What to expect from John Healey’s first budget: who wins, who pays?

Despite the chancellor's promises that the budget wouldn't be beset by leaks, both official and unofficial sources have indicated much of what Healey is likely to announce. The budget will allocate about £1.42tn this year on day-to-day spending and public investment, with £100bn going to debt interest after a rise in the interest rate the government pays to multidecade highs.

Most of this increase can be blamed on the Gulf conflict launched by the US and Israel at the end of February, which has taken the oil price to above $110 a barrel and the price of gas to levels not seen since late 2022. Government borrowing has fallen compared with 2025-26, but not by as much as the Office for Budget Responsibility estimated in March, mainly owing to higher debt financing.

Healey is spending about £1bn a month more than forecast. Those costs mean the buffer of £24bn built up in the last tax-raising budget is likely to have halved to £12bn, according to the Resolution Foundation thinktank. The Treasury would be more comfortable having this headroom at about £15bn, according to economists at ING.

Everyday fixes

The chancellor has promised to give consumers and businesses "breathing space" with measures to help with soaring costs. These include an extension of parental pay to more than 150,000 additional parents per year worth £388, covering self-employed fathers and partners who have previously missed out.

Healey will end the carer's allowance cliff-edge, so unpaid carers no longer lose more than their allowance once they hit their weekly earnings limit. He will also remove import tariffs on more than 100 products, including baked beans, chocolate and gherkins, to reduce their shop prices.

Energy bills

The chancellor is planning to spend more than £1bn to help poorer households struggling with soaring gas and electricity bills, with the bulk going towards an expansion of the existing Warm Home Discount. An additional £100 could be added to this £150 means-tested yearly rebate, funded by taxes rather than billpayers as the current discount is.

Burnham has already suspended VAT on electricity bills for six months and on Wednesday morning Healey announced he was scrapping standing charges on gas bills in a move he claimed would save 60% of households on average £45 a year.

Help for first-time homebuyers

The budget will provide more detail of how the "your first home" scheme – first announced at Labour's annual party conference last month – will work in practice. The revamped version of the Tories' "help to buy" programme will give first-time buyers a 20% equity loan towards a new-build home, with an initial interest-free period and a minimum deposit of just 2.5%.

Bank tax

The Guardian revealed this month that the budget's main revenue-raising measure is expected to be a levy on banks. The sector's resistance has been undermined by a run of bumper quarterly profits on the back of higher interest rates, culminating in HSBC revealing on Tuesday that its profits had risen 32% to about £7.2bn.

Jeremy Hunt cut the bank surcharge – a supplement to corporation tax – from 8% to 3% ahead of the last election and one option on the table is reversing this cut to raise more than £2bn a year.

Taxes on online sellers

There has been strong lobbying from Labour backbenchers and unions to increase the taxes paid by online marketplaces such as Amazon and eBay. The former Burnham adviser Andy Haldane used a Guardian interview to urge Healey to "level the playing field" with physical stores.

One proposal reportedly drawn up would raise up to an extra £1bn by forcing them to collect VAT on behalf of large-scale sellers based in the UK as well as those overseas. That money could be used to fund a cut in business rates paid by small high-street shops, possibly in the form of an increase to the threshold at which they start paying from £12,000 to £18,000.

Other measures

Spreading decision-making to the far reaches of England is a major element of Burnham's plans for economic growth. Healey will offer a £150m funding boost to help mayoralties and local authorities scale up for the new work they will carry out.

In addition there will be a £1.5bn borrowing facility. The package will also include the allocation of an initial £285m "good growth" funding next year, to be spent on local leaders' priorities – which could include housing, transport links or high street regeneration.

Healey is understood to have scrapped plans for a new visa route to the UK aimed at wealthy people from overseas that were explored by the Treasury earlier in the year.