Chancellor John Healey Unveils Budget 2026 Featuring £100 Energy Payments and Bank Tax Increases
In his first Budget, Chancellor John Healey announced a series of cost of living measures, including a £100 energy payment and a rise in bank profits tax, while facing immediate criticism from opposition leaders who deemed the plans insufficient.
BBC Politics
Chancellor John Healey announced a series of measures aimed at addressing the cost of living crisis in his first Budget, which he framed as necessary to provide 'breathing space' for families amid global economic uncertainty.
The package includes a one-off £100 energy payment for households in council tax bands A to D across England, with Wales and Scotland planning to replicate or match the support. Furthermore, the government announced the scrapping of gas standing charges in England, Scotland, and Wales during 2027 or as soon as possible, shifting these fixed daily fees onto the price per unit of energy.
Other consumer relief measures include extending the temporary 5p cut to fuel duty on petrol and diesel until July, and increasing the minimum wage rates by 3.9% in April. For businesses, Healey increased the threshold at which High Street shops in England begin paying business rates, raising it from £12,000 to £18,000, though vape shops and adult gaming centres are excluded from this relief.
Financially, Healey increased the tax on the profits of large banks from 3% to 6%, a measure set to run from January 2027 until April 2028. He also announced increased taxes on high-stakes gambling machines. However, the Budget included several fiscal constraints, such as freezing income tax thresholds and increasing the tax on income from savings and property rental to 24% for basic rate taxpayers starting in April 2027.
Economic forecasts remain cautious, with the Office for Budget Responsibility downgrading its growth forecast for the coming year to 1%. The OBR noted that British households are projected to be little better off than they were before the Covid-19 pandemic.
Political reaction to the Budget was swift and largely critical. Conservative leader Kemi Badenoch stated the plans were 'not bold enough,' arguing the government is 'overspent, overborrowed, overtaxed and drowning in an out-of-control welfare system.' She also criticized the government's defense strategy, claiming the Chancellor should have presented a clear plan for defense spending earlier.
Opposition leaders from the left and the right also expressed dissatisfaction. Lib Dem leader Sir Ed Davey argued that without a plan to fix the UK's trading relationship with the EU, the Budget amounted to mere 'tinkering around the edges.' Unite union general secretary Sharon Graham described the cost of living measures as 'baby steps,' while Green Party leader Zack Polanski criticized the Budget for failing to address climate change.
Healey also outlined plans for regional devolution, proposing that local mayors be allowed to retain 20% of business rates and a share of income tax to spend on local priorities, with the long-term aim of allowing mayors to retain 100% of locally raised business rates by the end of the decade.