A Budget should be judged by what it means around the kitchen table for Britains families. Can they pay their bills? Does work provide a decent living? Will the NHS be there when someone needs it? Can young people imagine a future in which they have a secure home? Are people feeling better off or supported by the government?
John Healey’s Budget addresses those questions with practical help today and investment for tomorrow. For Labour voters and voters considering voting Labour, it provides a clear argument: this government understands that economic success must be felt in people’s everyday lives.
The pressures facing the country remain serious. Global energy shocks are squeezing household finances as energy bills rise, and the independent forecasts show how difficult raising living standards will be under the current climate. The Chancellor was right to acknowledge that honestly and directly. Labour’s task is to improve that outlook through decisions that protect families, strengthen services and build a more productive economy.
The immediate support on energy matters enormously. The Budget provides a £100 Household Energy Payment for eligible households in council tax bands A to D in England, with funding for support elsewhere in the UK. It also extends the electricity VAT cut until July 2027. These measures will not eliminate every increase, but they will leave families paying less than they otherwise would. Families know that there are limits to what government can do and the public know there is not an endless pot of money. But that the Chancellor has signalled this support shows Labour is on their side.
The funding choice matters too. A temporary increase in the bank corporation tax surcharge will help pay for household energy support. Asking profitable banks to contribute more while families face exceptional pressure is a fair Labour choice. Government cannot control every international event, but it can decide who carries the burden. It also speaks to Labour values, those with the broadest shoulders should do more to help tackle the cost of living challenge facing the British people.
Higher wages are equally important. From April 2027, the National Living Wage will rise by 3.9% to £13.21 an hour. The Treasury estimates that this represents £910 more in gross annual earnings for a full-time worker. That increase will make a difference to workers whose pay has too often failed to reflect their contribution. It puts a clear divide between Labour and the Tories who have suggested the minimum wage should be frozen for five years, or Reform who voted against Labours last minimum wage increase. While the right claim to be the party of working people, it is Labour that is putting more money into the pockets of hard-pressed families.
The Budget also recognises the realities of family life. It extends parental pay to additional parents, including self-employed fathers and partners, and commits to replacing the Carer’s Allowance earnings cliff edge. People caring for a loved one should not lose their entire allowance because their earnings have edged above a threshold. These changes need effective implementation, but they establish a fairer direction. Again, demonstrating that Labour understands the challenges people face, aligning our party with their concerns and ambitions.
Help with motoring costs also matters to people whose livelihoods depend on driving. The fuel duty freeze and temporary 5p cut are extended until July 2027 which will also help the self-employed and people in trades, while more generous tax-free business mileage rates will support eligible workers using their own vehicles. Nurses, care workers and tradespeople know that getting to work can itself be expensive and they will know that the Labour government is doing what it can to help them continue to work.
However, living standards depend on more than take-home pay. A family forced to pay privately for treatment because public services cannot meet its needs faces another financial burden. A parent unable to work because of poor health loses income and opportunity. Investment in public services is therefore central to a serious cost-of-living strategy. The Budget provides a further £190 million for NHS pressures in England this year and £100 million to accelerate robotically assisted surgery. The ambition is to expand access to less invasive treatment while improving efficiency. Technology should help staff spend more time caring for patients and help patients recover sooner. A sound investment by the government.
This builds on spending plans that put departmental day-to-day funding more than £40 billion higher annually by 2028–29, and capital investment £120 billion higher over the Parliament, compared with the previous government’s spring 2024 plans. These are comparisons with inherited plans, rather than entirely new announcements this week. They nevertheless demonstrate the scale of Labour’s commitment to rebuilding public provision. Labour governments always have to rebuild the public services after years of Tory austerity. The public know Labour will always put the public services first, again, a stark contrast to Reform who want to slash public services and who favour a private healthcare system.
Housing investment is another essential part of that work. An additional £1.5 billion for the Social and Affordable Homes Programme is intended to deliver around 10,000 homes in England, prioritising social rent and council housing. Affordable housing gives families security and reduces the pressure that high housing costs place on their budgets. The government will need to explore other avenues, including incentives for the private sector to build the homes target we set in 2024. But progress has been made.
Labour has a proud record in two years in government. Against this, the opposition must answer difficult questions. Reform has promised £40 billion of spending cuts in its first financial year, rising to £80 billion over five years, alongside substantial tax reductions. Families should demand to know exactly which support, and services would bear those cuts. Calling spending waste does not establish that removing it would be painless. Reform’s proposals to reduce affordable housing requirements also deserve challenge from anyone struggling to secure a home. While Reform claim to be the party of the ordinary man and woman in the street, their policies would harm them the most.
The Conservatives offer another programme of deep reductions, claiming £71 billion in savings while promising tax cuts. Their own plans include large welfare reductions and a smaller state. There is no regard for what this will mean for vulnerable people and the effective delivery of good public services. Public confidence requires credible evidence that their savings can be achieved without simply transferring costs onto families. Again, the Tories, after 14 years in government have learned nothing.
Promising more is easy; demonstrating dependable funding is the harder test. Labour is facing that test too. There are difficult spending decisions ahead, and announcements must become improvements people can feel. Over the summer the government made a number of announcements that immediately helped with the cost of living. Our future case rests on delivery: stronger wages, help with bills, affordable homes and public services that support family life.
That is the purpose of the Chancellors Budget and the policies announced will give Labour canvassers a strong case to make to the British people in any set of elections. Labour is the cost of living party because raising living standards is the measure by which we should judge everything government does and we have started on that journey with strength and purpose.
