LONDON: Britain’s Labour government will increase a tax on profits earned by banks to help fund support for soaring energy bills, finance minister John Healey said in his budget announcement Wednesday (Oct 28).
The first budget of Prime Minister Andy Burnham’s new administration was delivered against a harsh global backdrop of rising inflation and borrowing costs.
However Healey pledged to raise defence spending to three per cent of GDP by 2030, a commitment he had pushed for as defence secretary under PM Keir Starmer before resigning over insufficient military funding.
Britain’s economy will grow slightly faster than forecast this year before slowing sharply in 2027, driven by the fallout from the war in the Middle East, Healey said Wednesday as he delivered the government’s annual budget.
“Fiscal discipline is my first commitment,” said Healey, as he faced pressure to reassure Britain’s bond market.
Healey, whose official title is chancellor of the exchequer, promised “immediate” support for households and businesses in the face of “global economic storms”.
The Labour government will double a surcharge on profits earned by banks operating in the country – to six per cent – to finance a one-off subsidy to millions of households struggling with higher energy costs.
The government will hand out a direct payment of £100 (US$133) to 20 million households, as gas and electricity prices surge in large part owing to the Middle East conflict.
Further measures to lower household bills included removing fixed fees on gas bills, while extending a freeze on fuel duty.
Healey was constrained in his spending plans by a commitment to abide by the rules laid out by his predecessor Rachel Reeves, which state that day-to-day spending must balance with government tax receipts.
