Healey’s first budget pairs £100 energy payments with bill cuts

John Healey announced £100 energy payments for 20 million households as part of his first budget, combining immediate cost-of-living support with commitments to reduce government borrowing, according to the Guardian’s account. The package also includes energy-bill measures, wage increases and changes to support for carers and self-employed fathers.

Households in council tax bands A to D will receive the energy payment directly into their bank accounts. Healey put the cost of the scheme at £2.6bn, presenting it as part of the government’s response to global economic pressures affecting household finances.

The government also plans to abolish gas standing charges for 23 million homes. It says the change will save two-thirds of households an average of £45 annually, while extending a VAT cut through winter and spring to July is intended to take £50 off the annual energy price cap.

Other energy measures include scrapping a levy intended to fund hydrogen and moving older renewable generation onto fixed-price contracts. Together, the announcements make cheaper energy a central theme of the budget, although the savings described are government estimates rather than confirmed reductions for every household.

The economic backdrop remains subdued. Office for Budget Responsibility forecasts cited in the report put growth at 1.2% in 2026 and 1% in 2027, compared with its March projections of 1.1% and 1.6%, respectively. Growth is then forecast at 1.6% in 2028, 1.8% in 2029, 1.7% in 2030 and 1.6% in 2031.

Healey said the budget would satisfy rules requiring day-to-day spending to be covered by tax receipts and public sector net financial liabilities to fall relative to GDP in the third forecast year. The OBR figures reported by the Guardian show fiscal headroom of £15bn in 2029-30 and £20bn in 2030-31. Borrowing is projected to decline from 4.2% of GDP this year to 1.8% by 2030-31.

For motorists, fuel duty will remain frozen for a 16th consecutive year. Healey also announced an increase in the higher mileage rate for people using their cars for work, from 25p to 30p a mile. Import tariffs on more than 100 products, including baked beans, chocolate and gherkins, will be removed in an effort to lower shop prices.

Both the national minimum wage and national living wage will rise by 3.9% in April. The report lists the April 2026 rates as £12.71 for workers aged 21 and over and £10.85 for those aged 18 to 20; those figures are the existing benchmarks, not the newly increased rates.

Self-employed fathers will become eligible for paternity pay for the first time. Healey also confirmed plans to remove the carers’ allowance earnings cliff edge, which has left some claimants facing substantial repayment demands after crossing the earnings threshold.

The package combines direct household assistance with a forecast path towards lower borrowing, but the weaker 2027 growth projection underscores the limits of the economic outlook. Implementation will determine when eligible households receive payments and how the announced changes affect their bills, while the fiscal projections remain dependent on the economy’s performance.