John Healey unveils £100 for energy bills and bank tax in first Budget

In his inaugural Budget speech, Chancellor John Healey announced a £100 one-off payment aimed at millions of households to help ease the pressure of rising energy costs. This support will be funded through an increased tax on the profits of major banks. Healey emphasized the need to provide immediate relief for struggling families while also offering “hope for the future” amid what he described as the “global economic storms” affecting the UK economy.

The Budget also includes measures aimed at supporting local businesses, including raising the threshold for business rates in England from £12,000 to £18,000, though certain sectors like vape shops and adult gaming centers are excluded from this relief. Other key elements of the plan include scrapping gas standing charges across England, Scotland, and Wales by 2027 to shift these fixed fees onto consumption, an extension of a temporary 5p cut in fuel duty until July, and a 3.9% increase in minimum wage rates from April. Healey also confirmed that several major policy decisions on welfare and defense spending would be deferred until next year.

To help fund these initiatives, the chancellor announced an increase in the tax on high-stakes gambling machines alongside doubling the charge on big banks’ profits from 3% to 6%, effective from January 2025 until April 2028. Despite these measures, public finances remain strained, with £14 billion more expected to be spent on debt interest this year. Income tax thresholds will remain frozen, and taxes on income from savings and rental properties are set to rise to 24% for basic rate taxpayers by April 2027. However, Healey reversed a previous decision to reduce the cash ISA allowance, leaving it at £20,000 per year.

Healey also outlined plans to devolve more fiscal powers to regional mayors by allowing them to keep 20% of business rates and a share of income tax revenue, with a long-term goal of full retention of these business rates by the end of the decade. The chancellor sought to reassure critics wary of welfare spending by committing to reduce the welfare bill “in a Labour way,” although no concrete steps will be taken until after pending reviews on personal independence payments and youth employment are published next year. Controversy around defense funding persists, with Healey acknowledging a £4.7 billion shortfall in the defense investment plan to be covered partially by reallocating capital budgets. The government’s intention to meet its defense spending targets by 2030 and 2035 is expected to be detailed in next year’s spending review, drawing criticism from Conservative leader Kemi Badenoch, who accused Healey of increasing risks to UK forces.

Reactions to the Budget were mixed. Helen Miller, from the Institute for Fiscal Studies, described it as containing “a raft of fiddly measures” but lacking significant impact on growth. Liberal Democrat leader Sir Ed Davey insisted that without addressing the UK-EU trading relationship, such Budget announcements amount to “tinkering around the edges.” Reform UK leader Nigel Farage labeled the plans as “little giveaways” that fail to deliver substantive improvements, particularly on defense. From the left, Unite’s general secretary Sharon Graham called the measures “baby steps,” cautioning that the energy support falls short of the expected bill increases. Green Party leader Zack Polanski criticized the Budget for ignoring climate issues and prioritizing bankers, saying it “betrays the future for young people and the planet they inherit.”

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