UK Budget Delivers £100 Energy Checks as Inflation Forecasts Worsen

The United Kingdom's first budget under Prime Minister Andy Burnham arrived Wednesday with cash for energy bills and housing, while the country's fiscal watchdog projected zero growth in real earnings for next year. Chancellor of the Exchequer John Healey told the House of Commons the measures were for the "working people of Britain" after recent years of falling living standards.

The plan includes a one-off 100 pound ($133) payment toward energy bills for 20 million households. Homes valued at 88,000 pounds ($117,000) or less qualify, using 1991 valuations rather than current market prices. A temporary VAT cut extends to 1 July, lowering the annual price cap by 50 pounds ($66.50). The measures follow a rise in global fuel costs after the closure of the Strait of Hormuz, a route that typically carries about 20 percent of the world's oil and liquefied natural gas.

Healey said the changes would provide "breathing space" after austerity, Brexit, the coronavirus pandemic, privatisation and rising energy prices. James Meadway, co-director of the think tank Verdant, said the steps are "not nothing" but fall well short of the problem people face. He said forecasts point to this Parliament being the worst for living standards in modern history, and called the budget "nothing like enough".

The Office for Budget Responsibility, which issued its assessment on Wednesday, projects no growth in real earnings next year and lowered its 2027 growth forecast to 1 percent from 1.5 percent. Meadway said government figures expect the pressure households face to worsen over the next year.

On wages, the National Minimum Wage and National Living Wage both rise 3.9 percent in April. The minimum wage is 10.85 pounds ($14.44) an hour for workers aged 18 to 20, and the living wage is 12.71 pounds ($16.91) for those aged 21 and over. To help pay for household and business support, the Bank Corporation Tax Surcharge doubles from three percent to six percent for 15 months ending 31 March 2028, a change projected to raise 1.5 billion pounds ($2bn).

The budget also sets aside 15 billion pounds ($20bn) for an additional Defence Investment Plan. Healey said a 4.7 billion pound ($6.2bn) gap would be covered by moving money between departmental budgets. He did not detail how the UK would reach the NATO target of 3.5 percent of GDP on defence by 2035, with an interim goal of three percent in 2030, saying a spending review next year would address it. NATO Secretary-General Mark Rutte wrote on X that the plan showed a "strong commitment on defence". Healey also committed 10 billion pounds ($13.2bn) in economic and military aid for Ukraine.

On housing, Office for National Statistics data show 35 percent of men aged 20 to 35 lived with their parents last year, against 22 percent of women in that age group. A First Time Buyer savings account launches in 2029 to replace the Lifetime ISA, keeping the 25 percent bonus on deposits of up to 4,000 pounds ($5,320), worth up to 1,000 pounds ($1,330) a year. The penalty for first-time buyers using Lifetime ISA funds on a home worth more than 450,000 pounds ($598,853) drops immediately to 20 percent from 25 percent. The budget sets aside 432 million pounds ($574.9m) over two years to reduce rough sleeping, a goal Burnham has pledged to reach.