Healey presents first budget with energy and housing measures

Chancellor John Healey delivered the first budget of the Burnham government at 12:30 pm on Tuesday, outlining a package of measures aimed at reducing costs for low and middle income households. The announcement followed weeks of speculation and was described by the Treasury as a low key event.

The plan focuses on providing breathing space for today and fresh hope for the future, according to Healey. He rejected calls to raise capital gains tax or lower the mansion tax. He also promised to stick to Labour fiscal rules, a constraint that has been tightened by the increased cost of borrowing due to the Iran war.

One of the central elements of the budget is support for energy bills. The government plans to provide immediate relief for poorer families this winter and will announce reforms to the energy market designed to lower bills for all households in the longer term. Healey indicated he is considering making the warm homes discount, a £150 annual reduction in electricity bills for those on benefits, more generous.

The government will also pledge £1 billion in funding for council house building. This continues a commitment by Labour leader Andy Burnham to the biggest council house building programme since the post war decade. The budget will also provide details on the Your First Home scheme, a new version of the Help to Buy initiative intended to assist first time buyers.

StepChange, the UK's largest debt advice charity, provided data showing the average household arrears debt for its clients rose from £2,833 in 2022 to £4,345 in 2025. A spokesperson for the charity noted that in the late 2000s, consumers primarily sought help with consumer credit debt, but now one in two clients has energy debt.

Mathew Lawrence, director of the thinktank Common Wealth, stated that tax decisions have limited the government's scope for action on bills. He argued that alongside funded measures for immediate relief, the government needs a structural plan to reduce energy bills over the medium term. One proposed idea is an energy guarantee, which would protect a bloc of energy priced at pre crisis levels.

On food costs, the government announced the removal of import tariffs on products including baked beans, chocolate and gherkins. The Treasury estimates this measure will save the average household £21 on its yearly food shop. In contrast, the Resolution Foundation found that more than 900,000 private rented households on universal credit face a shortfall between their rent and housing allowance, averaging £158 a month for a family renting a two bedroom home.

The government also confirmed it will continue the freeze on fuel duty, a tax on petrol and diesel that was introduced in 2022. Jonny Marshall, an economist at the Resolution Foundation, suggested that this blunt instrument largely helps higher income households who drive more, and that the government could better target support for poorer households with more action on energy bills.