Prime Minister Andy Burnham's first Budget has come under immediate criticism from a leading economic think tank, which said the package does little to address Britain's economic challenges.
The Resolution Foundation said Chancellor John Healey delivered a "scattergun" Budget that would fail to prevent energy bills from rising above levels seen during the last energy shock. The analysis is due to be published in full on Thursday.
Energy bills and household impact
Mr Healey set out his first Budget as Chancellor on Wednesday, aiming to provide "breathing space" for the public amid rising prices exacerbated by the Iran war. Measures include scrapping standing charges on gas bills and energy payments of £100 for up to 20 million households.
However, the Resolution Foundation said typical annual energy bills were expected to reach £1,750 after Government support in 2026-27. That compares with £1,685 paid during the 2022-23 energy price jump after Russia invaded Ukraine.
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."
Disposable income forecast
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.
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."
Welfare and tax measures
The Chancellor also included tax breaks for high street businesses, as well as hiking taxes on banks and gambling. The Institute for Fiscal Studies also warned the Budget delayed tough decisions.
Mr Healey denied postponing difficult decisions on the welfare system, insisting the Government is making changes "now". Speaking to GB News, he said ministers have already brought in a range of measures to cut the cost.
He told the broadcaster: "This was a broken system. And two years ago we started putting back in place face-to-face assessments. We've changed terms of universal credit, so people don't have to brand themselves as too sick to work."
"So, those are changes we're making now. But in the long run, as I've argued, and the Prime Minister has said, too, we have to bring the cost of benefits down."
"We will, but we have to do that, especially for our young people, in a way that gives them a chance to make something of themselves. And when we've got a million youngsters that aren't working and aren't in education or training, that's a moral duty to do this, and we will."
The Chancellor told BBC Radio 4's Today that the Government "can never remove completely the cost-of-living pressures that people feel". He said: "We can help where we can and that's what I'm doing with creating a bit of breathing space for these households."
He also told Today that "crude cuts" to the welfare system would be a bad idea when "people are feeling the cost-of-living pressures". However, he vowed there would be a "reduction in the benefits bill" before the next General Election, telling the programme: "There will be a reduction in the benefits bill, we'll do that in a Labour way and we'll do that because it is simply not good for Britain or progressive to have a bigger and bigger benefits bill."
Prime Minister defends Budget
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."
"Of course, we already announced the plan to take VAT off people's electricity bills. There's a whole host of other measures. We're doing what we can to support people in difficult times, recognising that we don't have huge room for manoeuvre."
"But as you can see in what the Chancellor has announced, there are strong signs that the economy will improve over the coming years. The fiscal rules are met, so we've done all of this within a very prudent and stable approach."
