John Healey’s first budget has drawn criticism over its approach to household energy support, with thinktanks warning that relief is poorly targeted and that rising energy costs could put further pressure on Britain’s public finances. According to The Guardian Business, the package includes a £100 winter cost-of-living payment for most households, alongside a temporary increase in the surcharge on bank profits.
The Resolution Foundation said the support was spread too broadly rather than concentrated on households facing the greatest need. With energy bills expected to rise sharply in January, chief executive Ruth Curtice warned that even families receiving assistance would face higher bills than during the previous energy-price shock. The report also said the Bank of England was expected to raise interest rates the following week.
To help finance relief, Healey has raised the bank profits surcharge from 3% to 6% for 15 months. TUC general secretary Paul Nowak welcomed the decision but argued that banks should contribute more. He said the union would press for the levy to be extended and increased at its review if banks continued to earn windfall profits.
The Institute for Fiscal Studies identified wider risks to the budget. Its director, Helen Miller, said an additional £28bn a year would be needed to account for inflation in future spending plans and meet the goal of defence spending reaching 3% of GDP by 2030. Without that provision, some departments could face cuts in real terms, potentially prompting renewed pressure for tax increases.
The IFS also warned that unexpectedly high energy costs could readily erode the £15bn cushion against Labour’s fiscal rules. The Guardian Business reported that Healey had used some of that headroom to absorb the effects of the Iran war, which had increased government borrowing costs. The buffer stood at £24bn at the spring statement. Miller considered using it reasonable, but cautioned that the smaller reserve left the chancellor more vulnerable to further setbacks.