Worse off under Burnham: The middle-earners and families struggling with bills who face a fall in living standards under Labour's 'is that it?' Budget

John Healey faced a backlash last night after an underwhelming Budget that left families facing a fall in living standards. The Chancellor pushed up taxes to a record high and poured billions of pounds more into benefits. But he ducked tough decisions on increasing defence spending and curbing the runaway welfare budget. And a package of measures designed to ease the cost of living was so modest it was last night dubbed the 'Gherkin Budget' after Mr Healey boasted of tariff cuts that will shave a few pence off a jar of pickled cucumbers.

In a withering assessment, Kemi Badenoch said the Budget 'does not come close to meeting the moment'. The Tory leader said: 'We have overspent, over-borrowed, over-taxed and are drowning in an out-of-control welfare system.' She added: 'Most people listening to this Budget will be thinking to themselves, is that it? Really, is that it? The Prime Minister came in promising to reverse 40 years of neo-liberalism. Instead, we got 4p off gherkins.'

The Office for Budget Responsibility (OBR) downgraded its anaemic growth forecast for next year to just 1 per cent. But experts fear that the situation could get worse within days, as speculation mounts that Donald Trump is planning new bombing raids on Iran after next week's midterm elections in the US, which would drive oil prices higher still. In his first Budget as Labour Chancellor, Mr Healey: Raised taxes on savers, landlords and banks as he continued the Labour Government's record of pushing up the tax burden to new highs at every Budget; Offered a £100 rebate to 20million homes in council tax bands A to D to help offset soaring energy bills this winter; Published official forecasts showing that inflation and government borrowing are both on course to rise; Signed off an extra £5billion a year in welfare spending after failing to bring forward reforms; Delayed a planned 6p-a-litre increase in fuel duty until July; Faced criticism after he set a target of spending three per cent of GDP on defence by the end of the decade – but failed to say how it would be funded; Bowed to pressure to scrap Rachel Reeves's plan to cut the tax-free cash Isa limit.

Mrs Badenoch accused Labour of kicking difficult decisions into the long grass 'because the Prime Minister wants to keep the option of an early election open – putting his party's interests before the country'. Some Labour MPs were also speculating last night that the PM is preparing a snap election after weak growth forecasts for next year were downgraded again. The Prime Minister said he could 'rule out calling a general election in the next 12 months'.

He insisted that the Budget did contain some 'bold' measures, including the council tax rebate to help offset energy bills, even though it is likely to be swallowed up by a jump of several hundred pounds in the energy price cap come January. The PM said the package would make a 'significant' difference 'if you add it all up'. Mr Healey described the package as a 'Budget for working people'. He said the measures would give people 'breathing space' from an energy crisis triggered by a war 'we did not want'.

The Chancellor insisted he would 'bring down the welfare bill' in future. But he said it would be done 'in a Labour way'. He said he was committed to 'fiscal discipline' and pencilled in tough spending limits for the final years of the decade. Economists said unprotected departments such as the Home Office and transport could face real terms cuts of 2.6 per cent a year. But he gave no indication of how the savings would be achieved. Economist Paul Johnson, former head of the Institute for Fiscal Studies, said: 'The numbers add up because the numbers were made up.

If business and the country need some certainty and stability to help with growth, this Budget did not provide it.' The OBR warned that living standards are set to fall in the next 12 months. The watchdog's forecast for real household disposable income per person is now £420 lower than two years ago and is not predicted to recover until April 2029. OBR economist David Miles said Britain was facing a 'pretty grim picture' for living standards, with real incomes no better than they were before the pandemic.

The centre-Left Resolution Foundation think-tank described the outlook for living standards as 'dire'. Chief executive Ruth Curtice said the Chancellor had 'spread the jam thin' and warned that his decision to cut the buffer against breaking his own fiscal rules meant he now 'doesn't have enough to survive one bad roll of the dice'. The Chancellor said it was right to use some of the so-called headroom to help soften the impact of the 'global economic storm' caused by the Iran war.

But he faced criticism on all sides for his timid approach. Rain Newton-Smith, CBI chief executive, said: 'This Budget lacks the bold moves that would have made it easier for firms to invest, hire and grow.' Andrea Egan, Left-wing leader of the Unison trade union, said: 'This was the Government's first chance to turn the Prime Minister's historic ambition for a new economic settlement into action. On that count it falls short.' Overall, Mr Healey hiked taxes by £7billion a year, following on from the £66billion levied by Ms Reeves in Labour's first two Budgets.

The OBR said the tax to GDP ratio would pass its historic high of 37.2 per cent next year and continue rising for the next five years. The Chancellor maintained the long-running freeze on tax thresholds, which have already dragged millions of people into higher tax bands. Reform UK's Treasury spokesman Robert Jenrick described the Budget as 'an exercise in fiddling while the economy burns'. Below, read the verdicts of the real people affected by the Budget. £100 off our energy bill 'won't help long term' Name Abigail Giles Age: 35 Lives: Berkshire Job: Teacher and influencer Teacher Abigail Giles with her electrician husband and their daughter Millie Berkshire mother-of-one Abigail Giles said there was still 'not a lot of help for working families' facing massive energy bills in the new year.

Her family – which also includes her daughter Millie, 3, and electrician husband James, 34 – will qualify for the £100 energy bill relief, but she says this 'doesn't really help out long term' She said her 'energy bills through the winter before have been £200 in just a month', and this is likely to rise further as the energy price cap goes up – along with virtually all other costs of living. The removal of the gas standing charge is not much help either as their home is mainly heated electrically.

Her husband James's van runs on diesel for his business JG Electrical , and despite the fuel duty freeze, she said, 'costs are really mounting up. We really think it's making everything harder and is just another high cost to consider.' And Mrs Giles added of another increasing essential cost for households: 'I'm just sick of worrying about the mortgage rate. Ours, at the moment, is looking at going up £300 to £400 a month from November.'

Mrs Giles works as a teacher but has had to go part time and start a social media 'mumfluencer' page – abigailfinds.uk – to get freebie days out to entertain Millie which they otherwise 'couldn't afford' and help other families in the same position. 'It shouldn't be this hard to get by,' Mrs Giles said, 'I'm a teacher, James is an electrician, we're in quite good jobs. It shouldn't be that hard.' Business rates relief will make 'a big difference' Name: Kyle Hyams Age: 33 Based: Surbiton, southwest London Job: Coffee and gelato shop owner Kyle Hyams, his wife and three daughters pictured together in one of his gelato shops Kyle Hyams welcomes the small business rates relief announced in the Budget.

He said the threshold increase from £12,000 to £18,000 giving 70,000 smaller firms a tax break will make 'a big difference'. He will now not be paying any business rates at his premises, which mainly comprise coffee and gelato shops across southwest London named after his daughters Aoife and Orla. But he noted that many business owners won't feel the benefit. He began making gelato in 2024 with the aim of growing it into a national brand, but his ambitions are hindered by high VAT payments and rising National Insurance and minimum wage. 'Despite huge calls from the hospitality industry to reduce VAT rates to 10 per cent, there was no mention of this, which I find disappointing,' he said.

While the announcement of a 3.9 per cent increase to the national minimum wage is great for employees, he said: 'This is another expense for business owners without the support needed to raise these funds.' He also felt there could be more support with energy bills for businesses. He said: 'Everything we're trying to do to grow is being hindered by the government and by the constant moving of goalposts.' 'No one wants to invest more when they're not guaranteed a return on it.

I feel like they're [the government] sort of crushing the dreams of people who have got high aspirations for what they want to achieve.' 'We are definitely going to lose customers' Name: Jo Bevilacqua Age: 42 Based: Orton Longueville, Peterborough Job: Hair and beauty salon owner Jo Bevilacqua, owner of Serenity Loves, an award-winning hair and beauty salon in Peterborough, said she will lose customers following the announcement of a 3.9 per cent increase to national minimum wage. 'It is going to put added pressure on us without a shadow of a doubt,' she said. 'We're going to have to put our prices up which will possibly outprice customers.

We're definitely going to lose customers.' Her business, which will turn 15 next March, has survived Covid, energy price shocks and the cost-of-living crisis. Now the 42-year-old, who employs 16 staff including six apprentices, is faced with tackling a further minimum wage increase after a string of extra business taxes under Labour since 2024 including higher National Insurance. 'We're trying to invest in the next generation, but it is becoming increasingly difficult,' she said.

Jo Bevilacqua in her hair and beauty salon, Serenity Loves, in Peterborough Training apprentices costs up to £15,000, and it takes four years before she sees a return on investment. She feels young people are desperate to find meaningful employment, but businesses are not being given the means to help them. 'We had a paid six-week internship program last March, we had eight positions open and had 150 applicants. 'Young people want to work and get their foot in the door, but businesses cannot afford to take them on.'

She added that she was 'very underwhelmed' with the Chancellor's Budget, saying: 'They talk about backing businesses, but I don't see how they're doing that. 'They talk about supporting new entrepreneurs but what about the other businesses that are trading right now?' 'Why are we considering taxing British people for choosing to holiday in Britain?' Name: Amanda Stecker Age: 59 Based: London and Oxfordshire Job: Luxury holiday home letter Amanda Stecker owns and lets out six luxury cottages in the Cotswolds, but was dismayed to hear the introduction of the overnight visitors tax.

It could mean tourists – including British holidaymakers – would have to pay 5 per cent tax on their overnight accommodation . But it seems like a backwards way to support local economies, Mrs Stecker said: 'Why are we considering taxing British people for choosing to holiday in Britain? At our cottages, 70 per cent of guests are British. 'These are precisely the visitors who help keep local economies alive outside the peak tourist season.'

Luxury holiday home letter Amanda Stecker in front of one of her cottages in the Cotswolds Mrs Stecker began her business, Unique Cotswold Cottages, with one cottage eight years ago –