It was a “breathing space” budget from Chancellor John Healey. In the absence of big surprises or bold change, Healey’s trade-off appears to be small reliefs now in exchange for “fresh hope” in the future. Here’s what our experts made of the chancellor’s first budget.

Targeted help with energy costs as bills keep rising

Jonquil Lowe, Visiting Academic, The Open University

This budget took place against a backdrop of global turmoil and rising inflation, driven largely by higher energy costs. These are continuing to squeeze household budgets. From January, the energy price cap is predicted to rise by 27% to nearly £2,200 a year for a typical household.

Help with energy costs is therefore an important move. This support includes a £100 energy payment for households in England in council tax bands A to D (the devolved governments will receive equivalent funding to replicate this).

There was also a commitment to abolish the standing charge for gas (currently on average 30 pence a day). The amount will instead be added to the charge for the unit cost of each kilowatt-hour used. This gives households more control over their bills – it will mean that limiting the amount of gas they use will have a bigger effect on reducing their cost. However, one worry is that squeezed households could still risk their health by not heating their homes adequately.

Labour’s manifesto pledged not to raise taxes on working people. This budget technically kept to that if we assume that working people just receive earnings. But building on last year’s changes, this budget has introduced another increase to the tax rates on interest from savings and rental income. Landlords and some savers will be taxed at a basic rate of 24% (currently 20%), higher rate 44% (from 40%) and additional rate 49% (from 45%) from April 2027.

This makes it all the more welcome that a proposal last year to cut the cash ISA limit for savers aged under 65 to £12,000 is being abandoned. Everyone, regardless of their age, will still be able to put up to £20,000 a year into a cash ISA (or cash and money funds within a stocks-and-shares ISA) and receive the interest tax-free.

The government will also consult on setting up a first-time buyer ISA to replace the Lifetime ISA and help people save for a home. From February 2027, a new scheme called Your First Home will provide equity loans for first-time buyers purchasing new properties. The loan, worth 20% of the purchase price, will be tax-free for the first five years. To be eligible buyers must have a household income of no more than £110,000 (£140,000 in London).

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The budget also delivered a higher tax-free personal allowance for pensioners on the lowest incomes. The new Pension Tax Allowance will be applied automatically, with HMRC doing the sums. Pensioners with income up to £13,037 (the full state pension) will pay no income tax from April 2027. For comparison, for younger people the standard allowance is frozen at £12,570 until April 2031. They would pay £93.40........

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