Budget 2026 live: Healey announces £100 energy payment for millions and 3% rise in bank tax

The OBR is warning that the government is slightly less likely to keep to its fiscal rules than a year ago.

The watchdog confirms that the fiscal mandate – for the current budget to be in surplus in 2029-30 – is on track, with a margin of £15bn (as John Healey told MPs earlier).

The OBR says:

This is £7bn lower than when the fiscal rules were last formally assessed at budget 2025.

The probability of meeting the fiscal mandate is now estimated at 56 per cent, which compares to a probability of 59 per cent at budget 2025.

The Office for Budget Responsibility's latest economic and fiscal outlook – the fiscal watchdog's assessment of the budget – starts with a sobering warning that “the UK's economic and fiscal position remains very challengingâ€.

The OBR cites the “repeated adverse shocks†that have led to weak growth and pushed up government borrowing.

Shocks since the 2008 global financial crisis. “including rising barriers to trade after EU exit, the pandemic, and the 2022 energy price spikeâ€, it says.

And it warns that there have been “further adverse developments†since its March forecast, with both “interest rates and energy prices rising significantlyâ€.

As a net importer of energy, the rise in energy prices constitutes a negative terms-of-trade shock for the UK, which pushes up on inflation and lowers real household disposable income.

This means the OBR now expects UK inflation to average 3.5% in 2027, up from 2% expected in March.

The Treasury's budget documents are online here.

And here is the Office for Budget Responsibility's economic and fiscal outlook report.

The government's website seems to be creaking under the pressure as people check what council tax band they are in so they can see whether they qualify for the £100 support payment announced today.

You can check your tax band here: Check Council Tax Band.

But when we try, we get this error message:

Don't all click at once….

Healey ended by talking about housing.

He said, for people saving to buy a home, a first-time buyer Isa will replace the lifetime Isa.

He ended his speech saying:

The decision I've taken today will help steer Britain through and, when the storms pass, what matters is where Britain is heading – a Britain reindustrialised, a Britain with power returned to communities, threats deterred, global opportunities seized.

In our first 100 days, this Labour government has set a course for fresh hope, good growth and support for those who need it.

We know who we are. We know where we're going. We can see the Britain we want. It's a vision burnt into every line of this budget statement, breathing space now, fresh hope for the future, delivered to the British people by this Labour government.

Healey says the extra £430m being allocated to tackle rough sleeping this winter will apply every winter.

This is a moral mission for me. It's a moral mission for the prime minister. It is a moral mission for the Labour party.

Home is the heart of all our lives. It's the foundation in which we raise our families and build our homes. Rough sleeping is the sharp end, a symptom of a system that feels broken to too many people.

Healey gives more detail of how defence spending will go up.

First, I'm launching today a new innovative Defence Finance Taskforce to lead this work ahead of the spending review.

Second, I'm now confirming that we will commence treaty negotiations on the multilateral defence mechanism or bank with Finland, Poland and the Netherlands to boost defence investment and joint procurement across Nato allies.

Third, we will expand our defence industrial base by getting the maximum amount of private investment into defence, including through public private partnerships.

And fourth, as an immediate step, I can tell the house that the National Wealth Fund and the British Business Bank will launch a new focus on defence, dual use technology and sovereign capability, deploying up to £5bn of investment and lending over the next four years.

Healey turns to defence.

He says:

This morning, the prime minister and I called President Zelenskyy to tell him about our commitments in the budget today. He told us, you've made my day.

He says there will be extra economic and military support for Ukraine worth £10bn based on loans and export finance guarantees.

He says:

At the spending review next year, I confirmed that I will set out the details of how we will meet our Nato commitment to spend 3.5% of GDP on defence by 2035, with a target date for 3% in 2030.

Healey says the Alan Milburn report and the Stephen Timms report, on Neets and Pip respectively, will be published next month.

And he confirms the triple lock is being made less generous.

Healey says he investing in civil service transformation, launching a review of NHS productivity, “reducing the double running between central and local government†and setting up a local apprenticeships service.

Healey says the government has rejected austerity.

The public services are getting an extra £40bn a year for day to day spending, he says.

And Healey announces more powers for mayors.

In today's budget I'm announcing new good growth funds for mayors and incubator capital for areas without mayors.

I'm announcing flexible funding to invest in local economies, boosted by a further £1.5bn of devolved loans for mayor authorities, funds that will back projects like the new Black Country metro extension led by the mayor of the West Midlands, or the urban regeneration in Gateshead …

This is unfinished business for me. As a Treasury minister in the last Labour government, I was proud to help create the regional development agencies. They delivered economic growth, local regeneration before they were axed in 2010 by the Tory Lib Dem coalition.

But there is a further step we never took – the most radical act of devolution in a generation. The devolution of tax revenues.

That is the step I take today. Alongside this budget, a roadmap for fiscal devolution. For the first time, I'm making the commitment that 100% of business rates will be retained locally by the end of the decade.

So if local leaders help businesses to start and grow, more of the rates they pay will stay in that area. Fom next year 20% of business rates revenues will go to mayors and, from 2028, a share of income tax receipts will go to mayors as well.

Also, from 2028, mayors and other strategic authorities will have new powers to introduce an overnight visitors levy.

Taken together, these are long-term funding streams they can be used to back investment into big local infrastructure, so that more of the money that is raised locally can be invested and spent locally.

Shares in gambling companies have jumped – a sign that the City thinks John Healey has gone soft on the sector.

Today's increase in the machine game duty from 20% to 25% for higher stakes machines is below some expectations.

Casino and bingo operator Rank's shares are up 9%, and Entain are 6.3% higher.

Healey says changes to the Treasury's accounting methodology will lead to more regional investment. He gives a long list of places that will benefit.

Healey announces a tax cut to help people setting up their own business.

I know starting a company means taking a risk, often leaving a secure job and build something that there's no guarantee will work.

And I believe that when business founders take that risk, build an exceptional company, create wealth for Britain, we should recognise that success and keep those people here to invest again.

That is why today I'm announcing a founder's relief, a brand new relief in capital gains tax, a 10% rate on lifetime gains, up to £10m for the founders of our most successful firms.