FAQ: What’s in the Budget and what does it mean for you?

Chancellor of the Exchequer John Healey laid out his first budget since entering No11 this afternoon. It focused on giving what the government billed as breathing room to households, ahead of a tricky winter driven by rising fuel prices, thanks to Trump’s war in the Middle East. 

The Budget comes just three weeks before the Prime Minister is expected to lay out the options on the table for the UK’s future relationship with Europe at the next summit on November 20. Independent economic modelling by Frontier Economic, commissioned by Best for Britain, shows that full EU membership could offer upwards of £92bn in growth in the long-run and £43bn in additional exports each and every year.

Here are the five key policies the Chancellor announced and how you might be affected…

1. Energy bills help

Healey announced a number of changes to aid households and businesses ahead of energy price rises in the new year. He confirmed that he would deliver a £100 energy payment to all households in Council Tax bands A-D. The move, which is predicted to cost the treasury £2.6bn, will apply to around 20 million households in the coming months. 

The Scottish, Welsh, and Northern Irish governments will receive their share of the funding and the Chancellor called on them to utilise the money in the same manner to “give people of all nations in the UK breathing space on their energy bills this winter”.

2. High streets business rate relief

In a bid to revitalise high streets across the UK, the Chancellor announced an expansion of the government’s plan to cut 20% of business rates for pubs, clubs, and music venues. This time round, Healey told the House pressure from the Prime Minister had encouraged him to increase the threshold for small business rate relief for retail, hospitality and leisure businesses from £12,000 to £18,000.

This change will mean 70,000 more businesses will no longer have to pay any form of business rates. This would mean half of restaurants, shops, and gyms would now be exempt allowing them to focus on hiring more employees and expanding their businesses. To fund this change, the Chancellor is set to  raise taxes on gambling, while ensuring vape shops continue to pay business rates by losing their eligibility to relief altogether. 

3. Banks surcharge

Healey also admitted he had utilised some of the headroom left over from his predecessor Rachel Reeves’ last budget to absorb some of the impact of the Iran war. However, he made the case for some parts of the economy supporting fresh government support on energy bills.

On this, he turned to the banks, announcing an additional 3% surcharge to begin in January and end fifteen months later, to help with the immediate pressure. The Chancellor challenged opposition leader Kemi Badenoch, saying: “I’ve made my choice at this Budget, asking a bit more of our banks to support ordinary people, raising taxes on gambling to support good growth on every high street.” 

4. Fiscal devolution

Continuing a job he began as a  junior Treasury minister in the 2000’s, Healey announced one of the most radical changes to tax collection and local government organisation in a generation. For the first time, the Chancellor made a commitment that 100% of business rates will be retained locally by the end of the decade. 

From 2027 onward, 20% of business rate revenue would go directly to mayors or their equivalent position in local government, and from 2028 a share of income tax would also go directly to councils, rather than indirectly through Whitehall. These announcements built on the news earlier this autumn that mayors were being given the power to introduce an overnight visitors levy from 2028.

Healey outlined how he hoped these new income streams could be best used to fund large local infrastructure projects, and to incentivise councils to  unlock growth in their own area – “so that more of the money that is raised locally, can be invested and spent locally”. It is perhaps the most substantial indication of the new devolution agenda Prime Minister Andy Burnham will hope to enact during his time in No10.

5. Building deregulation

Finally, admitting the nation’s housing supply and building capabilities were not where they needed to be, and taking direct aim at the issue of rough sleeping, Healey announced new changes to building regulations. The Chancellor spoke of the moral mission he felt in ending rough sleeping in Britain, a view emphasised by the PM.. But, he argued, Britain must take bold steps to tackle structural issues which have plagued the country since the 1980s. 

Since that period, Britain has lost over two million council homes, creating a system whereby 170,000 children will sleep in temporary accommodation tonight. To boost house building across the UK, the Chancellor announced there would be “no major changes to building regulations” except in extraordinary safety-related circumstances, while biodiversity requirements for brownfield sites would be removed.

To revitalise council housebuilding, Healey extended cheaper borrowing for councils, made land sold to social housing providers VAT-free and increased the budget for the social and affordable housing programme by £1.5bn, taking the government’s budget for boosting council housing to £40bn.

Time for EU membership?

Following the budget, the latest figures from the OBR maintained their view that growth over the course of the next five years would remain slow, with the growth next year predicted to reach just 1%. 

If the Chancellor and Prime Minister remain serious about unlocking growth in every postcode, they must pursue full EU membership. 

Such a policy is shown to grow the economy in every nation and region of the UK, delivering at least a 3.6% boost to UK GDP in the long-run, almost entirely reversing the damage of Brexit on the economy. It would be a game-changer.