Budget 2026 latest: Chancellor Healey set to cut food costs but add 2p to price of pint in first fiscal event

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Burnham suggests government could scrap standing charges from gas bills

The chancellor is poised to add 2p to the price of a pint after unveiling cuts to the cost of supermarket staples including baked beans, gherkins and chocolate ahead of his major Budget announcement this week.

On Wednesday, John Healey is expected to increase alcohol duty in line with Retail Prices Index (RPI) inflation, despite industry bodies urging the chancellor to drop plans they say would hurt “struggling” businesses.

He also announced the removal of import tariffs on over 100 products, as Andy Burnham pledges to deliver “breathing space” for families and businesses in the first Budget under his leadership.

The move is one of a series of so-called “everyday fixes” announced ahead of Wednesday, and comes alongside changes to parental pay and carers allowance.

Products expected to see tariff cuts also include jams, marmalades, garlic and toffees, as well as kerosene and fertilisers.

Meanwhile, the chancellor announced he will make the 55p per mile tax-free mileage rates permanent, and that parental pay will be extended to more than 150,000 additional parents per year, including self-employed dads and partners.

The prime minister said the changes will “make life a little easier” for Britons.

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UK ‘set to miss’ heavily-reduced aid spending target of 0.3%

The UK will need to allocate additional funding for international aid if it is to meet its target of 0.3 per cent of gross national income, with a current estimated shortfall of £410 million, according to a new report.

Forecasting by the Center for Global Development (CGD), a think tank focused on global development, shows planned spending is likely to undershoot the target and meet only 0.29 per cent of national income.

Its most conservative forecast estimated a £250m shortfall, while a gap of as much as £580m, leaving a spend of 0.28 per cent of national income, was “very plausible”.

It represents material shortfalls in the spending power of UK aid, the CGD said in a blog post published on their website, with the extra money enough to halve cuts to Africa that “will cost thousands of lives and mean the UK’s de-facto exit from the south and east of the continent”.

It could also fund reform of the Green Climate Fund, which helps other countries’ ambitions on cutting emissions.

Read more:

Britain and Poland sign defence pact amid escalation from Russia

Britain and Poland will begin working together to build a new generation of air defence missiles following a new agreement between the countries.

Wes Streeting and his counterpart Kosiniak-Kamysz signed the pact in Warsaw on Tuesday.

It comes as both Poland and the UK face growing threats from Russia.

Mr Streeting said: “Poland is one of the UK’s closest allies – from flying together in the Battle of Britain, to breaking the Enigma code, they have been a vital partner for our defence for nearly a century.

“The new Warsaw Defence Plan honours this co-operation and sets out how we will continue to work together today, building a stronger Europe in a stronger Nato.

“From collaborating on Nato exercises that deter our adversaries to working together to support Ukraine in its fight for freedom, we are committed to standing together for European security whilst boosting our economies with stronger defence industries.”

Under the pact, the two nations will share their experiences of developing new warships. Britain’s Type 31 frigate and Poland’s Miecznik are based on a common design.

The tax rises and cuts to expect from the Budget – from inheritance to capital gains

As with any Budget, there has been speculation about what could be included in the statement – though there have been far fewer leaks in the lead up compared to last year.

All eyes will be on the chancellor to see if he lays out plans on key issues, such as welfare reform defence, as well as any key tax policies.

Here is a round up of what we could see come out of the Budget on 28 October:

More drivers would prefer chancellor cuts VAT on fuel than reduce fuel duty

More than a third of motorists would prefer the chancellor cuts VAT on fuel over reducing fuel duty in the Budget, according to a new poll.

With pump prices for petrol and diesel soaring, Mr Healey has reportedly bowed to pressure to cancel January’s planned increase in fuel duty, keeping the rate of the levy frozen for the 16th year at 52p per litre.

Research conducted by the RAC found 29 per cent of motorists would prefer to see a cut in fuel duty compared to the 34 per cent that would rather the chancellor cuts VAT on fuel.

A 5p cut to fuel duty has been in place since spring 2022, meaning it has been frozen at 52.95p per litre for both petrol and diesel.

VAT on road fuel is charged at 20 per cent on top of the combined price of the product and fuel duty.

Under-pressure households may see Budget announcements as 'drop in the ocean'

The government has been criticised for its approach of making mini changes in tomorrow’s Budget, as some saying it may be viewed as a drop in the ocean for households.

Sarah Coles, the head of personal finance at AJ Bell, said: “The government seems to have adopted an ‘every little helps’ approach to the cost-of-living crisis, announcing a host of mini changes designed to ease the pressure on households very slightly. Taken together they could make a real difference to some households, particularly carers and new parents.

“However, for others they will be a drop in the ocean. Hard-pressed households will be hoping for more support in the Budget.

“Including gherkins in the list of items that could get cheaper may be seen as a bit of an own goal, because it risks reducing the measures to a cheap joke – indeed, the Conservatives have already pounced on the news. But for those affected by some of these changes, these announcements could be significant.

“People driving long distances for work could be hundreds of pounds better off a year, as could 150,000 extra parents a year receiving up to £194 a week for a fortnight as parental pay is extended. Meanwhile, carers could keep more of their £86.45 a week allowance if they go slightly over the earnings limit, because the carer’s allowance weekly earnings limit cliff edge will become a taper.

“And although the initial import tax changes may only save households around £21 a year, the fact that fertiliser is on the list could ease the squeeze on farmers, and keep a lid on price rises further down the line too.”

What can we expect in the chancellor's first budget tomorrow?

John Healey is delivering his first budget tomorrow against the backdrop of a difficult domestic economic situation, made worse by the international market turmoil caused by the Iran war.

He will have limited scope for big Budget giveaways due to the stretched public finances and significantly reduced headroom as a result of increased borrowing costs.

These are some of the announcements you can expect from the chancellor:

  • Scrapping the carers’ allowance cliff edge
  • Making a higher tax-free mileage allowance of 55p permanent
  • Slashing tariffs on a range of popular foods including chocolate and gherkins
  • Extending parental pay to more than 150,000 parents each year
  • A rise in the minimum wage by nearly 4 per cent
  • More than £600 million for various projects on the development and safe use of AI
  • A £7 million fund for a feasibility study into a possible future bid to hold the Olympics and Paralympics in northern England
  • An initial £285 million to give mayors and regional leaders in England more money and power to invest in projects in their areas
  • More than £1 billion for social and affordable housing
  • A further £432 million for the rough sleeping programme

Martin Lewis hails scrapping of 'nightmare' carer's allowance

Martin Lewis has hailed the scrapping of the carer’s allowance in the Budget on Wednesday, which he spoke about with the chancellor a couple of months ago.

He said the announcement was “very good news”, adding: “It was one of things on my list when I met the chancellor a couple of months ago. Unfortunately though, it isn’t going to happen straight away.”

The government revealed changes to the carer’s allowance to prevent unpaid carers from a “cliff edge”.

It means unpaid carers will no longer lose their entire allowance for earning above the Weekly Earnings Limit and the government will instead taper away £1 of the benefit for every £1 earned above the weekly limit.

Mr Lewis described the current system as “unjust” and a “nightmare”.

He said he had been told the new system wouldn’t come until 2030/31 because the IT system needed fixing to avoid an overpayment issue.

“While this is not perfect, it is a big step forward. It reduces to disincentive to work.”

Mr Lewis previously said he met with the chancellor who “listened and took notes and didn’t give much away” ahead of next week's major fiscal event.

Several policy plans have been rumoured in the build up to the event, as the cost of living remains a major concern for many households. Inflation rose to 3.5 per cent in September to mark the highest level in nearly a year, as rising energy costs continue to drive up prices.

'Totally unnecessary' to talk about rejoining EU

Talks about rejoining the EU are “totally unnecessary” conversations to be bringing up, the shadow housing secretary has said.

Katie Lam hit out at Andy Burnham after he said he would like to see the UK rejoin the EU in his lifetime.

She told Sky news: “The question was asked, the people answered, the decision has been made.

“It was, in my opinion, the right decision, and I voted to leave the European Union.

“But fundamentally it was the people's decision.

“And I think it is really shocking that within what, less than 100 days, the prime minister has cast aspersions on the result of the referendum, you know, claiming or heavily implying that there was Russian interference, which we know is not true.

“And is now talking about going back into freedom of movement, which people categorically do not want.

“I think it's a totally unnecessary conversation to be bringing up and is indicative of the fact that he's run out of ideas.”

Original source Budget 2026 latest: Chancellor Healey set to cut food costs but add 2p to price of pint in first fiscal event

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