Ahead of first budget, Chancellor John Healey faces spending pressures and bank levy proposals

By The Financial Edition · 28 October 2026 · 16:54 GMT · The Guardian Business · 1 min read

Photograph: Diego Delso, delso.photo · CC BY-SA · sector illustration, not event evidence

Fiscal pressures and spending

Ahead of his first budget, Chancellor John Healey faces heightened day-to-day spending and debt interest costs driven by oil and gas price rises. Reports indicate the Treasury's fiscal headroom has tightened, while spending plans include over £1bn aimed at helping poorer households with energy bills through an expanded Warm Home Discount.

Proposed revenue measures

To raise revenue without breaching manifesto commitments on income tax, national insurance, and VAT, the budget is expected to consider a levy on banks following a period of higher sector profits. Proposals regarding online marketplaces and taxes on online sellers are also under consideration to fund business rate relief for high-street shops.

Jargon, explained.

fiscal headroom: The margin the government has against its own fiscal rules, based on economic forecasts.
National Insurance: UK contributions paid by workers and employers to help fund state benefits and services. It is not a commercial insurance policy.
VAT: Value Added Tax — a tax added to the sale price of most goods and services.

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