John Healey has set out his first Budget amid rising energy and fuel costs, high borrowing expenses and what he described as a need to give households and businesses “breathing space”.
The package is being presented as a limited-tax-rise Budget focused on cost-of-living support, while major decisions on defence, benefits and social care are being deferred.
In his statement, the Chancellor said the measures were aimed at “the working people of Britain, for British businesses, big and small”. He said the Government would focus on easing the cost of living and the cost of doing business, supporting enterprise and tackling challenges including energy, national security, public services and housing.
John Healey Budget built on fiscal discipline
The Office for Budget Responsibility forecasts that the Government will spend £14 billion more on debt interest this year as the UK faces what the Chancellor called “global economic storms”.
Borrowing is expected to fall to 4.2 per cent this year and then to 1.8 per cent in 2030-31. Debt is forecast to reach 83.2 per cent of GDP this year and 83.8 per cent next year, before falling to 81.7 per cent in 2031-32.
The watchdog expects the Chancellor to have £15 billion of fiscal headroom in 2029-30, down from the £24 billion buffer previously set out by Rachel Reeves.
Energy bills support
Healey has already announced plans to scrap standing charges on gas bills, with the Treasury saying he will ask Ofgem to remove them in 2027 or as soon as possible afterwards.
The move is expected to benefit millions of households, although experts have warned that people living in larger homes could be worse off.
“From this point, our priority is first and foremost cheaper energy, with clean power key to achieving this,” Healey said.
