Chancellor targets cost of living crisis in budget for a ‘difficult moment’

Chancellor targets cost of living crisis in budget for a ‘difficult moment’ Healey hopes to give ‘hope for the future’ but only modest policies are expected with important decisions deferred

John Healey has acknowledged the UK faces a “difficult moment” but insisted he would put the country on a better path as he delivers his first budget on Wednesday against a turbulent global economic backdrop.

But despite the international uncertainty, the chancellor will signal “fresh hope for the future” as he attempts to sound a more optimistic note, by providing households with breathing space from rising cost of living pressures.

The budget, which will be interpreted as a signal of Andy Burnham’s intent, is nevertheless expected to be a relatively modest affair as Healey grapples with stark fiscal realities, putting off important decisions on tax and spending until next year.

“The world’s a highly uncertain place,” the chancellor said, in a video released before the budget. “Conflicts abroad are pushing up energy prices, and the cost of living here at home – piling pressure on the families, on businesses and on our public finances.”

Healey insisted the government would move to ease the cost of living “responsibly” by sticking to Labour’s self-imposed fiscal rules, as he attempts to reassure the markets that his plans for longer-term reform will make Britain “more resilient” from global shocks.

The chancellor has limited scope for big giveaways because of the stretched public finances, made worse by international market turmoil caused by the Iran conflict, but changes aimed at easing the cost of living are set to feature heavily.

In his pre-budget address, he added: “This budget is about getting through this difficult moment. But it’s also about putting Britain on a future path, a better future path.”

Healey is expected to offer temporary support for poorer families before a steep rise in typical energy bills in January; while pledging energy market reforms aimed at bringing down bills for all households in the longer term.

Andy Burnham recently told MPs he was keen to see the gas standing charge – a fixed daily levy on all users – abolished. The move would bring down bills for consumers who use less energy, and the cost would be picked up by those who use more.

Industry experts fear further investment in hydrogen and carbon capture is likely to bear the brunt of efforts to rein in extra spending, in a blow to the UK’s net zero targets.

As part of a series of “everyday fixes”, the chancellor is expected to end the carers’ allowance cliff edge , which has penalised unpaid carers for going over their earnings limit, even by as little as a few pence a week. Healey is also expected to cancel January’s planned increase in fuel duty.