Chancellor John Healey is poised to deliver his first Budget on Wednesday, amid fevered speculation surrounding potential tax rises or spending cuts to fill a growing black hole in the public finances.
The Budget is one of the biggest events in the UK's political and economic calendar, when the chancellor sets out the government's plans for taxation, public spending and the wider economy. Delivered in a speech to MPs in the House of Commons, the Budget outlines how the government intends to raise and spend money.
Former defence secretary Mr Healey is under pressure to raise taxes or find billions of savings to help ramp up Britain’s military spending, whilst also ensuring the string of pledges set out by the prime minister during his first weeks in office are fully funded.
Meanwhile, soaring borrowing costs because of the Iran war and weaker growth has wiped nearly billions off the government's fiscal headroom.
UK government borrowing rose by more than expected to £24.5 billion for last month, underscoring the constraints in the public finances ahead of the Budget.
Mr Healey is expected to outline the proposals at approximately 12.30pm on Wednesday in the Commons, immediately after Andy Burnham has finished his weekly despatch box showdown with Kemi Badenoch at Prime Minister’s Questions.
While the government has been relatively tight lipped over its planned Budget measures, with only a few policy leaks making into the press, Mr Healey has been clear that his Budget will look at cutting “the cost of business”, as he promised to be a chancellor who backs entrepreneurs.
Speaking just days before his first major fiscal event, Mr Healey sought to rebuild the damaged relationship between Labour and business, saying he is “conscious” that businesses were also suffering under the cost-of-living crisis.
Another major element of the Budget is expected to focus on greater help for UK households struggling with the rising cost of energy.
It has been reported that he is looking to spend over £1bn to see greater discounts applied to households less able to afford rising costs.
This will likely come in the form of an expansion of the existing Warm Home Discount, which grants a yearly £150 rebate to energy bills for households receiving a qualifying means-tested benefits. This could be boosted by another £100, The Guardian has reported.
Ministers are also reportedly preparing to announce a tax crackdown on online retailers as part of the chancellor’s plan to deliver a budget for the "white van man” and the “high street beautician”.
Mr Healey is said to be looking at ensuring that multibillion-pound online marketplaces such as Amazon, eBay and Temu will be made responsible for collecting tax owed by retailers selling on their platforms.
Other measures expected to be unveiled at the budget are a “mansion tax” on homes valued at over £2m, unveiled by former chancellor Rachel Reeves last year, and an increase to bank taxes in the UK, with the government reportedly considering raising the tax surcharge on bank profits from 3 per cent to 8 per cent.