John Healey will deliver his first Budget as Chancellor on Wednesday, but he may have little room to manoeuvre due to surging Government debt costs.
Analysis by KPMG suggests that soaring borrowing costs, which rose to £24.5bn last month and pushed the national debt above £3trn, combined with weaker growth, could cut his fiscal headroom – the buffer the government has under its own borrowing rules – from £23.6bn to about £12bn.
But Healey has committed to sticking with Labour’s 2024 manifesto, ruling out rises to income tax, national insurance for employees or VAT.
How rare cancer behaves differently depending on location
Scientists at the University of Edinburgh have found that a rare, aggressive cancer, commonly occurring in the uterus, abdomen and limbs, behaves differently depending on where it is found in the body.
What you need to know
- Leiomyosarcoma is the most common subtype of soft tissue sarcoma.
- It affects smooth muscle cells, also known as involuntary muscles, which are found in the walls of hollow organs.
- Around 600 cases of leiomyosarcoma are diagnosed each year in the UK.
- Scientists studied more than 11,700 patients with the condition.
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The findings of the study
Researchers found that leiomyosarcomas of the uterus, urinary tract and trunk had the poorest survival rates, compared with cancers of the head and neck, limbs, and male reproductive tract.
There are also significantly poorer outcomes for Black patients, widowed patients and those from lower-income households.
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Why is this important?
This study shows why our investment into rare cancers is key. It highlights how research can uncover critical differences between tumours which is vital for developing more effective, personalised treatments for patients.
Dr Catherine Elliott, Cancer Research UK’s director of research
Why demand to see tribute acts is on the rise
Venues say they are putting on more events to cater to a growing cohort of people who want a more affordable night out, as fans are priced out of seeing big artists perform live.
Cost of living hits music fans
Around a fifth of UK adults have attended a tribute act show in the past 12 months, a survey by the Night Time Industries Association (NTIA) found.
More than two-thirds agreed that seeing major acts live has become too expensive.
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Harder, better, faster, cheaper
The soaring prices of tickets to attend live concerts has come under scrutiny following world tours for big artists like Harry Styles, Taylor Swift and Beyonce in recent years.
Instead, audiences are increasingly turning to tribute acts such as Arctic Numpties, Noasis, Fleetwood Bac, Daft Funk and Pitbull to hear the back catalogues of their favourite artists.
Paying tribute for less
Dan Ickowitz-Seidler, the director of Propaganda Venues, said the group is booking more tribute shows in response to a “real increase” in demand.
“People want an affordable night out where they can see a quality band, hear songs they love and have a great evening with friends,” he said.
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What young people want out of the Budget
The priorities of those under 40 reflect the pressures facing a generation trying to get ahead.
We speak to three young people in their twenties and thirties about what they want to see announced on 28 October.
The ‘broken’ student loan system
Researcher Toby Whelton, 24, said: “Retroactive changes to loan terms, made long after I graduated, will cost me tens of thousands more over my lifetime.”
Whelton wants to see the government reduce the repayment rate to 5 per cent as he thinks the current rate of 9 per cent is “simply too high”.
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‘I want to see income tax thresholds rise’
- Dan Johnson, from Whitley Bay, Tyne and Wear, wants to see an end to the freezing of income tax thresholds in the UK.
Currently, the income tax personal allowance remains frozen at £12,570, and the higher-rate threshold remains frozen at £50,270.- These aren’t due to be unfrozen until 2031.
The 35-year-old said: “This is a stealth tax that’s brought millions of middle earners into the 40 per cent tax band. It’s a disincentive to earning more and taking on more responsibility.”
‘Energy costs are a worry’
Taylor Cooper, 31, wants more support with everyday costs for working households.
“The Chancellor could help by introducing targeted support to reduce energy bills, taking steps to bring mortgage costs down and making sure working households keep more of what they earn,” she said.
Cooper would love to see a postponement of any planned increase in fuel duty as petrol prices have soared in recent months.
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That means any new spending will probably have to be paid for with trade-offs elsewhere.
Much of the detail is still to be confirmed, but here are the groups who could be better off – and those who could lose out after the Budget.
Better off: Low-income pensioners
For the first time, the full new state pension is set to rise above the personal allowance – the amount people can receive before paying income tax – when it increases by 3.9 per cent (£488) next April, taking it above £13,000.
The allowance has been frozen at £12,570 since 2021, meaning pensioners on the full new state pension would normally face a tax bill of around £88 in 2027-28.
The Government has pledged that pensioners whose only income is the state pension “will not pay income tax”, with details on how this will work expected in the Budget.
But anyone with a workplace or private pension on top would still pay tax on their state pension, creating a “cliff edge” that Steve Webb, a former pensions minister now at consultancy LCP, has warned would leave only around 5 per cent of pensioners protected.
Better off: Households struggling with energy bills
Burnham’s first cost of living measure as Prime Minister was to scrap VAT on energy bills from October, saving a typical home about £45 a year.
But with the End Fuel Poverty Coalition warning that a typical heating bill could jump by £276 in January, reports that Healey is likely to go further by expanding the Warm Home Discount, which takes £150 off bills for households on means-tested benefits, with an extra £100 being mooted.
Burnham also said he had asked ministers to develop a plan to remove standing charges, the daily fixed rate of connecting to a supply, on gas bills.
The think-tank, Nesta, said removing the charge could make dual fuel households £22 a year better off and particularly help low-income families who use little energy.
Adam Scorer, chief executive of National Energy Action, said the Budget “must deliver additional targeted support for households most at risk this winter”.
Drivers could also be spared a rise at the pumps, with the reporting that Healey is expected to drop plans to raise fuel duty by 3p a litre in January and 2p in March.
Better off: First-time buyers
Burnham and Healey are committed to replacing the Lifetime ISA with a new first-time buyer ISA, The i Paper has been told, which would pay a government bonus when savers buy their first home.
The Lifetime ISA allows you to save £4,000 which the government tops up with a 25 per cent bonus, but when savers come to withdraw their money they face a 25 per cent penalty if they use the money for anything other than retirement or to buy a first property worth under £450,000.
There would be no penalty for withdrawing money for other purposes, and no upper age limit, although the savings limit and bonus size have yet to be confirmed under a new first-time buyer ISA.
Healey is also expected to formally announce Your First Home, an equity loan scheme unveiled by Burnham on the eve of the Labour conference, which would see the government lend buyers of new-build homes in England 20 per cent of the price on top of a 2.5 per cent deposit.
Launching the scheme, Burnham said “too many young people are struggling with the cost of housing”, with many feeling they have “given up hope of ever having a home to call their own”.
He said it was aimed at people without support from the “Bank of Mum and Dad”, and that it would also give housebuilders the confidence to build more homes.
Better off: Wealthy investors
Healey has ruled out raising capital gains tax (CGT) – the tax on the profit made when selling an asset such as shares or a second home – after being warned it could cost the Treasury money if wealthy people left the UK or delayed selling.
It marks a shift from July, when Burnham said he wanted to look “in detail” at aligning CGT with income tax bands, which would have raised the top rate from 24 per cent to as much as 45 per cent.
George Bangham, head of social policy at the New Economics Foundation (NEF), told The i Paper that leaving rates unchanged would be “a missed opportunity to close tax discounts and raise almost £20bn per year”.
He said someone who pays through capital gains rather than income faces a top rate of 24 per cent instead of 45 per cent, and pays no national insurance on it either.
Citing CenTax research on HMRC data, he said the biggest winners would be the 5,000 people who receive more than half of all taxable capital gains.
He added that at least half of those gains are closely linked to people’s work, describing them as “labour income which people have (legally) reclassified as capital gains, that a better-designed tax system would tax via income tax”.
Worse off: Young workers on the minimum wage
Business sources told The i Paper that Healey is set to pause Labour’s pledge to bring the minimum wage for 18- to 20-year-olds, currently £10.85 an hour, in line with the £12.71 paid to those aged 21 and over.
That gap is worth £1.86 an hour, or around £3,600 a year for someone working full-time, and Labour’s manifesto had promised to “remove discriminatory age bands, so all adults are entitled to the same minimum wage”.
Healey has signalled concern about the impact on jobs, and was said to be “acutely conscious” of the “trade-off” between higher pay for young workers and employment levels in an interview with last week.
The Low Pay Commission, which recommends minimum wage rates, had initially targeted 2028-29 for closing the gap, but one source said ministers were now “pushing back the timeline”, while another said they would “pause rather than scrap” the policy.
Worse off: Banks
reports that Healey is considering reversing former chancellor Jeremy Hunt’s cut to the bank surcharge – an extra tax banks pay on their profits. Hunt cut the surcharge from 8 per cent to 3 per cent in April 2023.
Analysis by NEF suggests it would raise between £5.8bn and £7.6bn by the end of Parliament, and its economist Abhijay Sood said banks should “pitch in to help ensure the essentials of life are affordable for ordinary people”.
But a UK Finance spokesperson warned that an increase “would weaken the UK’s competitiveness, discourage investment and job creation”.
In a letter to Healey, the lobby group said it would mean around £6bn of lost economic output over five years, rising to nearly £20bn over a decade.
Worse off: People who owe tax
It can currently only do so where a debt exceeds £1,000, and must leave at least £5,000 in the account – but under the reported plans the threshold would fall to as little as a few pounds, and could include fines and interest.
Shadow Chancellor Andrew Griffith said Labour wanted the taxman “to empty your bank account over a few hundred pounds and leave you with nothing to pay the rent”.
Jon Stride of the Association of Taxation Technicians has also warned that some debts have been pursued “while claims are still outstanding because of HMRC delays or errors”.