Healey delivers first Budget as chancellor, with energy bill relief and a borrowing outlook
John Healey delivered his first Budget as chancellor of the Exchequer, the minister in charge of the UK's public finances, on Wednesday 28 October 2026. Reuters The Budget combined a set of forecasts with a package of measures aimed mainly at household energy bills.
Healey said fiscal discipline, meaning tight control over spending and borrowing, was his first priority. He paid tribute to Rachel Reeves's approach to fiscal discipline in his speech. He also said trade tensions and the war in Iran were acting as a drag on global economic growth, and that the UK did not want the war. He argued that the conflict had raised costs for British families through higher energy prices and higher interest rates. The government will spend £14bn more on debt interest this year, he said. The Guardian
The Office for Budget Responsibility, the government's independent forecaster, set out its projections alongside the Budget. It expects GDP growth of 1.2% this year, 1% next year, then 1.6% in 2028, 1.8% in 2029, 1.7% in 2030 and 1.6% in 2031. Government borrowing is forecast at 4.2% of GDP, the total size of the economy, this year, falling to 3.4% next year and to 1.8% by 2030-31. Government debt is forecast at 83.2% of GDP this year and 83.8% next year, then easing to 81.7% in the following years. The Guardian
Healey said he would meet two fiscal rules, the self-imposed targets the government uses to judge its finances. The first requires day-to-day spending to be covered by tax receipts. The second requires debt, measured as public sector net financial liabilities, to be falling as a share of GDP by the third year of the forecast. The forecaster put the margin against the government's rules, known as headroom, at £15bn in 2029-30 and £20bn in 2030-31. The Guardian
On energy, Healey announced that a levy on energy bills used to fund hydrogen would be scrapped. Older renewable energy projects are to move onto fixed-price contracts, which he said would cut bills. The government will extend a VAT cut to July, which he said would take £50 off the annual price cap, the limit on what household energy suppliers can charge. Standing charges, the fixed daily fee on gas bills, are to be abolished for 23 million homes. Healey said this would save two-thirds of households an average of £45 a year. The Guardian
Households in council tax bands A to D, the lower bands of the local property tax, are to receive a £100 energy payment paid directly into bank accounts. Healey said it would reach 20 million households at a cost of £2.6bn. The Guardian
In a growth speech on 7 September, Healey said he would set out a roadmap to fiscal devolution, the transfer of tax and spending powers from Westminster to local areas, at the Budget. HM Treasury
