Healey Doubles Bank Levy to Fund £100 Winter Payment for 20 Million Households

The cost of the upcoming winter energy bill will rise by £466 per household in January, according to EDF. Chancellor John Healey announced a £100 winter payment for approximately 20 million English households on Wednesday to offset these rising costs. The total package costs the public purse £2.6 billion.

Healey delivered his first budget in an hour long address to MPs. He described the economic outlook as challenging, citing global economic storms, the war in Iran, and their impact on oil and gas prices. He stated that the payment is designed to take pressure off households during the coldest months and help them reach spring. The payment applies to all English households in council tax bands A through D. Healey said he hoped the Scottish and Welsh governments would use their allocated share of the funding for similar schemes.

To finance the payment, Healey doubled the additional levy on bank profits to 6% for a period of 15 months. He also increased tax rates on income from property and savings by 2 pence. The 2 pence increase was not expected by analysts. Healey scrapped fuel tax increases planned by his predecessor Rachel Reeves and extended the VAT cut on electricity until next summer.

For businesses, the rates relief threshold for retail, hospitality, and leisure firms increased from £12,000 to £18,000. This change is funded by higher taxes on gambling and vape shops. The Institute for Fiscal Studies warned that the upcoming spending review will be a crunch point for many government departments. The budget also included hints at looser visa salary thresholds for specific industries and new powers for Sadiq Khan to extend the Bakerloo line.

The Office for Budget Responsibility published forecasts alongside the speech. David Miles, from the OBR, described the outlook as a pretty grim picture. Inflation is projected to rise to almost 4%. Economic growth next year is expected to be 1%, which is about half a percentage point lower than the March forecast. Real disposable incomes are projected to be only 2% higher by 2030-31 than before the pandemic.

Critics questioned the targeting of the measures. Laura Suter of AJ Bell said savers face another hefty tax rise and that landlords could raise rents or sell up. Ruth Curtice of the Resolution Foundation argued the payment was badly targeted and that the poorest needed more generous help. The New Economics Foundation said the chancellor showed the right instincts but not yet the right scale. The OBR warned that the property tax change risks leading to a steady rise in rents by deterring landlords and reducing supply.

Healey said he would stay within Labour's fiscal rules, noting nervous bond markets. The government will still meet the main fiscal rule with headroom of £15 billion by 2029-30. This is less than the £24 billion buffer built up in the spring. Healey promised to rebuild the buffer to £22 billion by the end of the forecast period. Conservative leader Kemi Badenoch said Britain had overspent, overborrowed, and overtaxed. Prime Minister Burnham rejected claims of an early election, saying he could rule one out for at least 12 months.