Financeupdated 1h ago2 min read
Archive photo · 8 January 2025John Healey Sets Out First UK Budget Under Pressure To Ease Cost Of Living
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Healey's first budget aims to ease the cost of living amid borrowing-cost constraints. Budget to be cautious, prioritise market stability; energy bills relief anticipated.
9 outlets told this the same way.
Healey’s first Budget
Chancellor John Healey is set to set out his first Budget on Wednesday under pressure to deliver on promises to ease the cost of living for households and to help businesses. Healey’s options are limited by high government borrowing costs and the big tax increases introduced by Healey's predecessor Rachel Reeves. The BBC framed the Budget as a test of whether political ambitions can survive economic realities, quoting Healey that "Britain has it harder now".
Institute for Fiscal Studies director Helen Miller said the government faces "a long list of constraints" as war in the Middle East worsens some of them. The BBC reported ministers expect support on the cost of living and energy bills to be targeted at the most vulnerable, while Healey said he wants to "start the long-term action needed to get energy costs down for good".
Tax, debt, and devolution
The budget’s main revenue-raising measure will probably be a levy on banks to fund a targeted, temporary package of support for households, with energy subsidies worth more than £1 billion ($1.3 billion) described by the Guardian as a possible part of the mix. The BBC reported the government has promised not to raise income tax, national insurance or VAT, calling it a self imposed constraint. Healey is expected to outline fiscal devolution plans to transfer power and funds from Westminster to regional leaders across England, who will be able to retain a share of locally generated tax.
The BBC said the chancellor told BBC Newscast he wants a "really radical devolution of powers and resources to local leaders". Healey has already announced a new £1.5 billion borrowing facility as part of the devolution approach.
Wales and household pressure
Elin Jones, the Cabinet Minister for Finance, urged the Chancellor to act ahead of the UK Government’s Budget, saying, "We are urging for £1 billion of that to be brought forward now". Jones argued that "Just 1% of Network Rail's spending across England and Wales comes to Wales" and said real-terms cuts to day-to-day and capital budgets are holding Wales back. The BBC said the banks are braced for a levy or surcharge that may pay for support to get energy costs down, while it also noted that spending 3% of national income on security will come in next year’s Spending Review.
Healey insisted the Government would move to ease the cost of living "responsibly" by sticking to Labour’s self-imposed fiscal rules. Dr Alexandros Skouralis linked mortgage affordability to global politics, noting that average advertised five-year rates have risen from 2.55% in October 2021 to around 6% this October.
