The UK’s latest Chancellor of the Exchequer, John Healey, wasted little time in announcing the date of his first major set piece. Just over a week after his appointment, he revealed that this year’s Autumn Budget would take place on 28 October.
This announcement fired the starting gun on the usual pre-Budget activities of speculation and lobbying. Healey’s first Budget will also give us the first concrete evidence of what the tax and spending plans of the Andy Burnham government are. Here we look at what we know so far and what the early lobbying has focussed on.
Fiscal devolution
Healey has already reinforced some of the plans and ideas that Burnham has spoken about since taking office on 20 July. Key to the plans of the new administration is ‘fiscal devolution’ that will see regions take greater control over tax and spending.
Healey said: ‘This will be a Budget that moves money and power out of Westminster, and into every postcode around Britain. It will be built on fiscal discipline. It will meet our fiscal rules. It’ll give businesses and families some of the stability they need to plan for the future.’
The Prime Minister spent the first few weeks of his premiership making crowd-pleasing spending plans that tackled some of the issues around the cost of living. However, he has also warned that ‘difficult choices’ lie ahead for taxpayers as the government embarks on a ten-year plan.
Energy bills and bus fares
Tackling the cost of energy was one of the first priorities for the Burnham government. It is removing VAT from domestic electricity bills from 1 October 2026 in time to impact the next Ofgem price cap. This is expected to save around £45 on the yearly Ofgem price cap in October.
There has been disagreement about how this will be funded. The government said it would be paid from the cancellation of the £1.8 billion Digital ID programme. However, a former government minister disputed this, saying that the ID programme was unfunded.
The government also announced single bus tickets will be capped at £2 in England (outside London) from 1 January 2027 for 12 months.
The £2 cap will cost £400 million and is being funded by savings from reprioritising the Department for Energy Security and Net Zero’s budget.
In addition, pubs, clubs and live music venues will receive a 20% cut to their business rates bills from April next year.
The new rate cuts will benefit nearly 32,000 pubs, clubs and live music venues, saving the typical pub an estimated £1,100 in the next financial year. The relief will cost around £100 million.
The government says these changes will be fully funded, including through reviewing reliefs for businesses that do not make a positive contribution to local communities, such as vape shops.
Wider business concerns
Meanwhile, the wider economic picture remains challenging for the government. Over the summer employment has edged down, unemployment has risen slightly and economic inactivity continues to increase, while vacancies remain subdued.
The Greater Birmingham Chambers of Commerce (GBCC) says this ‘reflects the wider concerns being raised by businesses across the country’.
Emily Stubbs, Head of Policy at the GBCC, says: “As the government prepares its Autumn Budget, businesses need targeted measures that support recruitment and investment.
‘This should include an employer National Insurance contribution cut for under-25s to help firms create more opportunities for young people entering the workforce, and a package of support on energy costs and business rates to give businesses greater confidence to invest and grow.
‘Businesses want to invest and create jobs, but they need the right conditions to do so. The Autumn Budget is an opportunity to provide that certainty and put growth back on the front foot.’
Bumper profits and affordable insurance
The financial services sector may prove a tempting target for Healey as banks have been enjoying bumper profits while Insurance Premium Tax (IPT) is producing record receipts.
However, according to media reports, Jamie Dimon, CEO of US bank JPMorgan Chase, urged Healey not to use his first Budget as Chancellor to impose a windfall tax on banking profits.
This followed speculation that such a tax on lenders could fund the government’s cost-of-living agenda, with campaigners estimating such a move could raise £19 billion.
Meanwhile, the Office for Budget Responsibility’s Spring Statement forecasts indicate that IPT is now expected to raise £57.8 billion between 2025/26 and 2030/31, a £500 million upgrade on estimates made following the Autumn Budget in November.
Continued demand for health-related insurance products is expected to remain a key driver of growth.
Cormac Bradley, Senior Actuarial Director at financial consultancy Broadstone, said: ‘The latest forecasts highlight just how significant IPT has become as a source of government revenue. But insurance is not simply a tax base – it is a vital safety net for households and businesses, helping them manage uncertainty and protect against unexpected costs.
‘As the new Burnham government considers measures to support growth and reduce pressure on household finances, the impact of insurance affordability should form part of that discussion.’
The Autumn Budget
The Chancellor will deliver the Autumn Budget to Parliament on 28 October.
Whatever changes are made, Mercia’s tax experts will be watching and will provide detailed analysis of the day’s announcements.