UK offers energy aid, raises bank tax against ‘global economic storms’

A temporary bank tax increase will help fund cost-of-living relief as the government faces rising borrowing costs and slower economic growth next year, tied to spiraling costs and wars in Ukraine and Iran.MANCHESTER, England (CN) — British households will receive a 100-pound ($133) payment this winter as economy minister John Healey on Wednesday announced temporary tax increases on banks and measures to ease energy costs in the first budget of Prime Minister Andy Burnham’s Labour government.Healey told Parliament on Wednesday that the government would spend 2.6 billion pounds on payments to about 20 million households.The money will go directly into bank accounts to help families manage rising energy bills during the coldest months.To fund immediate energy relief, the government will impose an additional 3% bank surcharge for 15 months beginning in January, on top of the standard 25% corporation tax rate.Since becoming prime minister, Burnham has framed his premiership as a cost-of-living government, promising to ease pressure on household budgets.Healey said his budget was designed to “steer us through the global economic storms” and give Britain “breathing space” as rising energy prices and borrowing costs put pressure on public finances.Speaking of the U.S. war on Iran, he said, “We did not want this war and we rejected calls to jump into it,” blaming the conflict for driving up oil and gas prices and increasing costs for households and businesses.The Office for Budget Responsibility — the independent watchdog that assesses the government’s plans — upgraded its forecast for economic growth to 1.2% this year. But it also forecast the government would spend 14 billion pounds more on debt interest this financial year.Energy and household costsThe government will extend the zero rate tax on household electricity bills through July. The tax cut had been due to expire in March 2027. Healey said the extension would take about 50 pounds off the annual energy price cap, which limits the rates suppliers can charge households.The government will also extend a cut in fuel duty through next July. Healey said the continuing conflict in the Middle East had kept fuel prices high.Tariffs on more than 100 supermarket products will also be suspended.Other measures include a 3.9% increase in the minimum wage for about 2.3 million lower-paid workers. The increase will apply to workers aged 18 to 20 as well as older employees.Self-employed fathers and partners will also become eligible for paid parental leave.Small businesses will benefit from a higher threshold for business rate relief, increasing from 12,000 pounds to 18,000 pounds. Healey said the change would remove 70,000 businesses from paying business rates altogether.The measure will be funded by higher taxes on gambling.Ukraine and defense spendingHealey announced 10 billion pounds in urgent military funding for Ukraine this winter.He said he and the prime minister had spoken with Ukrainian President Volodymyr Zelenskyy earlier Wednesday to inform him of the support.Britain will stand with Ukraine “as long as it takes,” the chancellor said.The defense budget is 14 billion pounds higher than it was in the Conservatives’ final year in government, Healey said.He added that next year’s spending review would set out how Britain would meet its NATO commitment to spend 3.5% of gross domestic product on defense by 2035. U.S. President Donald Trump has consistently urged European countries to spend more on defense.Housing and greater regional powersHealey announced a further 430 million pounds to keep open the government’s offer of a route off the streets for people sleeping rough.He said more than 170,000 children would spend the night in temporary accommodation.The government will also launch its Your First Home scheme next spring, offering government-backed equity loans to help first-time buyers who cannot rely on financial support from their families.The budget sets out a plan to give regional mayors greater control over local revenue. Mayors will receive 20% of business rate revenue from next year, with a share of income tax receipts due to follow from 2028.The chancellor announced more funding for artificial intelligence safety and security and a new framework setting conditions for data centers operating in Britain.“We are already world leaders in AI safety and security, which today’s budget backs with an extra half a billion pounds,” Healey said.He said the budget would give families and businesses breathing space while keeping public finances under control.Courthouse News reporter James Francis Whitehead is based in England.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads