UK chancellor unveils cautious budget offering limited relief while punting hard choices to next year
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Chancellor John Healey said the budget will give low-income households short-term breathing space and scrap the planned fuel duty rise, but critics say it delays the deeper redistribution and public investment needed to tackle the cost-of-living crisis.
Chancellor John Healey said the United Kingdom faces a “difficult moment”, but pledged to give households breathing space from rising cost-of-living pressures in his first budget. In a pre-budget video, he warned that global conflicts are pushing up energy prices and adding strain to families, businesses and public finances. He said the government will act “responsibly” within Labour’s fiscal rules and aims to make the economy more resilient to external shocks, though the approach remains tightly constrained by those rules.
The budget is expected to be modest, with major tax and spending decisions postponed until the next fiscal review. Temporary support for poorer families is planned ahead of a projected increase in typical energy bills in January, and a cancellation of the planned fuel-duty rise is likely. The chancellor also intends to end the carers’ allowance cliff edge and to increase the minimum wage by about 4%, with a slower rise for workers under 21, measures that offer only partial relief against years of wage pressure and insecure incomes.
Energy-market reforms, including possible changes to the gas standing charge, are to be outlined, and a roadmap for devolving more tax revenue to regional authorities will be presented. Defence spending commitments will be reaffirmed, though detailed timetables are expected in next year’s spending review, leaving many of the biggest questions unresolved for now.
Healey highlighted signs of economic resilience, noting higher investment, growing productivity and joint fastest growth among G7 nations in the first half of the year. He also announced measures to protect pensioners and near-million earners from income-tax liability and to expand the Help to Buy scheme for middle-income households, while to offset higher borrowing costs, the chancellor is expected to raise taxes on banks and require online retailers to collect tax on sales made through their platforms. Analysts said bond-market investors will watch the budget closely as UK yields have risen to their highest level since 2008.
Opposition figures warned that the budget does not address the “cliff edge” of public finances, with the shadow chief secretary to the Treasury describing it as a “do-nothing” plan and the Liberal Democrat deputy leader saying families are being squeezed from all sides.