Dearbail Jordan
Senior business and economics reporter

Spending on welfare could rise from £353bn this year to £431bn in 2031-32, according to the Office for Budget Responsibility (OBR).

The official forecaster reckons this will be driven by spending on heath-related state help such as Personal Independence Payments as well as benefits for pensioners.

It says that spending on welfare - measured as a percentage of the economy - is actually lower than a peak reached in 2012-13 due to rising unemployment in the aftermath of the global financial crisis.

But current levels are still high and what is different now is the increase in health-related welfare payments in the wake of the Covid pandemic.

The OBR estimates that welfare spending will increase by £19bn this year, then £16bn a year on average until 2031-32.

Griffith is now questioned about Conservative promises to cut taxes and spending should they win the next election.

He says the party would reinstate the two-child benefit cap, bring back face-to-face assessments for Pip disability allowance - for which "minor conditions such as anxiety will longer qualify", adding that the party had identified £70bn in savings overall.

Pushed further on what cuts the Conservatives would make, Griffith says "you won't get benefits if you've come from a non-EU country" and you're "not contributing to the economy".

He adds that the Tories would "reduce overseas spending, reduce the cost of the civil service by about a third", taking it back to 2016 headcount levels.

Shadow Chancellor Andrew Griffith tells the Today programme there were no cuts to public spending in yesterday's Budget, describing welfare as "the biggest out of control part" of government finances.

He says the Budget he would have presented would have been "very different in terms of some tougher choices on welfare" and would have "properly funded" the extra money needed for defence.

He says it would also have dealt with the deficit, adding: "We're borrowing money just to pay the interest on the national debt."

Asked if he needs to show some humility given the Conservatives' record in office, Griffith says: "I've never shied away from saying previous Conservative governments have had a chequered record on managing the public finances".

He says Chancellor John Healey has "left us more fragile today in a challenging world because he lowered the [fiscal] headroom".

• As a reminder, Healey said in his Budget speech yesterday that Britain would have a smaller buffer to meet its fiscal targets, with the government's tax revenues were expected to ⁠be £15 billion higher than day-to-day spending ​in the 2029/30 fiscal year.

Shadow Chancellor Andrew Griffith has been speaking to BBC Radio 4's Today programme.

The public finances are "not in good shape", he starts, saying that we live in "very difficult geopolitical times".

He describes the Budget as "disjointed" and says the chancellor ducked the two biggest decisions yesterday - the first of which was defence.

Pointing out he resigned as defence secretary over funding, Griffith says a plan to meet 3% GDP on defence by 2030 is "still not funded".

He stresses this is about "sustainable financing" for the armed forces at a time of increasing global threats.

He then repeats Conservative leader Kemi Badenoch's line from yesterday that Moscow and Tehran will not be worried when we are not taking defence seriously.

Michael Race
Business and economics reporter

After all the policy announcements and political rhetoric being banded about yesterday, you might be wondering this morning: when might I start to feel better off?

It's a mixed picture when it comes to economic growth in the coming years, with difficult times approaching in the near-term, according to the government's official forecaster the Office for Budget Responsibility (OBR).

The UK's financial watchdog sharply cut its growth expectations for the UK in 2027 as high energy bills hit the spending power of households and business.

Growth recovers towards the end of the decade, but the longer term picture for the country is one of weakness.

Image source, OBR

Delving further into the OBR's report, I came across this chart on real household disposable income, which is an indicator of living standards, over a period of decades.

It shows that for almost 20 years since the global financial crisis, living standards on average have grown at a much lower than rate they were on average for the latter half of the 20th century.

The chart shows a dip next year as high energy prices hit spending power and while they start to rise again as we reach the end of this decade, the growth in living standards is still way below where they were in the early 2000s.

Image source, EPA/Shutterstock

The Resolution Foundation has described Healey's Budget as "scattergun", adding that it did little to address "the sharp challenges facing Britain".

The economic think tank, which focuses on lower and middle earners, says the cost of living measures announced yesterday would not prevent energy bills from jumping above levels seen during the last energy shock.

“Cost of living support is being spread far too thinly and will leave even those families receiving help facing higher energy bills than they did during the last energy price shock," Chief Executive Ruth Curtice says.

The think tank adds that typical annual energy bills are expected to reach £1,750 after Government support in 2026-27, forecasting also that typical disposable income would fall by £1,050 between now and the end of the parliamentary term in 2028-29.

“A more dramatic change of tactics may be needed, and we did not learn how the Government will choose between public service ambitions and household incomes. Next year the choices will unavoidably get starker," Curtice adds.

Asked by the BBC whether the government's spending plans amount to austerity, Prof Jonathan Haskel says "I'll leave others to use those particular words" and that the OBR "just does the mathematics".

But he did say that if the government keeps the commitments it has made in defence, education and health, there could be a cut by 2.6% in other government departments.

On welfare, he also clarifies this would rise from around 10.5% to 11.5% of GDP - a large chunk being for disability and pension payments, which have grown in recent years.

Overall, he says the economic outlook was a "pretty grim picture", suggesting forecasting has been tricky over the past three years as the government hasn't made detailed spending plans.

Chair of the Office for Budget Responsibility (OBR) Jonathan Haskel is speaking to BBC Radio 4's Today programme.

He explains borrowing rates that the chancellor faces have gone up "very severely" since the OBR's last forecast in March - with a £14bn increase in the borrowing bill just from an increase in interest rates alone.

The chancellor had to address that before deciding on any policies - for context, the figure is around one third of the entire budget for the Department for Transport, he says.

He explains that in the OBR's report, published after the Budget yesterday, they sketch out the prospects for real household disposable income per person.

Before the financial crisis, that was growing by a couple of per cent per year but has "gone right down" to around one per cent across an entire decade, calling it a "very difficult outcome" for people.

• What is the Office for Budget Responsibility (OBR)? 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.

Speaking to BBC Breakfast, Helen Miller, director of the Institute for Fiscal Studies, describes yesterday's Budget as "small overall" but "ram-packed with measures".

The cost of living package was "always going to be at the heart of this Budget", she continues, and adds that the £100 one-off payment plus other measures "will help people" although she caveats that people haven't yet felt the "full force of winter".

"We actually think for most families, energy bills [will be] going up by over £400 in comparison to a package of help that's about £130."

So while it will "definitely help", people are likely to still feel worse off at the end of winter.

Asked whether the chancellor could have done more, Miller says the war in the Middle East has made the whole country "worse off" and it would never have been possible for him to make us all as well of as we would've been had that not happened.

She says the government has chosen a "relatively broad" package where they could have chosen to focus on lower income households, adding: "That is just a political choice."

Image source, PA Media

Opposition parties have been reacting to government spending plans unveiled yesterday by John Healey in his first Budget as chancellor.

The Conservatives have accused Labour of being "addicted to welfare", with Tory leader Kemi Badenoch saying the government had "overspent, overborrowed, overtaxed and [is] drowning in an out-of-control welfare system".

Reform says the Budget did not address the "ballooning" benefits bill. Leader Nigel Farage said the Budget was full of "little giveaways" but "doesn't overall do very much" and did not offer "anything of any value on defence whatsoever".

• How much does the UK spend on welfare? At its last forecast in the Spring, the Office for Budget Responsibility (OBR) estimated that the UK would spend £333bn (or 10.9% of GDP) on welfare this year. This is forecast to reach £407 billion (11.2% of GDP) by 2030-31.

The Green Party says Labour's Budget lacked ambition, tinkering "round the edges, rather than properly taxing extreme wealth and profits".

Liberal Democrats leader Ed Davey criticised what he called "stealth tax rises" and argued that weak growth, sluggish business investment and squeezed living standards cannot properly be addressed without a "fundamental re-think" of the UK's trading relationship with Europe.

Andy Verity
BBC Economics correspondent

UK households will be left paying higher energy bills than during the last energy crisis in 2022, according to analysis of the Budget by the Resolution Foundation.

The left-leaning think tank said that after newly-announced support, including a £100 energy payment for 20 million households, typical energy bills were nevertheless forecast to be £1,750 in the current financial year.

That’s higher in real terms (when adjusted for inflation) than during the last energy price shock after the invasion of Ukraine, when net bills were £1,685.

The Resolution Foundation also said more than £4bn of support with the cost of living is badly targeted - the poorest half of households will gain £158 on average which is just £14 more than the richest.

That’s partly because the support with energy bills is linked to council tax bands that are based on outdated property valuations from 1991.

• Will I get the £100 energy payment and when will I receive it?

Image source, Getty Images

Energy bills:

• One-off £100 payment for up to 20 million households in council tax bands A-D in England to help tackle rising energy bills
• Funding will be allocated to devolved governments, with Wales saying it will match the payment and the Scottish government planning to "replicate" it
• Standing charges – fixed daily fees customers pay regardless of usage – to be removed from household gas bills in England, Scotland and Wales, with costs added to the unit rate instead

Taxes:

• An extra 2% tax on income from savings and property rental from April
• Amount people can put into tax-free cash ISAs (Individual Savings Accounts) to remain at £20,000 a year, with plans to lower the limit to £12,000 for under-65s scrapped
• Surcharge banks pay on their profits to rise from 3% to 6% for 15 months, starting in January

Wages:

• Legal minimum wage to rise by 3.9% in April
• Unpaid carers will no longer lose their entire Carer's Allowance if they earn more than £204 a week after tax, with a taper rate introduced instead
• Parental pay extended to self-employed fathers and parents in same-sex couples

Housing:

• New scheme to help first-time buyers in England purchase a home, offering government-backed loans to households earning less than £110,000, or £140,000 inside London
• A new First-Time Buyer ISA to be introduced from April 2029, to replace the Lifetime ISA and help people save a deposit for their first home

We can bring you some more details now from Healey's interview with Radio 4's Today programme, which will be broadcast in full later at around 08:10 GMT at the top of this page.

One element he was asked about was the announcement of a one-off £100 energy payment this winter for households in council tax bands A-D - with bills forecast to increase by £276 in January.

"It will be four in five households, 20 million households - direct £100 payment into their bank accounts and this is a way that we can get the money to these people at the time when they are going to be facing the early winter bills," he says.

"I do want to be honest with people, government can never remove completely the cost of living pressures that people feel - we can help where we can and that's what I'm doing."

Asked whether he thought a closer relationship with the EU would be key to economic growth, Healey responded: "You're reflecting the bigger national conversation that the prime minister wants to encourage - that's great."

Healey says he remains committed to Labour's manifesto pledges, while also saying that "in the meantime...make sure we can get a better deal for Britain".

Following the measures announced by the chancellor in the House of Commons yesterday, now he has pledged one more - a reduction in the welfare bill ahead of the next general election.

We don't have many details on this so far - but Healey has said it will be done "in a Labour way".

We'll hear more from that interview with Radio 4's Today programme later on this morning, for now you can hear some of his comments in the clip above.

The Treasury later disputed that the chancellor said the benefits bill would be cut before the next general election - read more.

Image source, EPA

It's the morning after Budget day and Chancellor John Healey is already making future pledges on reducing the benefits bill, having been criticised for a lack of details on the issue yesterday.

In an interview recorded after the Budget, Healey told the BBC it is "simply not good for Britain or progressive to have a bigger and bigger benefits bill", labelling the current system as "unsustainable".

He ruled out "crude cuts" but more details on his approach are not expected until two major reviews are published next month.

The Conservatives accused Labour of being "addicted to welfare", while Reform UK said the Budget did not address the "ballooning" benefits bill. Welfare spending is forecast to rise this year by £19bn to £353bn.

Healey's first Budget as chancellor included various so-called "breathing space" measures including scrapping the standing charge on gas bills in favour of a paid unit rate, and a £100 one-off "Household Energy Payment" for those in council tax bands A to D in England.

We're resuming our live coverage. We'll catch you up to speed on the measures announced by the chancellor yesterday, before we hear the full details of the chancellor's interview.

A flotilla of small measures as Healey unveils his first Budgetpublished at 19:44 GMT 28 October

19:44 GMT 28 October

Chris Mason
Political editor

This was a Budget I would describe as a flotilla of small measures.

But, depending on your circumstances, those measures may still feel noticeable - as either a gain or a loss.

The central challenge for the Chancellor John Healey, which he shares with his recent predecessors, is the public finances are in a mess and so are the personal finances of so, so many households.

And it is very difficult to do much about one of those things if the other one is in a mess. What we heard today was a cautious acknowledgement of both of these things.

One critical friend of the government suggested to me this would be a "Mr Sensible Budget" - their hope and expectation that it might be shorn of bells and whistles, but shorn of timebombs too.

Let’s see. It has allowed Labour’s critics to point to what they see as the vast gulf between the prime minister’s vision and the chancellor’s numbers.

The Conservative leader Kemi Badenoch said Burnham came to power promising to end 40 years of neoliberalism and "instead, we got 4p off gherkins".

The central truth tonight is this government’s biggest visible challenges remain: the long term funding of defence, shaking up the benefits system, our relationship with the European Union.

And, after years of economic turmoil - abroad and at home - the realistic prospect of more to come, squeezing incomes, living standards and, recent years suggest, squeezing patience with government too.

We're pausing our live coverage now, you can read more in our news story here.

Joe Coughlan
Live reporter

This year's Budget day kicked off with the government's announcement on standing charges being removed from household gas bills, a move which could see 60% of households gaining £45 a year but higher users paying higher bills.

Healey continued the time-honoured tradition of standing outside No 11 with the iconic red box, containing his Budget, before a PMQs session largely dominated by Burnham and Badenoch clashing over the UK's relationship with the EU.

Image source, EPA/Shutterstock

The chancellor then stood in the Commons for just under an hour, saying the Budget was built on "fiscal discipline" to give people "breathing space". He announced millions of households in England will receive a £100 payment to help with energy bills this winter - we've recapped some of the other measures announced.

It was then the turn of the government financial watchdog, the Office for Budget Responsibility (OBR), which described a "challenging" fiscal background, and forecasted increased government borrowing for the next few years, and a rise in interest rates by the middle of next year.

Our senior business and economics reporter Dearbail Jordan called it a "sobering" forecast - we've recapped the OBR's numbers here.

Tory leader Kemi Badenoch criticised Healey's first Budget as being "not good enough", while other parties focused on relations with Europe and defence spending - see our last two posts for how opposition parties and the devolved governments reacted.

We will be pausing our live coverage shortly with some analysis from our political editor Chris Mason. We've got more on this story here:

• Budget 2026: Key points at a glance
• Will I get the £100 energy payment and when will I receive it?
• Your pay, energy bills and savings: How the Budget affects you

Image source, PA Media

• Kemi Badenoch called it "not good enough" and said Healey had to clean up the "mess" made by Rachel Reeves, and accused the government of having U-turned on removing "discriminatory age bands" for the minimum wage

• The Lib Dems’ Ed Davey focused his Budget criticism on the government’s relationship with the European Union, saying the biggest thing it could do to improve the economy would be to "fix our trading relationship with Europe"

• Nigel Farage of Reform UK labelled called it "deeply cynical" and aimed at "hiding the truth from everybody that they are all going to get poorer"

• Green Party leader Zack Polanski said the Budget "all felt very familiar", accusing the government of being unwilling to give the country the investment "we so desperately need"
• Leaders in Wales, Scotland and Northern Ireland have also responded with criticism of the measures - see our last post

Jack Grey
Live reporter

Image source, PA Media

In his Budget speech, Chancellor John Healey announced millions of pounds worth of investment in "high-growth industries" in Wales, Scotland and Northern Ireland.

However, the devolved governments have complained that the Budget does not go far enough:

Wales

Finance Minister Elin Jones has described John Haley's Budget as a "real-terms cut dressed up as a windfall".

In a statement, Jones says the Budget "hasn't shifted the dial" for Wales, adding that "on rail, fiscal flexibilities and public services, Wales has been ignored again".

"Once you account for inflation, this is still a real-terms cut to our funding, not new money that improves our position," she adds.

Scotland

The Budget "completely fails to meet the moment," First Minister John Swinney says.

He says "yet again, Scotland has been treated as an afterthought," but pledged to match the £100 energy bill support that was announced for some in England.

Northern Ireland

Stormont's Finance Minister John O'Dowd says the Budget will be of "cold comfort to workers and families facing cost of living pressures".

He says the financial package currently being offered by Westminster leaves a "significant gap" and additional investment was urgently needed in areas such as critical infrastructure and social housing.

"The chancellor’s Budget has done little to close the gap on the pressures we face," O'Dowd says.

How radical are the chancellor’s energy reforms?published at 18:58 GMT 28 October

18:58 GMT 28 October

By Mark Poynting

As well as measures to help households this winter, the chancellor said he would begin “radical reform” to bring energy bills down in future and the government would “further break the grip of international gas prices on bills”.

Currently, wholesale electricity prices are often set by the cost of gas even if renewables might be generating more power for the grid. So when gas prices spike, bills do too.

Healey said the government would look to switch more of the contracts held by some renewable energy projects onto fixed-price deals, rather than being paid a variable price often linked to gas.

But many analysts believe the policy, first planned under former prime minister Sir Keir Starmer in April, will only have a modest impact on bills.

The chancellor also said he wouldn’t add any new environmental or social levies onto bills until a “cost control framework” was in place.

But last month more than 100 organisations, external - including energy firms, food producers and consumer advocacy groups - signed a joint letter calling for the government to go further and move all levies currently on bills to general taxation instead, which they said would make electricity cheaper.