LABOUR Chancellor John Healey delivered a bosses’ and bankers’ budget yesterday, opening with a warning that ‘what we face today are global economic storms’.
Fearful of the explosion of working class anger that the soaring energy bills are producing this winter, he announced that standing charges are to be scrapped from household gas bills and announced a paltry £100 energy payment.
Healey said the removal of the gas standing charge will come into effect ‘from next year’ and that 20 million households in council tax bands A-D will receive a £100 ‘household energy payment’ this winter paid directly into bank accounts.
The cut to VAT on electricity bills from 5% to zero had been expected to end in March 2027, but that will now be extended until July.
Healey announced an extra 3% on the banks’ surcharge – taking the total paid to 6%, starting in January and ending 15 months later.
This led to a jump in bank share prices on the news as they were expecting to be hit much more.
He also announced that young workers aged between 18 and 20 years old on the minimum wage will see their pay rise by 3.9%.
That’s the same percentage increase as those aged 21 years and over, which means that it is actually a widening of the gap between the two minimum wages.
This is a complete breach of the Labour 2024 election manifesto, which pledged not just not to widen the gap, but to abolish it.
In an attempt to thwart widespread opposition to data centres being built all over the country, Healey announced the launch of a ‘British data centre covenant’, which he claimed ‘will ensure that the British people can benefit from the huge potential upsides, with AI that is secure, safe and working for the British people’.
He announced the launch of ‘a new young entrepreneurs allowance,’ which will cover a year of living costs for young business founders ‘while they turn their ideas into businesses’.
Healey said he is ‘making sure that people pay the tax they owe, when they owe it, and closing loopholes in our tax system’.
‘From next year, 20% of business rates revenue will go to mayors,’ and from 2028 ‘a share of income tax receipts will go to mayors as well’.
Healey said this will see ‘100% of business rates retained locally by the end of the decade’.
Healey announced ‘a review of NHS productivity and AI so staff can spend their time with patients, not on admin’.
Healey moved on to the government’s attack on welfare, referencing the upcoming Milburn report.
The abolition of the pension triple lock ‘will save £15bn a year by the end of the 2030s and £50bn by 2050,’ he said.
He also announced the ‘bringing back of face-to-face assessments’ and a ‘clampdown on pensions being claimed abroad’.
On Ukraine, Healey said he and PM Burnham called President Zelensky earlier yesterday morning to inform him of ‘£10bn of additional economic and military support’.
Britain will stand with Ukraine ‘as long as it takes’, Healey added.
Healey moved on to defence, saying the defence budget is £14bn higher than it was in the Conservative’s last year of government.
He added that he will set out how he will meet the UK’s NATO commitment to spend 3.5% of GDP on defence by 2035 in next year’s spending review.
Healey also announced the launch of a new ‘innovative defence finance taskforce’ that will look at how to achieve this.
He added the government is also increasing private investment into defence including by public private partnerships.
He concluded with the announcement of a government-backed £4.7bn loan scheme for first-time house buyers of new-build property with a deposit of 2.5%, to be launched from next Spring.
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