Budget 2026: Chancellor John Healey pledges help with energy bills, cost of living
The Chancellor has been setting out the government's spending plans - in what is being seeing as a 'make or break' moment for Andy Burnham
Last updated 9 hours ago
Chancellor John Healey has delivered his first ever budget, promising a string of measures to help with the cost of living, as well as major investment in defence.
Promising a budget for the 'working people of Britain', the Rawmarsh and Conisbrough MP has said his spending plans will provide 'breathing room' for families as part of a 'new approach' from the govermment.
He's spoken of 'global economic storms', caused by the Russian invasion of Ukraine and the US war with Iran, impacting the long term outlook for the UK.
The autumn budget is being seen as an early test for Andy Burnham's administration, as the new Prime Minister tries to honour demands for more spending on areas like the armed forces with a need to balance the books.
The now Chancellor previously quit his role as Defence Secretary, arguing that ex-PM Sir Keir Starmer was failing to put enough money towards meeting the UK's security commitments.
Help with the cost of living
A shakeup of household energy bills is on the way with the Chancellor setting out a plan for cheaper energy for both homes and businesses.
John Healey says he will extend the VAT cut on energy bills to last through this winter, with a new scheme launching next year to shave 25% off of energy costs for businesses.
Gas standing charges are being scrapped, with the government also looking at getting rid of electricity standing charges.
20 million households in council tax bands A to D will get a £100 payment to help with energy costs in the coldest months, with funding being made available to the government in Scotland, Wales and Northern Ireland to offer the same pledge.
The 5p cut to fuel duty will remain as part of a bid to keep costs low at the pump.
Tariffs are being scrapped on 100 products sold at the supermarket, things like chocolate and baked beans, to help shoppers.
The national minimum wage and national living wage will increase by 3.9% for 2.3 million workers.
£15m will go towards schemes to help children learn to read, like the late Dolly Parton's Imagination Library.
For the first time self employed dads will get access to paternity leave.
£430m is being committed towards helping homeless people off the streets over the duration of this parliament.
A new scheme for first time buyers will launch next year, to help young people struggling to come up with a deposit get onto the ladder.
Tax and spending plans
The Chancellor claims he has kept Labour's 2024 General Election manifesto promise not to raise taxes 'on working people'.
Small business rate relief will be increased from £12,000 to £18,000, meaning more small firms will no longer need to pay business rates.
Gambling firms will face new taxes, including new levies on gaming machines - with vape and betting shops not eligible for business rates relief.
HMRC will get new powers to collect tax and to go after people who haven't paid their fair share.
Plans to cut the amount of money people can put into ISAs tax-free have been scrapped, with the limit being kept at £20,000, rather than being reduced to £12,000.
Banks will pay additional taxes to help pay for a reduction in energy bills, for a period of 15 months.
The Office for Budget Responsibility says the UK's economy will grow by 1.2% this year, 1% next year, 1.6% in 2028, 1.8% in 2029, 1.7% in 2030 and 1.6% in 2031.
Plugging the defence gap
Former Defence Secretary John Healey says he is 'fully funding' the government's Defence Investment Plan, which was released earlier this year.
It means £298bn worth of spending on upgrades to the UK's warfighting capabilities, with the government spending 2.7% of GDP on defence by 2029-30.
£10bn worth of additional assistance will go to Ukraine to help Kyiv resist the Russian invasion, with the Chancellor and Prime Minister calling Volodymyr Zelenskyy this morning.
The Chancellor has confimed that Rolls Royce has pledged to develop its 'next generation' of turbine engines in the UK, supporting jobs in the Midlands.
Critics have called for the UK to go further, with a NATO target for members to spend 3% of GDP on the armed forces.
Pledges on AI, entrepreneurs, regional funding
John Healey announced the launch of a new 'covenant' on data centres, with companies being forced to plan for their energy and water use and to keep sensitive data in the UK, if they want government support.
A new 'Young Entrepreneur's Allowance' will cover a year's worth of living costs for startup founders.
Regional Mayors will get access to extra funding to pay for upgrades to local infrastructure and transport, with the government also giving them access to 20% of business rates from next year.
Founders of companies will get relief on capital gains tax, as the Chancellor tries to keep jobs and investment in the UK.
“Not good enough, not strong enough, not bold enough”
Reacting to today's budget, Leader of the Opposition Kemi Badenoch said John Healey's announcement was “not good enough, not strong enough, not bold enough".
“We are spending more on debt interest than on the army and schools combined.
“The rate of interest we pay on our debts is higher than Greece, Latvia, Slovakia, even the Socialist Republic of Vietnam.
“Next year, under Labour, the tax burden will be the highest in our country’s history, and our benefits bill is going up by tens of billions of pounds because this Government has put welfare first.
“We are overspent, overborrowed, overtaxed, and drowning in an out-of-control welfare system, and this is his answer.
“Last week, the Government published its resilience plan. I’m afraid three days of baked beans and a wind-up radio are not going to save us. Labour’s Britain has no resilience.”