Chancellor John Healey Announces Budget and Welfare Spending Cuts
Chancellor John Healey introduced a cost-of-living support package while signaling future public spending cuts and a reduction in the overall benefits bill.
Chancellor of the Exchequer John Healey announced a Budget featuring a cost-of-living support package that includes a £100 household energy payment, a freeze on fuel duty, and a 3.9% increase in the minimum wage. The government also extended the VAT cut on electricity bills to July 2027 and committed to removing gas standing charges by 2027 or shortly thereafter. Healey attributed rising costs to global conflicts in Europe and the Middle East.
Despite these supports, Healey signaled a shift toward fiscal consolidation to reduce national debt, which exceeds 97% of the economy. He stated that the overall benefits bill will decrease under the Labour government starting next year, though he declined to set a specific timetable for those savings. Chief Secretary to the Treasury Emma Reynolds added that the government would avoid crude cuts to welfare, promising instead to legislate for a fair and sustainable reduction in the new year.
Healey also declined to guarantee that the government will meet its manifesto pledge to equalize the minimum wage for 18- to 20-year-olds before the next election, citing the need to balance jobs and wages to avoid increasing youth unemployment. This stance drew criticism from Conservative leader Kemi Badenoch, who alleged a £49 billion funding gap. Former Bank of England chief economist Andy Haldane further argued that the Budget did little to appease market fears regarding the government's fiscal policies.
