Will the Chancellor's changes to energy bills deliver the net zero promise?published at 16:23 GMT

16:23 GMT

Justin Rowlatt
Climate editor

Healey told the Commons that the government’s focus is now "cheaper energy". He said clean power was key to this and insisted Labour stays "unshakeably committed to net zero by 2050."

But the wars in Iran and Ukraine are the main driver of rising prices, so the chancellor’s focus was more about who pays what.

He’s scrapping green levies on energy bills, saying policy costs had been "simply loaded onto household bills".

"Today I am putting an end to that," he announced.

He’s also scrapping gas standing charges, extended the VAT cut on electricity, and is giving households in England in council tax bands A to D £100 for energy bills.

The costs haven’t gone away but now more of them are being picked up by all taxpayers irrespective of your energy use.

And there’s a catch. Economic theory suggests lower prices tend to encourage people to use more, which could make the net zero challenge even bigger.

Colletta Smith
Your Voice correspondent

It’s been a busy half term day at Bluebells Dairy farm in Derby.

As the chancellor delivered his Budget speech, mums Lauren and Nathalia were making magic potions with their kids for a day of Halloween activities.

Lauren, who is a teacher, welcomed the energy help offered to families by the chancellor.

"The price of everything has gone up but our wages are not going up," she says.

"We've been doing all sorts to save energy costs like turning off lights and keeping doors closed. Any money off bills is a good thing."

Nathalia, who has three children, agrees. She says families do need the help the government is offering to make even a little bit of a difference as wages just get eaten up so quickly.

"It’s just a really challenging time, especially if you are a bigger family. We have three kids so everything costs a lot."

Gareth Lewis
BBC Wales political editor

As part of the Budget, the government has announced that people living in a home in England in council tax bands A to D will receive a one-off £100 "Household Energy Payment" from January, funded by extra tax on banks.

If you live in a home in Wales and are in Council Tax bands A-D it is not yet clear how the £100 energy payment will operate.

Council tax and local government are devolved, so controlled by ministers in Cardiff Bay not Westminster.

The chancellor urged the Welsh government to follow his lead and make the payment - and although Welsh ministers will get so-called consequential funding it will be up to them how to spend it.

It is also not clear whether the Welsh government has the mechanisms in place to pay straight into people’s bank accounts, as is the plan in England.

The Welsh government has been asked to respond.

Glenn Campbell
BBC Scotland Political Editor

There was a direct challenge to the Scottish and other devolved governments in this budget. It was related to the £100 energy payments promised this winter to households in England in council tax bands A-D.

This spending will generate additional cash for ministers in Edinburgh, Cardiff and Belfast to spend as they choose but the Chancellor has urged them to use it in a similar way.

Given that the Scottish government called for extra help with the cost of living in advance of the UK budget, my guess is that they would want to allocate it to easing those pressures - whether or not they do exactly the same as John Healey.

Officially, they are waiting to crunch all the numbers before making any decisions.

The Scottish government is due to announce its own draft budget for the year ahead on 3 December.

Image source, Getty Images

Green Party leader Zack Polanski says the Budget "all felt very familiar" after writing on social media: "Was that it?"

"A Labour Government totally unwilling to take on power and wealth and give our country the investment we so desperately need," Polanski writes on X, adding a link to join the Green Party.

The Office For Budget Responsibility (OBR), the UK’s official public finances watchdog, released its forecast for the economy after the Budget a little earlier, and spoke to the media following the release.

Here's what we learned:

• Debt interest is pushing up government spending by £14bn per year - if the government can reduce how much interest it pays, that money can be spent elsewhere
• The net effect of the chancellor's policies over the next five years is increased borrowing over the "first couple of years" and and a decrease "in the last couple", chair Jonathan Haskel says
• Healey's Budget will meet the government's two fiscal rules, but there is "lots of uncertainty", he added
• The OBR forecasts that borrowing will be 4.2% of the UK economy in 2026-27, higher than the expected 3.6% of gross domestic product (GDP)
• It expects the Bank of England to raise interest rates to 4.5% by the middle of next year
• Economist David Miles described the last 10 years as "a dismal period in British economic history"

The forecaster's latest Economic and Fiscal Outlook is sobering, senior business and economics reporter Dearbail Jordan writes.

Healey announced a tax rise for some savers and landlords - here's a closer lookpublished at 15:51 GMT

15:51 GMT

Simon Jack
Business editor

The chancellor has imposed an additional 2% tax on income derived from savings and property rental.

At the moment, basic rate tax payers are allowed to earn up to £1,000 tax free and thereafter pay 20% tax on savings income.

That was already due to go up to 22% from 1 April next year and will now go up to 24%.

Higher rate tax payers can earn £500 tax free and thereafter pay 40% on savings income, which will rise to 44%%. The measure is forecast to raise £590m a year by 2031.

The government is also imposing a 2% rise in any income from property rental. The measure is forecast to raise £455m a year by 2031. However, savings in Isas will remain tax free.

The chancellor was keen to stress that there would be no tax rise on income from other investments like share dividends - making it clear that the government would prefer savers to invest in what it considers more productive, growth boosting assets than property and savings deposits.

Additional taxes on landlords could, of course, be passed on to renters.

Image source, UK Pool

Nigel Farage says today's Budget "doesn't overall do very much, but it attempts to please a very large number of people".

Speaking at a Reform UK press conference, the party leader says: "Frankly everything the prime minister does, everything the chancellor did today, is aimed at lots and lots of little giveaways."

He praises former defence secretary John Healey's Budget as being competent and in a "different league" to the previous two from Rachel Reeves, but also calls it "deeply cynical" for not offering "anything of any value on defence whatsoever".

Reform MP Robert Jenrick also says the Budget was a "nothingburger", adding that next year is looking like a "truly terrible year" for the country.

Speaking before Farage, the MP lists the pledges a Reform government would carry out, including giving £1,300 to every family in the country and raising the tax free allowance to £15,000.

Describing it as a "flotilla of small measures", political editor Chris Mason goes through the standout points of this year's Budget below:

Healey will need to argue that his relative caution is the right approachpublished at 15:38 GMT

15:38 GMT

Harry Farley
Political correspondent

This was a Budget of many measures.

There were 98 policy changes. That is more than average and more than in Rachel Reeves’s two Budgets. But the collective weight is still relatively small in terms of the total amount spent and raised in taxes.

John Healey was clear about the politics; taxing banks, landlords and gambling companies to pay for cost-of-living support, help for the high streets, and to make sure the state pension isn’t taxed.

With so many measures, there is plenty of detail to get into which we’ll continue to bring you.

The Conservatives point to the lack of detail on how he’d hit 3% of GDP on defence, and the rising cost of government debt, as evidence that Labour’s economic plan isn’t working. They want sharp cuts in public spending.

But as Unite union leader Sharon Graham reflected in her statement, some in the wider Labour movement are also underwhelmed although their diagnosis is different. Graham said taking £100 off energy payments for some households "will not touch the sides" of the rise in prices coming.

"This government needs to face the scale of the problem, and right now it isn’t even close," she said.

Healey will need to make an argument to his own party, as well as the public, that the global constraints of the Iran war, coupled with wanting to show restraint on public spending, means his relative caution is the right approach.

Image source, OBR

In the news conference, the OBR is asked that if there was a significant crisis and recession, to what extent could the government move to soften the blow or are the public finances on too unsustainable footing?

Tom Josephs, fiscal economist, says the main driver of the high levels of debt is because of the impact of major shocks in the last two decades - the financial crisis and Covid-19 in particular.

These drove up debt because of the impact on the economy and the cost of the policy responses introduced by the government, he explains.

He says "a consequence of high debt" is that it "may make it more difficult for governments in the future to be able to respond to similar crises if they happen".

Between these crises, he says, we have seen government only being able to reduce debt "by a relatively small amount" meaning it has ratcheted up each time.

The news conference has now ended - we'll continue to bring you analysis and reaction.

Dearbail Jordan
Senior business and economics reporter

We can bring you more now from the latest Office for Budget Responsibility report.

It expects the Bank of England to raise interest rates to 4.5% by the middle of next year. Earlier in 2026, it had forecast borrowing costs would reach 4% by 2030/31.

The Bank of England will announce its latest decision on interest rates next week on 5 November.

There is a chance the Bank could raise interest rates from 3.75% to 4%.

Dearbail Jordan
Senior business and economics reporter

As the OBR delivers a news conference on its latest forecasts, we're also trawling through 200 pages of its analysis and the forecaster has calculated that public sector net borrowing will be higher than it previously thought in March.

It now reckons borrowing will be 4.2% of the UK economy in 2026-27. It had expected it to equal 3.6% of gross domestic product. In fact, public sector net borrowing has been revised upwards for every year from now until 2031-22.

Dearbail Jordan
Senior business and economics reporter

Paying interest on government debt really does take a big chunk out of the government's coffers.

The OBR's Haskel says the Treasury is paying out £14bn on borrowing costs even before it spends on anything else.

That's why there is so much talk from the likes of Healey and Burnham about sticking to the fiscal rules.

If they can reduce how much interest the government pays, that money can be spent elsewhere.

Image source, OBR

Asked about disposable income, OBR economist David Miles says it's a "pretty grim picture".

"If you go back to just before Covid... where we are right now, some seven years later, is virtually no growth per person real household disposable income," he says.

That is "pretty unusual" in the history of the UK, he says, adding that it is to "quite a substantial extent" a reflection of increases to energy prices - which he describes as a "loss to the UK".

Over a 10-year period, starting just before Covid and up to 2029, he says there is "some growth" forecast in real household disposable income "from here on forward" - but "not in the very near term" due to energy prices.

Over that entire 10 years period, Miles says there may be a 1% increase in household disposable income, or "negligible growth every year for 10 years".

"It has been a dismal period in British economic history," he adds.

Haskel moves on to talk about the government's fiscal rules.

He says Healey's Budget will meet the government's two fiscal rules to a) cover day-to-day spending with tax revenue by the end of the parliament and b) net debt to be falling as a share of GDP over the same period.

But he says there is "lots of uncertainty" around these forecasts, with risks to the outlook including changes to energy prices, departmental spending and productivity growth.

Summarising the OBR's forecasts, Haskel says the fiscal background is "challenging" for various reasons, with the economic forecast for next year showing GDP lower and inflation higher.

However inflation is expected to fall and growth to recover in the medium-term, he adds, while fiscal rules will be met at the moment.

Image source, OBR

OBR chair Jonathan Haskel says government debt interest payments have gone up as a result of the increase in bank rates, explaining that debt interest is pushing up government spending by £14bn per year.

Other "stresses" on the economy, he says, include non-debt interest spending, including welfare payments.

The net effect of the chancellor's policies over the next five years is increased borrowing over the "first couple of years" and and a decrease "in the last couple" - "so they sort of somewhat net out," he adds.

Dearbail Jordan
Senior business and economics reporter

The Office for Budget Responsibility (OBR) chair Jonathan Haskel has begun his presentation on the forecaster's latest Economic and Fiscal Outlook - and it is sobering.

Back in 2006, UK debt as a percentage of GDP was 40%.

Now, it is nearly 100%.

Since March, when the OBR last published its forecasts, oil and gas prices have jumped substantially. He also points out that disposable income per household are not expected to rise as much as it previously thought.

The Office for Budget Responsibility is about to deliver a news conference following the Budget and the release of its latest analysis.

We'll bring you key lines from their forecast right here.

As a reminder, the OBR is the UK’s official public finances watchdog. It releases forecasts for the economy and public finances twice a year, alongside the Autumn Budget and Spring Statement.

Image source, House of Commons

Much of Liberal Democrat leader Ed Davey's criticism of the Budget stems from relations with the European Union (EU).

"The biggest single thing the government could do to fix our economy is to fix our trading relationship with Europe", Davey tells MPs in the Commons.

He says that until the government has "the courage" to do so, any Budget will just be "tinkering around the edges" as, in his view, it won't provide the growth needed by those in the UK.

Davey does, however, welcome PM Andy Burnham's open dialogue on relations with Europe, but he notes the issue is "just too urgent to wait until the next Parliament".

Growth, Davey adds, is well below what it used to be when the UK was part of the European Union.

The Lib Dem leader also points to income tax thresholds, saying they should rise to avoid a "stealth tax".