21 Takeaways From John Healey’s First Ever Budget

Chancellor John Healey has unveiled his first ever Budget, promising to offer more “breathing space” for households and businesses struggling with the cost of living.

From help with energy bills to taxes on banks, here’s a breakdown of the most significant announcements of his statement:

Burnham’s government already took VAT off electricity for 29 million households in its first week back in July.

Healey told MPs today he would extend that VAT cut through winter and spring to July, “taking £50 off the annual price cap”.

He added: “For business, our new British Industrial Competitiveness Scheme, will take 25% off electricity bills for 10,000 firms at the heart of British industry.

“It will go live in April, and I confirm that we will make backdated payments for energy costs this year too. “

As announced hours before the Budget, Healey said he would be scrapping the standing charges on gas bills.

That usually costs the average household £108 a year, regardless of how much gas they use.

But Healey said: “From next year, through [regulator] Ofgem, we will remove standing charges from household gas bills, and set out similar reforms to follow for electricity bills.”

The government estimates this will save 60% of households an average of £45 a year.

Healey said for 20 million households in council tax bands A-D, he would announce a £100 ‘Household Energy Payment’.

He said: “Paid directly into people’s bank accounts to help deal with rising energy bills, a £2.6bn scheme to take the pressure off in the coldest months and see people through to the Spring.

“The Scottish, Welsh and Northern Ireland governments will receive their share of this funding, And I call on them to do the same and give people in all nations of the UK breathing space on their energy bills.”

Healey said the government would extend the 5p cut to Fuel Duty through the winter and spring to July.

He added that he is increasing the higher mileage rate from 25p to 35p per mile, and “making permanent the increase to the standard mileage rate introduced earlier this year.”

Healey confirmed the government would be suspend tariffs on over 100 supermarket products to keep prices down – including baked beans, chocolate and gherkins, as well as fertilizer and kerosene heating oil.

Healey unveiled a new Pension Tax Allowance “so that pensioners with income up to the value of the full new State Pension will not pay Income Tax in this parliament.”

He added: “For carers, I am getting rid of the cliff edge on earnings, so that people don’t lose their entire Carers Allowance when they earn a penny over the threshold.

The chancellor said: “For our 2.3 million of our lowest paid workers, I am increasing both the National Minimum Wage [for those aged 18-21] and the National Living Wage [for those over 21] by 3.9%.”

Unlike in his last two Budgets, Healey is not try to close the gap between the two wages.

But The national living wage will still go up from £12.71 to around £13.20, while the national minimum wage will rise from £10.85 to around £11.27.

Healey said he had “heard calls for pay transparency on job adverts to help close the gender pay gap”.

He said the government would “act soon to make sure women are paid and promoted fairly.”

The chancellor added: “I will make self-employed fathers and partners eligible for paid parental leave for the first time.”

The Labour government already announced plans to cut 20% off business rates for pubs, clubs and music venues from April next year.

Today, the chancellor said: “I’m increasing the threshold for Small Business Rate Relief for retail hospitality and leisure businesses from £12,000 to £18,000.”

He said that would mean 70,000 businesses no longer have to pay business rates.

All other businesses would have their rates frozen in real terms, “so that none face an above-inflation rise for two years”.

Healey said he would be increasing Machine Games Duty from 20% to 25% for higher stakes machines, while protecting pubs and seaside arcades.

“I will carve out adult gaming centres and vape shops from business rate reliefs, and extend the business rates Transitional Relief Supplement for a further two years,” the chancellor said.

He said he would also strengthen the requirements for online marketplaces so that sellers cannot avoid paying VAT when they sell online.

The chancellor said he would provide a £10m alcohol duty relief for around 2,000 small British brewers and cider makers.

Healey said he would grant HMRC funding to improve compliance and stronger powers to collect overdue taxes from those who can clearly afford to pay, but ignore repeated contact.

The chancellor said he was “reforming the administration of self-assessed income tax from 2029” too, so these taxpayers make smaller, more regular payments.

Healey said: “ For other assets, I will provide greater upfront relief for new investment, increasing the main rate first-year allowance from 40% to 50%, while reducing the main writing down allowance from 14% to 12%.”

“Reducing the threshold for Business Asset Disposal Relief in Capital Gains Tax from £1m to £500,000, meaning no change for 3 in 4 claimants.

“And I am increasing the rates of tax on income from property and savings by a further two percentage points from April 2027, With no change to tax on income from dividends and tax on income from employment.”

Healey said 88% of people will pay no more tax on their savings as Labour will not go ahead with the cut to the tax-free amount that people can put into a cash ISA.

The chancellor said. “The limit will stay at £20,000 per year, tax-free, for people of all ages and to make investment accessible, I will work with the sector to create a new ‘Starter ISA’ to reward first-time investors.”

“Banks will pay an extra 3% on the Bank Surcharge,” the chancellor said. “This will be time limited, to pay for immediate support on energy bills, starting in January, ending 15 months later.”

That takes the overall surcharge to 6%.

Healey said: “I’m announcing new Good Growth Funds for Mayors, and incubator capital for areas without Mayors moving into Strategic or Mayoral status.

“Flexible funding to invest in local economies, boosted by a further £1.5bn of devolved loans for Mayoral Authorities.”

He added that 100% of business rates will be retained locally by the end of the decade.

“If local leaders help businesses start and grow, more of the rates they pay stay in that area. From next year, 20% of business rates revenue will go to Mayors, And from 2028, a share of income tax receipts will go to Mayors as well,” he said.

The chancellor reaffirmed an announcement revealed earlier this week – funds to help reduce rough sleeping.

“I confirm a further £430 million to keep that offer open for the rest of this Parliament. Not just this winter, but every winter.

“This is a moral mission. For this Prime Minister. For me. For this entire Labour Party,” he said.

The chancellor made it clear he would not outline how to bolster defence spending until next year’s Spending Review.

But Healey did reiterate the country’s targets, including the NATO commitment to spend 3.5% of GDP on defence by 2035, with a target date for 3% in 2030.

He added: “And today, I am getting work underway to get there in a fiscally sustainable way.”

Healey announced £10bn of additional economic and military support for Kyiv as Russian war against Ukraine continues.

He said this was based on loans, Export Finance guarantees, and half a billion in urgent military funding for this winter.

“The whole house, the whole country, is united for Ukraine. Today we send a clear message to Moscow: Britain will stand with Ukraine for as long as it takes,” Healey said.

Healey said: “To get more council homes built, I am extending cheaper borrowing for councils, and making all land sold to social housing providers VAT-free.

“And today, I am providing an additional £1.5bn for the Social and Affordable Housing Programme, Taking our total government backing for council housing to £40bn.”

He also said from the Spring there would be a new scheme for first time buyers, with a funding today with £4.7 billion of government-backed lending.

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