Healey's first Budget on Wednesday, 28 October, fuels early election talk

The Budget is expected to change little

Chancellor John Healey presents his first Budget on Wednesday, 28 October, and the pre-Budget coverage describes a package with few changes. Mr Healey has reportedly turned down cabinet colleagues' demands for higher capital gains tax, and Prime Minister Andy Burnham and the chancellor have said they will keep the manifesto pledge not to raise income tax, VAT or employee national insurance contributions. The main revenue measure reported is a bank levy that would rise from 3 per cent to as much as 8 per cent on bank profits. Expected extras include more help with energy bills for low-income households, measures to bring down fuel duty and money for Mr Burnham's plans to end rough sleeping. Public sector pay rises are not expected to be fully funded centrally, so departments would have to find the money from their own budgets, a step that could bring the government into conflict with trade unions.

Early election talk

Opposition parties and financial institutions are preparing for Mr Burnham to call an early election, despite his public denials. An Ipsos poll published around the weekend of 24 October suggests Labour would win a majority of more than 130 seats, and a source close to Kemi Badenoch said it had strengthened the expectation of a vote possibly in May or earlier. Ipsos gives Labour 32 per cent, its highest point in a poll since the election and eight points ahead of the Conservatives. The London arm of the Dutch bank ING has briefed that it is also preparing for an early election. City economists warn that a vote in 2027 could weaken the pound and push up borrowing costs, particularly if the Budget is seen as a 'boring Budget'.

Tax debt and HMRC powers

HMRC would gain authority to take money directly from current and savings accounts of people who fail to pay their tax, a measure expected to be announced in the Budget. The move responds to a tax debt of £60bn. HMRC estimates about 4.8 million people and companies owe debts below £10,000, totalling about £4bn, an average of £950 per individual customer. Under current rules HMRC can take money from debtors owing more than £1,000 if at least £5,000 remains after recovery, and that threshold could fall to a few pounds for taxpayers who have repeatedly avoided HMRC. Shadow chancellor Andrew Griffith called the move "absurd", while the Association of Taxation Technicians wants safeguards in place before the powers are used. A tax crackdown on online retailers is also rumoured, with marketplaces such as Amazon, eBay and Temu possibly made responsible for collecting tax owed by sellers on their sites.

Devolved governments brace for cuts

Wales faces what its finance minister, Elin Jones, expects to be its worst settlement since before the pandemic unless the Budget brings a cash boost. Jones put the risk in stark terms.

This will be very possibly then the worst settlement that we've had since the period before Covid.

She said day-to-day spending on health and education is looking at a real-terms cut of 0.7% next year, and Dame Nia Griffith has urged the chancellor to relax rules on Welsh ministers borrowing for investment. Jones also wants Welsh ministers to access reserves in the same way as the Scottish government. In Scotland, the Scottish Fiscal Commission warned in August of a £700m reduction to the Holyrood budget, and Social Justice Secretary Shirley-Anne Somerville wants the forecasts scrapped. Ms Somerville set out the demand directly.

What we really need is a change of direction from this supposedly-new Labour government.

The Scottish Fiscal Commission has also warned that there is very little new funding for 2027-28, and SNP Finance Secretary Jenny Gilruth will publish a draft Scottish budget in December.

Business groups want lower costs

Andy Haldane, former Bank of England chief economist and now president of the British Chambers of Commerce, says north-east firms have faced a "huge squeeze over the last 10 years" and wants lower business costs and more power for local leaders such as the mayor, Kim McGuinness. He points to clean energy, offshore wind, AI and advanced manufacturing as sources of growth in the region, and argues the area has strong potential.

The potential for growth here is as great as in any region in the UK.

John McCabe, chief executive of the North East Chamber of Commerce, says rising costs, particularly taxation and compliance with legislation, must be cut. Natasha McDonough, founder of Sunderland-based MMC Research, wants the chancellor to do more to encourage start-ups, arguing that many people running side hustles run sensible businesses that could grow. A Treasury spokesperson said the chancellor is "fully focused" on giving businesses breathing space and driving growth in every postcode. Mr Healey will set out Labour's tax and spending plans when he delivers the Budget on 28 October.