Chancellor John Healey delivered his first Budget today under Prime Minister Andy Burnham, facing a tricky balancing act: keeping public finances on track amid global economic turbulence and rising costs.<\/p>\n
His measures aim to give households “breathing space, support high streets and encourage business growth – while asking banks to contribute more and leaving the government with a thinner financial cushion.”<\/p>\n
Public finances and the economy<\/strong><\/p>\n Less room for manoeuvre: The OBR says the government\u2019s financial headroom will fall from \u00a324bn to \u00a315bn in 2029\/30.<\/p>\n Rising debt costs: The UK is forecast to spend \u00a314bn more on debt interest this year. Healey pointed to \u201cglobal economic storms\u201d, with the war in the Middle East and higher oil and gas prices adding to inflation and costs.<\/p>\n Growth outlook mixed: The OBR has raised its growth forecast to 1.2% this year, but expects growth to slow to 1% next year, down from an earlier forecast of 1.6%. Forecasts for 2028 onwards have been upgraded.<\/p>\n Business and employment<\/strong><\/p>\n Business rates relief for high streets: The threshold for small business rate relief for retail, hospitality and leisure rises from \u00a312,000 to \u00a318,000, taking 70,000 businesses out of paying business rates. The measure will be funded by higher gambling taxes.<\/p>\n A new deal for founders: A new \u201cfounders\u2019 relief\u201d will offer a 10% tax rate on lifetime gains of up to \u00a310m for founders of some of Britain\u2019s most successful businesses, in a bid to encourage entrepreneurs to stay in the UK.<\/p>\n More tax-free earnings for new ventures: The trading allowance for income from a new venture rises from \u00a31,000 to \u00a33,000.<\/p>\n Help for young entrepreneurs: A new allowance will cover one year\u2019s living costs for young founders as they turn ideas into businesses.<\/p>\n More backing for female founders: A new scale-up programme will support female entrepreneurs, while the British Business Bank will double its commitments to women-led businesses through funds to \u00a3200m.<\/p>\n Banks to pay more: The bank surcharge will rise by three percentage points from January 2027 for a time-limited period of 15 months, helping fund immediate energy bill support. Healey said the government was \u201casking a bit more of our banks\u201d.<\/p>\n Markets welcome bank tax announcement: Shares in Barclays rose 2.5% following the announcement, while NatWest gained 2.4% and Lloyds Banking Group climbed 1.9%. The rises came after Healey unveiled a smaller-than-forecast surcharge increase, which will last just 15 months.<\/p>\n Capital gains tax relief tightened: The business asset disposal relief threshold will fall from \u00a31m to \u00a3500,000, although the Chancellor says there will be \u201cno change for three in four claimants\u201d.<\/p>\n Tougher action on unpaid tax: HMRC will get stronger powers to collect overdue tax from people who can afford to pay but ignore requests. The government will also fund compliance work and reform self-assessment to allow smaller, more regular payments.<\/p>\n Pay transparency: Action is planned soon on pay transparency in job adverts, with Healey saying the aim is to ensure women are \u201cpaid and promoted fairly\u201d.<\/p>\n Minimum wage rises: The minimum wage for 18\u201320-year-olds will rise by 3.9%, matching the increase for those aged 21 and over. The rise is smaller than the cumulative 26% increase for younger workers over the previous two years.<\/p>\n A pay boost for low earners: The previously announced 3.9% increase in the National Minimum Wage and National Living Wage will benefit 2.3 million of the lowest-paid workers.<\/p>\n Paid parental leave extended: Self-employed fathers and partners will become eligible for paid parental leave.<\/p>\n Supermarket tariff cuts: Tariffs on more than 100 supermarket products were suspended in an announcement earlier in the week.<\/p>\n Devolution and regional growth<\/strong><\/p>\n Business rates retained locally: Healey has announced a \u201croadmap to fiscal devolution\u201d, with 100% of business rates set to be retained locally by the end of the decade.<\/p>\n Mayors to receive a share of revenue: From next year, 20% of business rates revenue will go to mayors. From 2028, mayors will also receive a share of income tax receipts.<\/p>\n New powers for local authorities: From 2028, mayors and some other local authorities will have additional powers to introduce overnight visitor levies.<\/p>\n More control for local leaders: Healey described the plans as the \u201cbiggest wave of devolution in a generation, driving good growth in every postcode\u201d. He said local leaders \u201cshouldn\u2019t have to come cap in hand to Whitehall\u201d to fund projects such as trams and concert halls.<\/p>\n Funding for regional projects: The Chancellor highlighted several multi-million-pound investments, including \u00a310m for a new market hall in Stafford and the equivalent of \u00a32.5m for a science park in north Wales.<\/p>\n Good Growth Funds: New \u201cGood Growth Funds\u201d will support mayors, alongside \u201cincubator capital\u201d for areas without mayors. Healey said growth could be transformed if more UK cities matched counterparts in France and Germany.<\/p>\n Property<\/strong><\/p>\n \u00a34.7bn Your First Home scheme: Around 70,000 first-time buyers in England will be able to buy a new-build home with a 2.5% deposit and a government equity loan of up to 20%, interest-free for five years.<\/p>\n Income caps are \u00a3110,000 outside London and \u00a3140,000 in London, with first loans from April 2027.<\/p>\n \u00a31.5bn more for social housing: Extra funding for the Social and Affordable Homes Programme will deliver around 10,000 more homes, taking total investment to more than \u00a340bn over 10 years.<\/p>\n Certainty for housebuilders: No major changes to building regulations for the rest of this Parliament, other than on building safety, and small brownfield sites will be exempt from Biodiversity Net Gain rules.<\/p>\n Landlords to pay more: Tax rates on property income will rise by a further two percentage points from April 2027.<\/p>\n New First Time Buyer ISA: It replaces the Lifetime ISA for new savers from April 2029, with a 25% bonus towards homes worth up to \u00a3450,000.<\/p>\n Technology, AI and public services<\/strong><\/p>\n \u00a3500m more for AI safety: The government will provide an extra \u00a3500m for AI safety and security. Healey said the UK must \u201cseize the opportunities and guard against the risks\u201d.<\/p>\n A new covenant for data centres: The British Data Centre Covenant will set strict tests for data centres, with the aim of attracting investment while addressing local concerns.<\/p>\n Keeping sensitive data in Britain: Healey said that when AI is used by the NHS and armed forces, the government wants the data to remain in the UK. AI must be \u201csecure, safe and working for the British people\u201d.<\/p>\n NHS productivity review: Healey has announced a review of NHS productivity and the use of AI, aiming to free up staff time for patients rather than administration.<\/p>\n \u00a3600m in back-office savings: Investment in AI to transform the civil service is intended to support a further \u00a3600m in savings from back-office budgets.<\/p>\n Digital overhaul of government: The Chancellor says technology and devolution will help streamline the state, reduce duplicated work between central and local government, and improve efficiency.<\/p>\n More focus on prevention: Healey says the next spending review will ringfence preventative spending that reduces future costs, with new departmental spending limits for prevention.<\/p>\n Energy and household bills<\/strong><\/p>\n \u00a3100 energy payment: Around 20 million households in council tax bands A to D in England will receive a \u00a3100 payment this winter, paid directly into bank accounts. The \u00a32.6bn scheme is intended to help households through the colder months and into spring.<\/p>\n Council tax band checks surge: The announcement has prompted a rush to check council tax bands, with the government\u2019s online service experiencing problems. Households can also find their band on their annual council tax bill.<\/p>\n Electricity VAT cut extended: The cut in VAT on electricity from 5% to 0% will continue until July, rather than ending in March 2027. Healey says this will save \u00a350 off the annual price cap, but the cut will not be made permanent.<\/p>\n Gas standing charge to go: The gas standing charge will be removed from next year, with similar reforms to electricity charges to follow.<\/p>\n Funding for devolved governments: Scotland, Wales and Northern Ireland will receive a share of the energy support funding. Healey has called on their governments to provide similar breathing space on bills.<\/p>\n Transport and motoring<\/strong><\/p>\n Fuel duty cut extended: The existing 5p cut in fuel duty will continue until next July, helping motorists through the winter and spring as fuel prices remain under pressure.<\/p>\n Higher mileage allowance: The mileage rate for people using their cars for work will rise from 25p to 35p per mile. The increase to the standard mileage rate will be made permanent.<\/p>\n Pensions, welfare and care<\/strong><\/p>\n State Pension tax pledge: Pensioners with income up to the value of the full new State Pension will not pay income tax during the current Parliament. This was announced earlier in the week.<\/p>\n Triple lock and care reforms: Healey says adjustments to the triple lock, alongside the creation of a new National Care Service, will save \u00a315bn a year by the end of the 2030s and \u00a350bn by 2050.<\/p>\n A new National Care Service: Healey says the combination of a rising State Pension and a National Care Service will support older people when they need it, while easing pressure on families and the NHS.<\/p>\n Carer\u2019s Allowance reform: Changes will mean people no longer lose their entire Carer\u2019s Allowance when their earnings exceed the threshold.<\/p>\n Support for people out of work: Healey says the government will not write off young people not in employment, education or training, or disabled people. He also referenced the forthcoming Milburn report on young people not in education, employment or training.<\/p>\n Personal tax and savings<\/strong><\/p>\n Cash ISA allowance stays put: The annual tax-free allowance for cash ISAs will remain at \u00a320,000, with the planned cut abandoned.<\/p>\n A new Starter ISA: The government will work with the sector to develop a \u201cStarter ISA\u201d intended to make investing more accessible.<\/p>\n","protected":false},"excerpt":{"rendered":" Tax breaks, energy relief and business reforms headline a Budget balancing growth with tighter finances<\/p>\n","protected":false},"author":266702,"featured_media":8567,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"coauthors":[127717],"class_list":["post-8589","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-latest-news","tag-featured-story","tag-national"],"yoast_head":"\n