Chancellor says 'no government can completely offset' cost of living pressures

The chancellor has defended his "breathing space" Budget but has acknowledged that the government cannot completely "offset" the pressures people are facing. In an interview with ITV's Good Morning Britain, John Healey also said that people will have to wait until the spending review next year to find out exactly how he will fund his defence commitments. When pushed on how much his Budget would actually help people struggling, the chancellor maintained that "no government can completely offset or cover the costs that people face and the pressures that people face".

"The pressures they're under, whether it's cost of living or cost of business, are driven a lot by the Iran war, by some of the trade tensions. "And they can see prices of the pumps, they can see the cost of monthly mortgages and particularly in their energy bills. They can see this driven by world events. And it is hitting worldwide but it's hitting us hard here at home". Subscribe free to our weekly newsletter for exclusive and original coverage from ITV News.

Direct to your inbox every Friday morning. However, Healey said he hoped that the Budget has shown people that "where we can help, we will". "I've wanted to respond in this Budget by creating, if you like, a budget that creates a bit of breathing space both for households from the cost of living and businesses from the cost of business that they're under as well". Despite Healey's efforts, the Office for Budget Responsibility (OBR) said following the Budget that the weakness in living standards represents “a pretty grim picture” for people.

OBR member David Miles added: “If you go back to just before Covid and take that as your base, where we are right now – which is, what, some seven years later – is virtually no growth in per-person real household disposable income". Budget 2026: How will the chancellor fund commitment to defence? Rise in bank tax and £100 energy payments: What’s in Healey’s debut Budget? Will the chancellor cut welfare to fund defence? In Wednesday’s speech in the Commons, he committed to spending 3% of GDP on defence by 2030, and to “fully funding” a £4.7 billion black hole in the defence investment plan (DIP) left by Sir Keir Starmer.

The chancellor says that the DIP shortfall will be funded by reallocation of funding from government departments and unallocated Treasury reserve. Healey told Good Morning Britain that funding the DIP “involved hard choices, it’s reprioritising within government”. When asked why he has not cut welfare spending to fund his defence commitments, Healey said, "now is not the time". Credit: PA "There is never any easy way in government of funding anything,” Helaey said.

"What Andy Burnham and I have said is that we have to bring down the cost of welfare. We have to bring down the benefits bill. "Now is not the time for just crude deep cuts to spending, not least because people are under pressure and feeling the cost of living. "But we can do this in a different way. And we can do this especially for the youngsters, the million young unemployed who aren't in training and aren't in jobs". The chancellor told Good Morning Britain that people will have to wait until the spending review next year to see exactly how he will fund his defence plans.

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