Chancellor John Healey Unveils First Budget with Bank Tax Hikes
Chancellor John Healey introduced a budget featuring energy relief for 20 million households funded by temporary tax increases on banks and gambling firms.
Chancellor of the Exchequer John Healey delivered his first budget on October 28, 2026, focusing on providing breathing space for households amid global economic instability and rising energy costs driven by conflict in the Middle East. The center-piece of the plan is a £2.6 billion energy support package, which includes a £100 payment to approximately 20 million households in council tax bands A to D and the extension of a VAT cut on electricity bills through July 2027. Healey also announced the abolition of gas standing charges starting in 2027, a move intended to save 60% of households an average of £45 annually.
To fund these measures, the government implemented a temporary increase in the bank corporation tax surcharge, raising it from 3% to 6% for 15 months starting in January 2027. Additional revenue will be generated by increasing the Machine Games Duty on high-stakes gambling machines from 20% to 25% and raising income tax on rental income and savings by two percentage points. Other key provisions include a 3.9% increase in the national minimum and living wages, a freeze on fuel duty until July 2027, and the introduction of a Your First Home equity loan scheme for first-time buyers.
Healey also introduced a radical devolution package granting regional mayors new borrowing powers and a share of local tax receipts. On national security, the government pledged £10 billion in support for Ukraine and reaffirmed a target for defense spending to reach 3% of GDP by 2030. While the Office for Budget Responsibility upgraded 2026 growth to 1.2%, it lowered the 2027 forecast to 1%, warning that the UK's fiscal position remains very challenging.
