Chancellor John Healey has delivered his first Budget, announcing a range of measures aimed at providing "breathing space" for households and businesses. Key announcements include the removal of gas standing charges, a £100 one-off winter payment for millions, and a rise in the minimum wage.
Energy bill support and winter payments
Standing charges will be removed from household gas bills for tens of millions of people. Under the current energy price cap, the gas standing charge is £108 a year on average, a fixed daily fee added to bills regardless of usage. Fixed costs will now be paid on the unit rate, with the government estimating that 60% of households will save an average of £45 per year.
Prime Minister Andy Burnham had already confirmed that VAT on electricity bills would be suspended for six months. In an unexpected announcement, the Chancellor said there will be a £100 one-off payment for 20 million people this winter, paid to those in council tax bands A to D directly into their bank accounts. He said: "That's a £2.6 billion scheme to take the pressure off in the coldest months and see people through to the Spring." Devolved governments will receive their fair share of the money.
Wage increases and regional funding
The minimum wage will rise by 3.9% for low-paid workers, taking the hourly rate from £12.71 to £13.20 from next April. The lower rate for 18 to 20-year-olds will rise by the same amount, a lesser rise than Labour had previously promised in their manifesto.
The Budget also pushes more powers and funding out of Westminster into city regions. The government had already stated it will introduce Good Growth funding for local leaders, including Liverpool City Region Mayor Steve Rotheram, with an initial £285 million in transitional seed funding allocated next year. The Chancellor added that from next year, 20% of business rates revenue will go to regional mayors.
Investment in Liverpool and social measures
There was a surprise £20m investment for Liverpool's Littlewoods project, supporting plans to transform the art deco building in Edge Lane into film and TV studios. The project had been facing a "viability challenge".
The government is "doubling funding" on offering rough sleepers support and routes away, extending support beyond March 2027 through to the end of this Parliament, taking total investment to £874 million. The Chancellor said rough sleeping is a "shame on the nation" and added: "This is a moral mission for me and the Prime Minister."
Savings, fuel duty, and tariffs
The Chancellor reversed a decision by his predecessor Rachel Reeves to slash the annual Isa allowance from £20,000 to £12,000. Ms Reeves had announced the Isa cut for savers aged under 65 at the autumn budget last year, with the change set to come into effect in April 2027.
Fuel duty is locked in at 55p per mile for the first 10,000 business miles, with the rate above 10,000 miles increasing from 25p to 35p per mile, supporting around three million employees and self-employed people. The 5p fuel duty cut is extended until next July, due to high fuel prices driven by the war in the Middle East.
The government will lower import costs on family favourites including baked beans and chocolate, while supporting farmers facing higher fertiliser bills and households relying on kerosene heating oil. Together with tariff suspensions already introduced, households could save up to £21 on their food shop each year. Other products expected to see tariff cuts include garlic, toffees, marmalades and throat pastils.
Carer's allowance, parental pay, and business rates
Unpaid carers will no longer lose their entire allowance for earning a penny over the Weekly Earnings Limit, equivalent to 16 hours of the National Living Wage. Instead, only £1 of support will taper away for every additional £1 earned.
Parental pay will be extended to more than 150,000 additional parents per year, including self-employed dads and partners who have previously missed out, giving eligible parents two weeks of support currently worth up to £194 a week.
The Chancellor announced an increase in the threshold for small business rate relief for retail, hospitality and leisure businesses from £12,000 to £18,000, taking 70,000 businesses out of paying business rates altogether. This will be funded by raising taxes on gambling.
To pay for the measures, a bank tax charge of 3% will be introduced, lower than the 5% that had been speculated. Taxes on gambling will also be raised to support the high street.
