Typical annual energy bills are expected to reach £1,750 after Government support in 2026-27, leaving families facing higher costs than during the last energy price shock, according to an analysis by the Resolution Foundation.
The think tank said Chancellor John Healey delivered a “scattergun” Budget that did little to address Britain’s economic challenges. Mr Healey set out his first Budget as Chancellor on Wednesday, attempting to provide “breathing space” for the public amid rising prices exacerbated by the Iran war.
Budget measures and energy support
Measures announced in the Budget aimed at tackling soaring energy costs include the scrapping of standing charges on gas bills and energy payments of £100 for up to 20 million households in council tax bands A to D. The Resolution Foundation's full analysis was due to be published on Thursday.
The £1,750 figure compares with £1,685 paid during the 2022-23 energy price jump after Russia invaded Ukraine.
Impact on household incomes
The Resolution Foundation also forecast typical disposable income would fall by £1,050 between now and the end of the parliamentary term in 2028-29. The gap in support between the poorest and wealthiest halves of households is expected to be just £14, according to the think tank.
Ruth Curtice, chief executive of the think tank, said: “Faced with a tough backdrop amid global economic turmoil, the Chancellor delivered a scattergun Budget that did little to address the sharp challenges facing Britain. Cost of living support is being spread far too thinly and will leave even those families receiving help facing higher energy bills than they did during the last energy price shock.”
Government response and outlook
Mr Healey said the UK was being battered by a global economic storm, with the Budget watchdog slashing its forecast for gross domestic product growth next year. He promised “to steer us through the global economic storms today, to chart a new course for Britain in the years ahead, to give people fresh hope for Britain’s future”.
Ms Curtice said: “Stepping back, this Parliament is increasingly looking like one of two halves, which yesterday’s Budget did little to address. The first half has been marked by rising living standards, solid economic growth and extra funding for public services – funded by huge tax rises – none of which was enough to prevent dramatic half-time substitutions in Downing Street.
“The new occupants will hope for better political fortune in the second half, but it could prove tough going against a projected £1,000 fall in disposable incomes. A more dramatic change of tactics may be needed, and we did not learn how the Government will choose between public service ambitions and household incomes. Next year the choices will unavoidably get starker.”
The Chancellor also included tax breaks for high street businesses, as well as hiking taxes on banks and gambling. Defending the Budget measures, the Prime Minister told broadcasters: “It’s pretty bold to help 20 million households with energy costs through the council tax cut this winter. It’s bold to lift 70,000 businesses out of business rates altogether, and that will give a real lift to high streets up and down the country.”
