John Healey's first budget to offer 'breathing space' with energy support package
Chancellor John Healey has promised his first budget, due in a fortnight, will give consumers and businesses 'breathing space' while sticking to Labour's fiscal rules, with a further package of energy support expected at the 28 October statement.
John Healey's first budget to offer 'breathing space' with energy support package
'Breathing space' pledge from Bangkok
The chancellor used the International Monetary Fund annual meetings in Bangkok to set out his aim for the statement, telling journalists there that the budget would steady households and firms without breaking Labour's fiscal rules.
"I want the budget to be a budget that gives Britain a bit of breathing space – but also reinforces the strength of our fiscal"
Healey also pointed to the government's focus on firms as well as households. "The prime minister's talked about recognising the cost of business, not just the cost of living," he said.
Energy support expected at 28 October statement
Attention is turning to what the 28 October tax and spending statement will contain for energy bills. Healey is expected to announce a further package of energy support at that statement, which comes before what is expected to be a sharp rise in the energy price cap in January.
The groundwork for the package includes measures already taken:
- The government has already cut VAT on electricity bills.
- A further package of energy support is expected at the 28 October statement.
- The announcement is timed before the anticipated January rise in the energy price cap.
IMF backing and fiscal rules
The UK has been praised by the IMF this week for setting out a plan to tackle its deficit. IMF managing director Kristalina Georgieva urged the government to "stay the course".
Healey welcomed that backing and tied it to his own commitments. "We will meet those fiscal rules, and I think one of the hallmarks of the IMF's backing of our fiscal plans," he said, describing the support as reflecting evidence of performance already rather than just a forecast.
The chancellor also reiterated that he would be sticking to the spending plans set out by his predecessor Rachel Reeves at last year's spending review, with cabinet colleagues expected to find additional resources within existing budgets. Pressed on departmental pressures, he said colleagues were doing a good job managing with what they have and that one has to reprioritise to do fresh things.
He declined to say whether he would increase taxes on banks or raise capital gains tax to offset pressure from higher energy prices and government borrowing costs, arguing that speculation about what was set to be in budgets was actually deeply damaging, leading people to cash in pensions early and businesses to hold back investment.
Ukraine support and next steps
Healey, a former defence secretary, hinted he was working on an additional package of support for Ukraine to be announced at the budget. "I'm working on different ways we can step up support for Ukraine: military, diplomatic and economic," he said, citing Putin's targeting of energy systems leaving thousands without power as a harsh winter approaches. The future of Ukraine is the future of European security, he argued, and it is so crucial that Putin doesn't prevail.
On Thursday morning, Healey and Bank of England governor Andrew Bailey chaired a meeting of G20 policymakers in the absence of the US Treasury secretary, Scott Bessent. The chancellor will fly back to London on Thursday evening to put the finishing touches to the budget, due on 28 October.
