What to Expect from the New Government's First Budget
Chancellor John Healey will deliver the Burnham government's first Budget on 28 October, the Treasury has confirmed BBC News.
A Budget is the government's annual financial statement, setting out how it plans to raise money through taxes and spend it on public services. This one carries extra drama because of Healey's own history with defence funding. He resigned as Sir Keir Starmer's defence secretary over what he regarded as a failure to fund the armed forces properly. He now lives and works at No 11 Downing Street (the Chancellor's official residence) under a different prime minister, Andy Burnham, who took over from Starmer on 20 July 2026 after winning the backing of Labour MPs BBC News.
Defence spending will be the central tension. The Treasury has identified an extra £4.7bn as necessary in the Budget to fund the defence investment plan BBC News. Healey is not, however, expected to set out a path to spending 3% of GDP (the total value of everything the UK produces in a year) on defence in the Budget itself. That plan will wait until the following spring's Spending Review, a separate statement that sets departmental budgets over several years, according to the same source. The decision to delay the 3% question will attract scrutiny from backbench MPs (those not in government roles) and members of the defence select committee, a cross-party group that examines defence policy. They remember precisely why Healey walked out of the Ministry of Defence.
The money available is further limited by Burnham's repeated promise to stick to Labour's 2024 manifesto pledge not to increase income tax, VAT (the tax on most goods and services) or national insurance. The prime minister has, though, said there is "room for movement" on taxes within the boundaries of that pledge BBC News. That wording is deliberately loose. It leaves the door open to changes elsewhere in the tax system — fuel duty, capital gains tax (tax on profits from selling assets), inheritance tax reliefs, or levies on specific sectors — without technically breaking the promise on those three named taxes.
Secrecy around the process has been tightened. Burnham's administration has put measures in place to stop Budget policy leaks, and the Treasury is telling officials that Budget security should be treated like national security BBC News. The instruction reflects concern within government that giving journalists advance notice of measures has eroded the authority of the parliamentary occasion itself.
The Budget will be the first major financial event for a government that is barely six weeks old. Burnham became Prime Minister on 20 July 2026, delivering his first speech on the steps of Downing Street, in which he said Britain needs to show the world it can "regain its stability" and that the challenge is to "make politics work" GOV.UK.
His route to Downing Street was unconventional. Burnham won the Makerfield by-election (a vote to fill a vacant parliamentary seat) on 18 June 2026, returning to the Commons after his period as Mayor of Greater Manchester, and was confirmed as the Labour (Co-op) MP for the seat Parliament.uk. He replaced Starmer after securing the backing of Labour MPs, without a contest that would have exposed his plans to public examination BBC News. The Conservatives have criticised him for not facing scrutiny over his plans for government before becoming prime minister BBC News.
Since taking office, Burnham has moved quickly on the diplomatic front. His first overseas visit as prime minister was to Kyiv, arriving on Monday 24 August for Ukrainian Independence Day, where he delivered the message "Britain is 100% behind you" GOV.UK.
Before that trip, Burnham spent two weeks on what was described as a "listening tour of the UK", travelling across the country in August while MPs break for the summer, focusing on areas where Labour has fallen behind BBC News; Politico. Downing Street said the government would continue to function normally while the prime minister was on holiday BBC News.
Burnham has also said he will bring together the leaders of Wales, Scotland and Northern Ireland this autumn for a National Economic Council summit to help boost the UK economy BBC News. That summit, if it happens before the Budget, could shape how Healey's decisions are received in the devolved nations. These are parts of the UK where many tax powers now rest with their own parliaments and assemblies: Holyrood in Scotland, the Senedd in Wales, and Stormont in Northern Ireland.
The 28 October date gives the government roughly two months to prepare. Healey's record on defence spending is, paradoxically, both an advantage and a problem. His resignation over MoD funding gives him unusual authority to argue that the deal he is now putting together is credible. But the same record means that any gap between the £4.7bn identified for the defence investment plan and what actually appears in the Red Book — the official document published alongside the Budget — will be measured against his own previous benchmark: the one that led him to quit.
The decision to hold back the 3% of GDP pathway until the spring Spending Review is a practical one. It avoids making a multi-year commitment before the Office for Budget Responsibility, the UK's independent economic forecaster, has settled on its forecasts for the new government. But it also means the defence lobby, already restless, will have to wait until 2027 for clarity on the full plan.
The broader context here is a prime minister who has not yet faced a general election as leader, who arrived in Downing Street through a vote among fellow MPs rather than a national contest, and whose first Budget will be read less for its individual measures than for what it tells us about the instincts of a government still finding its feet.
