UK chancellor John Healey outlines spending priorities and tax measures in first budget
John Healey's inaugural budget proposes £1.42 trillion in spending, targeted support for households and first-time buyers, and potential new levies on banks and online marketplaces.
London – Chancellor John Healey is set to deliver his first budget on Wednesday, outlining a spending plan of about £1.42 trillion for the current year. The package includes roughly £100 billion in debt-interest costs, driven by higher borrowing rates linked to recent spikes in oil and gas prices.
The Treasury intends to allocate funds to several consumer-focused measures. An extension of parental pay will cover an additional 150,000 parents, and the carer’s allowance cliff-edge will be removed to protect unpaid carers who exceed earnings limits. Import tariffs on more than 100 items, such as baked beans and chocolate, are slated for removal to lower retail prices.
Energy-assistance spending exceeds £1 billion, with an expansion of the Warm Home Discount and a proposed £100-per-year increase to the means-tested rebate, funded from general taxation. The government also plans to suspend VAT on electricity bills for six months and is reviewing the removal of standing charges on gas bills.
For first-time homebuyers, the budget will detail a revamped “your first home” scheme that offers a 20 % equity loan on new-build properties, with a minimum deposit of 2.5 %.
On defence, Healey aims to address a £4.7 billion shortfall in the investment plan, likely by reallocating funds from other departments, while a formal roadmap to meet the 3 % of GDP target is deferred to next year’s spending review.
Potential revenue measures include reinstating a bank levy that could raise over £2 billion annually, and a proposal to require large online marketplaces to collect VAT on sales to UK consumers, which could generate up to £1 billion. The additional revenue may fund an increase in the business-rates threshold for small high-street shops.
Other tax adjustments are expected to be modest: alcohol duty is likely to rise in line with inflation, while the mansion-tax threshold and capital-gains-tax rates are projected to remain unchanged. Fuel duty is anticipated to stay frozen for the remainder of the year.
The budget also contains a £150 million boost for devolution initiatives, a £1.5 billion borrowing facility, and an initial £285 million “good growth” fund for local authorities to support projects such as housing, transport and high-street regeneration.