John Healey Delivers First Budget Amid Fiscal Pressure
Chancellor John Healey delivered his first budget focusing on cost-of-living relief and bank tax increases while navigating high national debt and global economic volatility.
Chancellor of the Exchequer John Healey delivered his first budget on October 28, 2026, focusing on "everyday fixes" to provide "breathing space" for households facing a cost-of-living crisis. The budget arrives as the United Kingdom faces significant fiscal pressure, with national debt exceeding 3 trillion pounds and inflation hitting 3.5% due to supply bottlenecks and the war in Iran. To maintain market stability and avoid the volatility of previous administrations, Healey adopted a "low-key" approach, ruling out increases to income tax, national insurance, and VAT.
Key spending measures include a £1 billion boost for council housing to deliver 10,000 homes, £432 million to combat rough sleeping, and over £1 billion for energy bill relief for poor households. The government also announced a nearly 4% increase in the national living wage to £13.20 per hour and a freeze on fuel duty at 52p per litre. To fund these commitments and a £4.7 billion gap in defense investment, Healey targeted the banking and gambling sectors, proposing to raise the bank tax surcharge from 3% to 8% and closing VAT loopholes for foreign online retailers.
Opposition leader Kemi Badenoch criticized the budget, claiming the government is avoiding necessary welfare cuts. Meanwhile, the administration continues to push a devolution package to grant local leaders more financial independence from Westminster. Healey remains committed to fiscal rules requiring day-to-day spending to be funded by tax receipts by 2029/30, despite a shrinking fiscal buffer caused by rising borrowing costs.
