet Prime Minister Andy Burnham's promises amid severe economic constraints.
Economic constraints and political ambitions
Healey recently acknowledged that the financial resources available to New Labour in the 1990s "simply not there now," while Burnham described the current moment as the most significant political change in 40 years. The Institute for Fiscal Studies notes the new government faces a long list of constraints, some self-imposed and others worsened by global events such as the war in the Middle East.
Targeted cost-of-living support
Ministers are expected to announce targeted help with energy bills for the most vulnerable, with Healey stating he wants to "start the long-term action needed to get energy costs down for good." Banks are braced for a levy or surcharge that could fund this support.
Devolution and local powers
The Budget will include a "really radical devolution of powers and resources to local leaders," Healey told the BBC Newscast, arguing they are better placed to bypass departmental systems. However, some in Westminster worry that extra funding for mayors lacks adequate checks and balances.
Defence spending and fiscal rules
Further defence spending will be announced, though details on meeting a 3% of national income target by 2030 will wait for next year's Spending Review. The government has pledged not to raise income tax, national insurance or VAT, a self-imposed constraint highlighted by the IFS.
Opposition criticism
Conservative shadow chancellor Andrew Griffith warned public finances are "on a cliff edge" and urged tough decisions. Liberal Democrat Daisy Cooper said a "steady as she goes" Budget "is not going to cut it," while Reform UK's Robert Jenrick accused Healey of "fiddling while the economy burns." Green Party MP Ellie Chowns called for a "bold" approach but feared "business as usual."
