John Healey’s First Budget: Balancing Cost-of-Living Relief, Defence Funding and Regional Devolution

On Wednesday 28 October 2026 Chancellor John Healey MP will deliver his first Budget. The statement is expected to combine “breathing-space” measures for households with additional defence spending, a devolution-focused fiscal package and a £24 billion carbon-capture and storage (CCS) programme.

The Independent

The budget arrives amid an “unfolding economic shock” from the war in the Middle East, which has lifted global inflation and UK borrowing costs. The previous spring statement left a fiscal headroom of £23.6 billion; the Resolution Foundation now estimates it at about £12 billion. The Office for Budget Responsibility (OBR) will model debt-interest costs, inflation, pay growth, employment and productivity.

The Independent

• John Healey MP – Chancellor, former defence secretary.

The Independent

• Andy Burnham MP – Prime Minister.

The Independent

• Rachel Reeves MP – Former Chancellor.

The Independent

• Chris Packham – Naturalist, critic of the CCS programme.

The Guardian

• Mark Sommerfeld – UK director, Carbon Capture and Storage Association.

The Guardian

• Energy bills for a typical household are forecast to rise to £2,000 a year from January.

Cutting energy bills should be Chancellor’s top Budget priority, say public

• Since 2021, consumers have paid an average of £14,000 in extra mortgage, loan, energy and water costs.

The Guardian

• The government is earmarking more than £1 billion for energy-consumer discounts via an expanded Warm Home Discount.

Cutting energy bills should be Chancellor’s top Budget priority, say public

• Defence spending is slated to rise to 2.7 % of GDP by 2029 and the Chancellor aims for 3 % by 2030, which the Institute for Fiscal Studies says would need an extra £11 billion annually.

The Guardian

• The CCS programme totals £24 billion, exceeding the combined planned spending of the United States, the EU, Norway and Japan.

The Guardian

• The Office for National Statistics has revised net-migration forecasts to about 230,000 annually, a drop that could reduce tax receipts by £4.7 billion by 2029-30, according to the Resolution Foundation.

The Guardian

• Chris Packham called the £24 billion CCS spend a “national embarrassment” and urged the Treasury to redirect funds to proven green schemes that lower energy bills.

The Guardian

• Industry sources describe the CCS programme as “exorbitantly expensive,” while the Carbon Capture and Storage Association says it has already awarded more than £4 billion in supply-chain contracts supporting 350 companies and 5,500 jobs.

The Guardian

• The Bank of England is expected to raise interest rates the week after the Budget, affecting mortgage borrowers.

The Guardian

• A spending review is slated for next year, during which the Chancellor may seek additional funding for defence and regional devolution initiatives.

The Guardian

• “Pulling back now would undermine investor confidence, risk leaving infrastructure underused and deepen industrial decline,” — Mark Sommerfeld, CCSA UK director

The Guardian

• “But that doesn’t mean losing sight of the everyday problems that cost people money or simply aren’t fair.” — Prime Minister Andy Burnham

Chancellor to cut food costs as part of 'everyday fixes' package