Not long after Chancellor John Healey stepped up to the dispatch box, the shape of today’s Budget speech appeared to confirm suspicions that today’s main goal was to avoid rocking the boat. It took more than 15 minutes of scene-setting before we reached the substantive policy announcements. Was Healey playing for time, given perhaps how little there was to announce overall?
The numbers reinforce an impression of wanting to maintain the status quo. According to the OBR, the 98 measures in the Treasury scorecard amount to an immediate giveaway of £7.6bn in 2026-27, equivalent to 0.25 per cent of GDP, before net tax rises of £6.5bn by 2030-31. In the context of the challenges facing the country, this is small beer indeed.
And the net result? Gilts didn’t move. Bank shares went up. A job well done, some will say.
It is tempting to count political soundbites in a Budget transcript, but more revealing is what actually cuts through when watching a speech that lasts almost an hour.
Breathing space. Good Growth in every postcode. Fresh hope for the future.
Critics of Andy Burnham argue that he offers little more than vibes. However, his Labour Party Conference speech challenged that perception, setting out a clearer sense of the direction in which he wants to take the country. This Budget, by contrast, was a case of keeping things steady in an increasingly difficult economic climate.
Many MPs, on both sides of the aisle, will have been left wondering: “Was that it?” Yet Labour activists will have some tangible measures to sell to voters, without having to defend the difficult decisions the government has once again deferred. This political trade-off left the underlying questions around welfare, social care, defence, taxation and public spending unresolved.
On energy and the cost of living, there were measures with immediate appeal. The £100 payment for households in council tax bands A to D, alongside extensions to energy-bill relief and the 5p fuel duty cut, gives Labour clear messages for the doorstep. The recommitment to heat pump subsidies also offers continuity for households and industry.
For those focused on AI, the “British Data Centre Covenant” promises faster grid connections for projects that create local jobs, invest in communities and protect water supplies. But will it genuinely accelerate delivery, or effectively add another layer of conditions to an already challenging planning and regulatory environment? At a time when the UK is competing internationally for investment, speed and certainty matter.
The devolution measures could prove more consequential, and a clear indication of Burnham’s involvement when setting the Budget’s overall agenda. Giving mayors a growing share of business rates, followed by a share of income tax receipts and powers to introduce an overnight visitor levy, creates a stronger financial incentive to support local economic growth. Commercial development – from data centres and warehouses to offices – could become more attractive if local authorities retain more of the revenue it generates.
Other juicy policy nuggets include “founders’ relief” – cutting capital gains tax to 10 per cent on up to £10m in lifetime gains – alongside a more modest-than-expected three-percentage-point increase in the bank corporation tax surcharge.
But stepping back, the PMQs ahead of the Budget offered a more revealing glimpse of what might come next. When repeatedly challenged by opposition leader Kemi Badenoch on Europe, Burnham repeatedly returned to Labour’s manifesto commitments, highlighting the limits they placed on any immediate shift in position on rejoining the EU.
But, having recently reopened the debate on closer integration and freedom of movement, he appears to be signalling that there is appetite to go further, but that meaningful change will require a fresh political mandate. November’s EU summit may clarify the available options, but it will not settle how far Labour is prepared to go in this Parliament.
Simultaneously, the political backdrop is improving for Labour. The party is reaching 30 per cent in some polls, the Conservatives are struggling to cut through, Reform is contending with damaging controversies and Labour may be drawing voters back from the Liberal Democrats and Greens. After months of pressure, the party has a new-found momentum to protect.
And now a steady-as-she goes Budget. When all is said and done, May 2027 may no longer seem an impossible time for a general election. If Labour can consolidate its gains while its opponents struggle to recover, the temptation to go to the country could become irresistible. Until then, Burnham and co will continue to hold their new ming vase with great care indeed.
