Chancellor John Healey presented the first budget of the Burnham administration in the afternoon, approximately 100 days into the government’s tenure. The speech emphasized familiar policy themes including household support, growth objectives, and state restructuring, though the measures announced reflected caution rather than sweeping transformation. The government faced significant fiscal constraints stemming from the Middle East conflict and elevated borrowing costs, prompting a strategy centered on incremental adjustments rather than radical change.
The budget’s centerpiece was a £100 household energy payment directed to approximately 20 million households in council tax bands A through D in England, with equivalent funding allocated to Scotland, Wales, and Northern Ireland. Additional energy-related announcements included extending the VAT reduction on electricity through July 2027, a measure projected to reduce annual price caps by £50, and abolishing standing charges on gas bills, expected to save an average of £45 annually for most households. The government also extended a 5p fuel duty cut to the same timeframe and introduced a new Pension Tax Allowance for lower-income pensioners to prevent taxation on state pension income.
Other notable announcements addressed specific constituencies: carers gained relief from a controversial allowance cliff-edge rule that had created financial hardship for hundreds of thousands of unpaid caregivers, while savers benefited from reversed plans to reduce the annual cash Individual Savings Account allowance from £20,000 to £12,000. Small business rate relief thresholds increased from £12,000 to £18,000. The government also committed £10bn in economic and military support to Ukraine through loans and export finance guarantees.
To finance these measures without raising income tax, VAT, or national insurance—maintaining the government’s stated commitments—Healey increased the surcharge on bank profits from 3 percent to 6 percent for 15 months. The Office for Budget Responsibility subsequently issued a downward revision to growth forecasts for 2027, cautioning that households faced challenging living standards conditions amid geopolitical economic pressures. More substantial fiscal decisions were deferred to a spending review scheduled for the following year.
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