Chancellor John Healey is set to deliver the Autumn Budget on Wednesday, October 28, in the House of Commons. The statement will follow Prime Minister's Questions and will be the first Budget under Prime Minister Andy Burnham.
Budget Date and Context
Mr Healey, appointed Chancellor on July 20, confirmed the date before Parliament went into recess. He promised a Budget that will "move money and power out of Westminster and into every postcode around Britain." The Chancellor has stressed the importance of "fiscal discipline," saying the government wants to give businesses and families the stability they need to plan ahead.
Potential Tax Changes
One of the biggest questions heading into the Budget is whether households and businesses could face higher taxes. Burnham refused to rule out tax rises when challenged by the Tories during PMQs in September.
Tax increases being considered include higher levies on banks in the City demanded by union chiefs, ramping up taxes on the better-off, or a bigger Treasury cash grab from property owners. There has been discussion around reforming inheritance tax and potentially introducing a land value tax, which would tax the value of land rather than the buildings on it. However, the government has indicated that it does not intend to raise the main rates of income tax, VAT or National Insurance.
Announced Policies
The government has already announced several policies that could affect household finances. State pensions: The government plans to change the Triple Lock from April 2030 to help fund a national care service. Under the proposals, pensions would rise in line with the highest of inflation or 2.5%, rather than by the highest of inflation, wage growth or 2.5%. There will also be a mechanism to make sure the State Pension keeps up with earnings growth over time.
First-time buyers: A new scheme called "Your First Home" aims to make getting onto the property ladder easier. First-time buyers putting down a deposit of just 2.5% would be able to access a 20% equity loan to help with the cost of buying a home. Energy bills: In one of his first moves as Prime Minister, Burnham pledged to remove VAT from domestic energy bills from October 1.
Unanswered Questions
Further changes to inheritance tax, a possible land value tax and additional defence spending have all been discussed, although it remains unclear whether any will feature in the Chancellor's statement. The Institute for Fiscal Studies laid out the fraught choices that the Chancellor has inherited for his first Budget. It highlighted the threat of more tax rises, which would almost certainly hit London hardest, or welfare cuts on a scale already rejected by Labour MPs, or Prime Minister Andy Burnham imposing significant cuts to public services.
The IFS stressed that Donald Trump's Iran war meant inflation in coming years will be higher than was expected in the spring, when the Office for Budget Responsibility published its most recent comprehensive report on the UK economy. The Budget will be an important test of how the government intends to balance its spending ambitions with its promise of fiscal discipline.
