Chancellor John Healey's first Budget has been criticised by the Resolution Foundation, which says typical annual energy bills will reach £1,750 after Government support in 2026-27, above the £1,685 peak seen during the 2022-23 energy price surge.
Budget measures under scrutiny
Mr Healey set out his Budget on Wednesday, aiming to provide "breathing space" for the public amid rising prices exacerbated by the Iran war. Measures included scrapping standing charges on gas bills and energy payments of £100 for up to 20 million households.
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."
Income forecasts and support gap
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.
Ms Curtice added: "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."
Government response
The Budget also included tax breaks for high street businesses, as well as hiking taxes on banks and gambling. 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".
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."
