Healey's budget is a welcome but underpowered first step toward a fairer, more active state
Source: https://www.theguardian.com/profile/editorial. "The Guardian view on Labour’s budget: bold ambitions and welcome first steps | Editorial | The Guardian." October 28, 2026. www.theguardian.com
The Gist
The Guardian says Healey's budget heads in the right direction by making banks, landlords and gambling firms pay more and by investing in prevention. But the measures are too small, too temporary and partly built on shaky funding assumptions, because the chancellor kept tight fiscal rules. A much bolder effort is needed to ease the squeeze on households.
Conclusion
John Healey's budget points in the right direction by sketching a social-democratic active state, but it lacks the firepower (resources and redistribution) to tackle entrenched inequality and stagnation, so a bigger stride is needed.
Premises
- The budget's ambitions (shaping energy markets, ending rough sleeping, devolving tax and spend, asking banks, landlords and gambling firms to pay more, funding prevention) are directionally right and make moral and financial sense.
- Its relief is temporary while the squeeze on households persists: the OBR projects households shifting from saving about £50bn in 2026 to borrowing about the same in 2031, with mortgage costs at their highest share of income since 2009, and weak worker bargaining power letting firms rebuild margins.
- Specific measures are too small or poorly targeted: the bank tax raises £1.5bn versus about £11bn a deposit levy could have yielded, and the energy payment goes to 80% of homes while 1.4 million poor families miss out.
- Some funding assumptions are risky or not credible, such as relying on Rosebank oilfield revenues before approval and assuming £11bn of cuts to unprotected budgets in 2031-32.
- These weaknesses stem from fiscal constraints the chancellor chose to retain, and devolving tax revenues without redistribution risks favouring the wealthiest areas, which Healey has not explained how to prevent.
Assumptions
- Entrenched inequality and over a decade of stagnation require larger-scale state intervention and redistribution than the budget provides.
- The self-imposed fiscal rules are a choice that could be changed, not an unavoidable constraint.
- OBR forecasts are a reasonably reliable guide to future living standards.
- Higher taxes on banks, landlords and similar sectors are feasible without major negative economic effects.
- Preventive spending saves money across departments over the long term.
- A social-democratic active state is the desirable goal.