Healey to present modest budget with focus on energy and food costs

Chancellor John Healey will deliver the Burnham government's first budget in the House of Commons at 12:30pm on Wednesday. The package is designed to provide relief for low and middle income households, operating under the slogan "breathing space for today, fresh hope for the future." The Treasury has characterized the event as a "low-key" affair, reflecting a strategy focused on immediate cost of living pressures rather than major structural tax changes.

The scale of the proposals is constrained by fiscal rules and rising borrowing costs linked to the Iran war. Healey has declined calls to increase capital gains tax or reduce the mansion tax. Kiran Stacey, policy editor at The Guardian, noted that the budget would be "far smaller" than the previous year's and would not be "ending 40 years of neoliberalism." Many of the specific measures have already been briefed to officials.

Among the confirmed changes is the abolition of a rule that left unpaid carers in debt, a practice exposed by The Guardian last year. The government also paused the process of aligning the lower minimum wage for under-21s with the national living wage. A series of everyday fixes is expected to include targeted help for poorer families with energy bills this winter. Longer term energy market reforms are also planned to reduce bills for all households over time.

Household financial stress remains high. The debt charity StepChange reported that the average arrears debt among its clients rose from £2,833 in 2022 to £4,345 in 2025. A spokesperson for the charity stated that while clients in the late 2000s mostly carried consumer credit debt, one in two now have energy debt. Energy bills were the leading concern for readers of The Guardian's First Edition newsletter.

Michael, a renter in Winchester with three children, illustrates the squeeze on personal finances. He spends about £165 a month on electricity and gas. After tax, his monthly income is between £2,500 and £3,000, and he pays £1,800 in rent. This leaves him with at most £300 a week to support four people. Because he receives no benefits, he does not qualify for the warm homes discount, a £150 annual reduction that Healey has considered expanding.

Mathew Lawrence, director of the thinktank Common Wealth, said the government needs a structural plan to cut bills over the medium term, such as an energy guarantee priced at pre-crisis levels. However, he noted that Healey's tax decisions have limited the room to act. On food, the government will remove import tariffs on items including baked beans, chocolate, and gherkins. The Treasury estimates this will save £21 on the average yearly food shop, a sum that would barely register for Michael, who tries to keep his weekly Aldi shop to £80.

On housing, Chancellor Healey is expected to add £1bn in funding to Labour's biggest council housebuilding programme since the postwar decade. More detail is likely on the Your First Home scheme for first-time buyers, a new version of Help to Buy. Both initiatives will take time to have an effect. The Resolution Foundation reports that more than 900,000 private rented households on universal credit face a gap between rent and housing allowance. This gap averages £158 a month for a family in a two-bedroom home, with local housing allowance frozen since 2024.

The government will continue the freeze on fuel duty, originally announced by Rishi Sunak in 2022. Jonny Marshall, an economist at the Resolution Foundation, argued that the freeze mainly benefits higher-income households who drive more. He suggested it would be better to help poorer households through other means, particularly more action on energy bills.