John Healey Unveils First Budget with Bank Tax Hikes
Chancellor John Healey introduced a cautious budget featuring temporary bank tax increases to fund energy relief and a plan to scrap gas standing charges by 2027.
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. To fund cost-of-living measures without raising income tax, national insurance, or VAT, Healey implemented a temporary increase in the bank corporation tax surcharge from 3% to 6% for 15 months starting in January 2027. He also increased the Machine Games Duty on slot machines to 25% and raised taxes on landlords and savers.
Key relief measures include a £2.6 billion scheme providing £100 energy payments to approximately 20 million households in council tax bands A to D and the extension of a VAT cut on electricity through July 2027. In a significant energy market reform, the government will scrap standing charges on gas bills starting in 2027, shifting those costs to unit rates. Other provisions include a 3.9% increase in the National Living Wage and a new £4.7 billion equity loan scheme for first-time buyers.
Opposition leaders, including Conservative leader Kemi Badenoch, criticized the budget for avoiding necessary welfare cuts and failing to provide a concrete roadmap for increasing defense spending to 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 real household disposable income has seen virtually no growth since before the pandemic.
