Help is on the way… if you’re on benefits! Healey’s Budget promises ‘breathing space’ on energy bills – but could drag millions deeper into tax
Developing story first seen 4 hours ago
The Budget now includes a special tax allowance for the lowest-income pensioners, intended to stop the state pension increase in April from drawing them into tax. This is part of a package that promises some households breathing space on energy bills, while other tax changes could bring millions more into the tax system.
The Defence Investment Plan gets an extra £4.7 billion and targets defence spending of 3 per cent of GDP by 2030, but the Government will not set out the funding source until next year’s Spending Review. The OBR raised its growth forecast for this year from 1.1 to 1.2 per cent, while cutting the next forecast from 1.6 to 1 per cent; the minimum wage will rise by 3.9 per cent in April, and plans to cut the £20,000 cash ISA allowance have been dropped.
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In short
- Lowest-income pensioners will get a tax allowance.
- Defence spending gets £4.7 billion more.
- Growth forecasts were revised in both directions.
How this story developed
- 5 minutes ago Rachel Reeves’ Budget promises breathing space on energy bills through a measure aimed at people receiving benefits, while its wider tax changes could pull millions more into tax.
- 31 minutes ago The Budget now includes a special tax allowance for the lowest-income pensioners, intended to stop the state pension increase in April from drawing them into tax.
Where outlets differ
Left-leaning outlets 1
- Will John Healey’s ‘breathing space’ budget deliver what Britain needs? Our panel responds | PanelThe Guardian
Only here: john, deliver, britain, needs, panel
Right-leaning outlets 1
Only here: help, benefits, promises, energy, bills
Every side used: healey, breathing, space, budget
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The case for
Supporters could argue that targeting energy bill relief at people receiving benefits directs help towards households least able to absorb high costs, while extra defence funding addresses security needs. They may also see the higher minimum wage and the decision to retain the cash ISA allowance as practical support for workers and savers, despite weaker growth forecasts.
The case against
Critics could argue that limiting energy bill relief to benefit recipients leaves other struggling households without help, while wider tax changes risk drawing millions more into tax and squeezing incomes. They may also question committing extra defence funds before identifying their source, particularly as the growth outlook has weakened.
Explained simply
Energy bills take up a larger share of income for households with less money to spare. Benefits are payments from the state to people who meet certain conditions, such as having a low income or being unable to work. Support tied to benefits can help eligible households manage essential costs, though it does not reach everyone facing high bills.
The Budget is the Government’s plan for taxes and public spending, including decisions that affect wages, savings and public services. Rachel Reeves, the Chancellor, sets out the plan, while the Office for Budget Responsibility independently assesses its likely effects on the economy and public finances. Tax thresholds can affect how many people pay tax or move into a higher tax band as incomes rise.
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