Healey Budget: £100 Energy Payment, Bank Profits Tax Doubled to 6%, OBR Cuts Next Year's Growth Forecast to 1%

Chancellor John Healey delivered his first Budget to the House of Commons today, Oct. 28, and the contents are now on the table: a one-off energy payment, a doubled tax on bank profits, higher tax on savings and property income, and a downgraded growth outlook.

Healey told MPs he wanted to give families "breathing space now" and "hope for the future" as the economy faces "global economic storms." Prime Minister Andy Burnham and frontbench colleagues cheered him through an hour-long speech.

The energy payment

The headline measure is a £100 Household Energy Payment for households in council tax bands A to D in England. The Department for Energy Security and Net Zero says up to 20 million households qualify, including an estimated 83% of fuel-stressed households in England. Healey put the cost at £2.6 billion.

Payments start from January 2027. Households paying council tax by direct debit need do nothing, according to the department. Others will be invited by their councils to apply. Full eligibility criteria are still to be published.

Wales says it will match the payment. The Scottish government plans to "replicate" it. Healey urged the Northern Irish, Scottish and Welsh governments to introduce similar support with their share of the funding. Councils in England also get £100 million for further help to households hit hardest, including some in bands above D.

Electricity VAT stays at 0% until 1 July 2027, according to the Budget document, which the household-finance site Prepared Britain says takes about £50 off the annual price cap figure from April.

Healey said gas standing charges in England, Scotland and Wales will be scrapped during 2027 "or as soon as possible after." The fixed daily fees will move onto the price of each unit of energy, so heavy gas users will face higher bills, the BBC reported. The government says energy bills rose this year because of the conflict in the Middle East. It also pledged market reform to bring energy costs in line with Europe within 10 years.

Who pays

Healey doubled the tax on big banks' profits from 3% to 6%. It runs from January 2027 to April 2028. He said it applies to bank profits above £100 million.

Tax on savings and property rental income rises to 24% for basic-rate taxpayers from April 2027. It had been scheduled to rise to 22%. Healey described it as "a further two percentage points," with no change to tax on dividends or employment income. Income tax thresholds stay frozen. Taxes on high-stakes gambling machines go up.

The Budget document says it "rejects broad-based tax rises." There is no increase to the headline rates of income tax, National Insurance or VAT.

The planned cut to the cash ISA allowance, from £20,000 to £12,000, announced last year under Healey's predecessor Rachel Reeves, has been axed.

Cost-of-living and business measures

The 5p cut in fuel duty on petrol and diesel is extended to July. Minimum wage rates rise 3.9% in April. The Budget document puts the National Living Wage at £13.21 an hour. There is no progress on narrowing the gap between older and younger workers' rates.

For business, the point at which English high street shops start paying business rates rises from £12,000 to £18,000. Vape shops and adult gaming centres are excluded. Prepared Britain, summarising the Budget document, says the State Pension triple lock stays until 2029 and is changed from April 2030.

Healey also said £430 million more will go toward unsheltered homelessness and, according to Breitbart's account of the speech, a further £10 billion in economic and military support for Ukraine.

The OBR's numbers

The Office for Budget Responsibility downgraded its growth forecast for next year to 1%. It expects the UK to spend £14 billion more on debt interest this year.

The OBR also said real household disposable income per person is growing at a record-slow pace. It forecasts that growth averaged over the prior 10 years will fall below 0.1% a year by 2029-30. That would leave income per person just 1% above its pre-pandemic level. The OBR called this "a continuation of the historically weak growth in RHDI per person since the global financial crisis."

The pushback

Conservative leader Kemi Badenoch said the plans were "not bold enough." She described a government "overspent, overborrowed, overtaxed and drowning in an out-of-control welfare system."

Healey confirmed that many big decisions, including on defence spending and welfare, will not be made until next year. The Telegraph reported that welfare spending is forecast to reach £431.3 billion a year by 2031.

From the other direction, Simon Francis of the End Fuel Poverty Coalition said the Chancellor "talked the talk on energy bills, but ultimately failed to walk the walk." He said wholesale gas prices have tripled since February and that the payment "will barely dent the predicted rise households face in January."

The BBC's Chris Mason described the Budget as cautious despite its range of small measures.

What comes next

The energy payments are due from January 2027, and councils still await the full eligibility rules. The bank profits tax is set to expire in April 2028, while the savings and property income increase begins in April 2027. The welfare and defence decisions Healey deferred are now due next year, against a growth forecast of 1% and a rising debt interest bill.