Healey's first Budget: winter payment, welfare and housing

Chancellor John Healey delivered his first Budget on 28 October 2026, a package the government presented as giving families and businesses breathing space from rising costs. It included action on energy bills, fuel duty (the tax on petrol and diesel) and wages, along with a £100 winter cost of living payment for most households.

On housing, the Budget provides an extra £1.5 billion to deliver 10,000 homes across England. According to the government's factsheet, funding is prioritised for social rent homes, especially council homes.

Welfare, the money the state pays out in benefits, drew the most attention. Healey said it was not correct to say the government would bring the welfare bill down in this parliament, because no timetable had been set. Treasury officials later clarified that he had not meant to give a timeline for a reduction in the benefits bill, the Guardian reported.

Healey pointed to two forthcoming reviews: one by Alan Milburn on employment support for young people, and one by Stephen Timms on disability benefits. Neither has yet reported.

The Office for Budget Responsibility, the government's independent forecaster, expects total welfare spending to grow from £334bn last year to £431bn by 2030. Its overall welfare forecast has risen by £8bn since March. About half of welfare spending goes to pensioners and a quarter to sickness and disability benefits, the OBR said. Reuters reported that welfare spending was set to exceed 11% of the UK's economic output.

The Budget document says the government's stability rule, its main test for the public finances, is met by £15 billion in 2029-30. That figure is calculated before spending on certain welfare benefits is taken into account. The Institute for Fiscal Studies, an independent research body, said Healey would need an additional £28bn a year to offset inflation on future spending plans and to meet the target of spending 3% of GDP (the value of the economy's output) on defence by 2030.

The IFS director, Helen Miller, said the Budget opened the way to a spending review that looks set to be severe for some departments, with real-terms budget cuts among them.