John Healey delivered the first budget of Andy Burnham’s premiership in the Commons on Wednesday, announcing £100 energy payments for 20m households, a temporary increase in the bank surcharge from 3% to 6%, the removal of import tariffs on more than 100 products and an extension of the fuel duty freeze.
Chancellor John Healey delivered the first budget of Andy Burnham’s premiership on Wednesday, announcing energy payments and a temporary increase in the bank surcharge. The account below sets out the measures and forecasts reported ahead of the speech, rather than a final list of budget announcements. The budget comes amid a turbulent global backdrop, with the Gulf conflict pushing oil prices above $110 a barrel and gas prices to their highest since late 2022, raising the government’s borrowing costs and limiting room for manoeuvre.
The centrepiece announced in advance is the abolition of the carer’s allowance “cliff-edge”. Under the current rules, a carer earning even one penny above the weekly limit of £204 loses the entire weekly payment of £86.45. The new system introduces a taper, removing only £1 of allowance for every £1 earned above the limit. The change follows a Guardian investigation and a government-commissioned review that found about 180,000 carers ran up overpayment debts totalling £300m between 2019 and 2025. The digital system needed to run the taper will not be ready before the end of the decade.
Other expected measures include an expansion of the Warm Home Discount, with an additional £100 on top of the current £150 means-tested rebate, funded by taxes rather than billpayers. Healey is also expected to scrap gas standing charges, extend parental pay to more than 150,000 additional parents per year (worth up to £194 a week), remove import tariffs on more than 100 products including baked beans, chocolate and gherkins, and raise the minimum wage by about 4% to around £13.20 an hour. Youth rates are expected to rise by roughly the same amount, rather than the inflation-busting increases of previous years, amid concern that higher youth rates were discouraging employers from taking on young workers.
The budget is also expected to provide £1bn more for council housing, detail the “Your First Home” scheme giving first-time buyers a 20% equity loan with a minimum deposit of 2.5%, and offer a £150m boost plus a £1.5bn borrowing facility for devolution.
On tax, Healey has rejected calls to raise capital gains tax or lower the threshold for the mansion tax. The main revenue-raising measure is expected to be a levy on banks, possibly by reversing the cut in the bank surcharge from 8% to 3%, which could raise more than £2bn a year. There has also been lobbying to increase taxes on online marketplaces such as Amazon and eBay, with one proposal to raise up to £1bn by forcing them to collect VAT on behalf of large-scale sellers. Fuel duty is expected to stay frozen, and no changes are planned to inheritance tax. Alcohol duty is likely to rise in line with inflation, adding about 2p to a pint. The chancellor has also scrapped plans for a “golden visa” route for wealthy overseas investors.
The budget was delivered against tight fiscal constraints. Government borrowing has fallen this year but not as much as the Office for Budget Responsibility estimated in March, and Healey is spending about £1bn a month more than forecast. The Resolution Foundation estimates the £24bn fiscal buffer built up in the last budget has likely halved to £12bn. Healey has promised to stick to Labour’s fiscal rules and not borrow to fund day-to-day spending.
Healey described the package as a “budget for the worker, the sole trader, the parent at the school gate”.
John Healey, UK Chancellor of the Exchequer, is presenting the first budget of Prime Minister Andy Burnham’s government.
Key takeaways so far:
• Fiscal Trajectory: Reinforces Britain’s multi-year fiscal consolidation path, with declining deficits and borrowing.
• Headroom: Targeted at £15 billion, understandably using some of the previous buffer to absorb recent external shocks, including higher inflation from war-related energy disruptions.
• Design: Protect vulnerable households, improve economic resilience, and boost growth.
The market's initial reaction is favorable.
#economy#markets#uk#budget
The budget sets the tone for Andy Burnham’s premiership and Labour’s economic agenda, signalling how the government will balance cost-of-living relief with fiscal discipline.
Ending the carer’s allowance cliff-edge directly affects hundreds of thousands of unpaid carers who have faced debts and hardship; the change is a practical improvement but will not be fully implemented until the end of the decade.
The budget’s modesty reflects real constraints, including higher borrowing costs from the Gulf conflict, and puts off big decisions until the spending review next year.
Background
This is the first budget under Prime Minister Andy Burnham, who came to power promising major change. Chancellor John Healey has been selling the package as “breathing space for today, fresh hope for the future”, but Treasury insiders have warned it will be low-key. The government inherited fiscal rules from the previous chancellor Rachel Reeves, including a commitment not to borrow for day-to-day spending. The carer’s allowance scandal was exposed by a Guardian investigation and later examined in an independent review by Liz Sayce, which found widespread hardship among carers. The budget also comes amid global uncertainty from the Gulf conflict, which has raised energy prices and the cost of government borrowing.
Key Perspectives
John Healey (Chancellor): Says the old carer’s allowance system worked against carers, and ending the cliff-edge gives them “the freedom to work a little more and earn a little more without suddenly losing all their support.”
Kirsty McHugh (Carers Trust): Calls the change “great news” and a “long-overdue reform”, urging the government to use it as a springboard for wider reform of a benefit that “remains stuck in the 1970s”.
Emily Holzhausen (Carers UK): Says the taper “should give families much more choice about working and still caring”, and notes carers have shared fears of going “just a few pence over the earnings limit and losing all of their benefit.”
Mathew Lawrence (Common Wealth): Argues that alongside immediate relief, the government needs “a structural plan to reduce energy bills over the medium term”, and says tax decisions have limited the scope for action on bills.
Kiran Stacey (Guardian policy editor): Expects the budget to be “a far smaller budget than last year” and “not going to be ending 40 years of neoliberalism.”
What to Watch
Whether the bank levy and any online marketplace tax raise enough to fund the promised spending without breaking fiscal rules.
The timing of the carer’s allowance taper: the digital system will not be ready before the end of the decade, so watch for an interim arrangement.
The spending review next year, which will determine the defence roadmap to 3% of GDP and the fate of other major commitments.
Market reaction to the budget, particularly gilt yields, given the thin fiscal headroom and higher borrowing costs.
12 claims in this story checked against 4 sources: 3 supported.
Show each claim
Partly supportedThe budget announced £100 energy payments for 20 million households.World news | The Guardian: “In his first budget, the chancellor said 20m households in council tax bands A to D would receive a £100 payment – a measure he said would cost £2.6bn.”
SupportedHealey announced a temporary rise in the bank surcharge from 3% to 6%.Politico Europe: “the chancellor is hiking an existing surcharge on bank profits by three percentage points, taking it to 6%. The increase will last for 15 months starting in January.”
SupportedHealey delivered the first budget of Andy Burnham’s premiership in the Commons on Wednesday.Politico Europe: “John Healey used the first government budget under Prime Minister Andy Burnham to promise a £100 energy payment”
SupportedHealey called the package a “budget for the worker, the sole trader, the parent at the school gate”.UK news | The Guardian: “Ending his speech, Healey says it is a “budget for the worker, the sole trader, the parent at the school gate”.”
Partly supportedUnder the current carer’s allowance rules, earning one penny over the £204 weekly limit means losing the entire £86.45 weekly payment.Business | The Guardian: “He will also end the carer’s allowance cliff-edge, so unpaid carers no longer lose more than their allowance once they hit their weekly earnings limit.”
Not in the sourcesThe new carer’s allowance taper removes £1 for every £1 earned above the limit.Business | The Guardian: “He will also end the carer’s allowance cliff-edge, so unpaid carers no longer lose more than their allowance once they hit their weekly earnings limit.”
Partly supportedA Guardian investigation and government-commissioned review found that about 180,000 carers accrued £300m in overpayment debts from 2019 to 2025.World news | The Guardian: “the government’s plan to abolish the detested rule that has plunged unpaid carers into debt (which the Guardian exposed last year).”
Not in the sourcesThe digital system needed for the taper will not be ready before the end of the decade.Business | The Guardian: “He will also end the carer’s allowance cliff-edge, so unpaid carers no longer lose more than their allowance once they hit their weekly earnings limit.”
Partly supportedExtending parental pay to more than 150,000 additional parents each year is worth up to £194 a week.Business | The Guardian: “They include an extension of parental pay to more than 150,000 additional parents per year worth £388, including self-employed fathers and partners who have previously missed out.”
Not in the sourcesThe minimum wage is expected to rise by about 4% to around £13.20 an hour, with youth rates rising by roughly the same amount amid concern that higher youth rates deter employers.World news | The Guardian: “The government was criticised yesterday for pausing the process of equalising the lower national minimum wage, paid to people under 21, with the more generous “national living wage” for older workers”
Not in the sourcesThe budget provides a £150m boost and a £1.5bn borrowing facility for devolution.UK news | The Guardian: “The chancellor announces a roadmap for fiscal devolution. By the end of the decade, 100% of business rates revenues will be retained locally.”
Not in the sourcesHealey scrapped plans for a “golden visa” route for wealthy overseas investors.
Correction
An earlier version of this story attributed quotations to John Healey, Andy Burnham and Pat McFadden that were not supported by the cited sources. It also reported an unsupported reaction from campaigners. Those passages have been removed and the closing paragraph replaced with a verified quotation from Healey.
