John Healey has promised to use his first Budget to give households and businesses “breathing space today” from everyday costs while taking action to bring down energy bills for good in the future.
The Chancellor is expected to announce a freeze in fuel duty as well as plans for longer-term reforms as he seeks to make Britain “more resilient” from global shocks.
In a video message before he delivers the autumn statement on Wednesday, Mr Healey insisted the Government would move to ease the cost of living “responsibly” by sticking to Labour’s self-imposed fiscal rules.
He said: “Breathing space for today and fresh hope for the future. That’s what today’s Budget will deliver.
“The world’s a highly uncertain place. Conflicts abroad are pushing up energy prices, and the cost of living here at home – piling pressure on families, on businesses, and on our public finances.
“But Britain’s economy is showing real signs of resilience: investments up, productivity is growing, and we had the joint fastest growth in the G7 in the first half of this year.”
Mr Healey added: “This Budget is designed to give households breathing space from some of the everyday costs, provide targeted support for businesses and self-employed people, and to start the long-term action needed to get energy costs down for good.”
The Chancellor will have limited scope for big giveaways because of the stretched public finances, made worse by international market turmoil caused by the Iran war, and little has been leaked ahead of his statement on Wednesday.
He is sticking with the rules set by predecessor Rachel Reeves, requiring day-to-day spending to be financed by taxes rather than borrowing by 2029/30 and that public debt as a share of the economy should fall in the same year.
Prime Minister Andy Burnham has asked ministers to look at energy costs (Carlos Jasso/PA)
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But changes aimed at easing the cost of living are set to feature heavily, with Mr Healey expected to cancel January’s planned increase in fuel duty, keeping the rate of the levy frozen for the 16th year at 52p per litre, as first reported by The Sun.
Prime Minister Andy Burnham has also ordered the Chancellor and Energy Secretary Miatta Fahnbulleh to examine scrapping standing charges from gas bills.
He wants to break the link to stop the price of wholesale gas setting electricity bills too, even though the fossil fuel only makes up a small percentage of total generation.
The Chancellor is also expected to end the Carers’ Allowance cliff edge which has penalised unpaid carers for going over their earnings limit, even by as little as a few pence per week.
As part of a series of measures billed as “everyday fixes,” ministers have announced plans to make a higher tax-free mileage allowance of 55p permanent, and to slash tariffs on a range of popular foods, including chocolate, beans and gherkins, to make them cheaper for shoppers.
The last budget was delivered by Rachel Reeves (PA)
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The Chancellor is also set to announce a rise in the minimum wage by nearly 4%, while ending the trend of hiking the national minimum wage for those aged 18 to 20 by more than the rate for older workers, raising it instead roughly in line with the rate for over 21-year-olds, according to reports.
Opposition critics have pressured the Chancellor to use the Budget to set out a clear path for defence spending to hit 3% of national income by 2030, but he looks set to wait until next year’s spending review before announcing this road map.
In his message ahead of Wednesday, Mr Healey insisted that “in an uncertain world, we will strengthen national security and our defences, as well as our support for Ukraine”.
He said: “We’ll back British businesses and entrepreneurs, we’ll invest in the technologies that drive future growth, and we’ll build more homes, shift power out of Whitehall, so that leaders locally can drive growth in every postcode.
“We’ll do all of this responsibly, sticking within tight fiscal rules, and make sure every pound is well invested.
“Because this Budget is about getting through this difficult moment. But it’s also about putting Britain on a future path, a better future path.”
The Tories said Mr Healey was set to “shy away” from the difficult decisions, including bringing down the welfare bill, which the Prime Minister has said he does not want to do through “crude cuts”.
Shadow chancellor Andrew Griffith said: “Our public finances are on a cliff edge. John Healey must use his Budget to take tough decisions, instead of continuing to kick the can down the road. He must stop maxing out the nation’s credit card, tackle the out-of-control welfare bill and address rising global threats.
“If Healey fudges defence spending rather than properly funding 3% by 2030 in his Budget, he must resign. Defence is the first duty of any government, and we cannot leave our armed forces waiting any longer.
“The Conservatives are the only party with a plan to back hard work, cut spending, cut taxes and get Britain working again.”
Richard Fuller, shadow chief secretary to the Treasury, said Labour is ‘running scared of the big decisions necessary to get our country back on track’ (Jacob King/PA)
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The Liberal Democrats warned against a “steady as she goes” Budget and urged the Chancellor to go further by cutting fuel duty and other costs.
“Families are being squeezed from all sides, businesses face mounting costs, and for many it feels like even the basic joys in life have become unaffordable,” deputy leader Daisy Cooper said.
“That has to end. Today the Chancellor must cut energy bills, slash fuel duty and reduce VAT on our treasured pubs, restaurants and cafes.
“This must go hand in hand with getting Britain growing again. By joining the EU single market and customs union, we can grow the economy to cut taxes and cut bills.
“The Chancellor’s ability to deliver real change will determine whether his Budget is a pass or a fail.”
Reform UK Treasury spokesman Robert Jenrick called for a ‘break-glass Budget’ (Jonathan Brady/PA)
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Reform UK’s Treasury spokesman Robert Jenrick accused Mr Healey of “fiddling while the economy burns”.
“Borrowing costs are soaring, national debt has surpassed £3 trillion, and the tax burden is at a record high. We need a break-glass Budget that finally puts the economy back on track,” he said.
“The only way to give hardworking families and businesses relief is to first reduce spending. That’s why Reform has identified £40 billion of waste that can be cut immediately so households can get back £1,300.
“The test tomorrow is whether Healey is strong enough to take those tough decisions, or whether he will capitulate to Labour backbenchers just like Rachel Reeves.”