John Healey’s first Budget contained few surprises of note. Clearly, the Government is trying to follow the medical principle of “first, do no harm”, an approach that many would wish had been followed over the past couple of years. Whilst not explicitly repudiating the mistakes made by his predecessor, many of the incremental changes made in the Budget (e.g. slowing the rate of increase in the Youth National Minimum Wage) demonstrate that the Government recognises the part it has played in driving inflation. These are all sensible and send out the right signals (which is important), but are hardly game-changing.
On the positive side, the launch of the ‘Your First Home’ scheme should prove supportive of an increase in new-build volumes. We do not believe that there has been any fundamental change in people’s desire to own their own homes. The dismal number of new homes being built in the UK is reflective of a lack of supply and affordability issues. Analysis of the impact of previous Help-to-Buy programmes suggests that they accounted for around 15% of new-build properties in England between 2013 and 2023. While, clearly, the interest-rate environment is very different today, Your First Home will make it easier for those first-time buyers who have struggled to save a large deposit to get on the housing ladder. It would have been good to see further supply-side reforms alongside this, reversing some of the sizeable increase in the regulatory burden the sector has had to bear in recent years, but this was never likely. The commitment not to introduce any new regulations will have to do. We would also have preferred the scheme to start ahead of spring 2027, as the lag in implementation will now lead to an inevitable few months of reduced activity as purchasers hold fire until the incentives are available. Regardless, with the housebuilding sector having a high multiplier effect on the broader economy, the stimulus is welcome.
It shouldn’t be surprising that we disagree with the decision to increase taxes on banks. Healey was correct prior to the Budget when describing the banking sector as a ‘jewel in the British economic crown’. We are sceptical when any tax rise is described as ‘time-limited’ – after all, income tax was originally introduced as a temporary wartime measure in 1799. Ultimately, though, the cost of meeting the increase in the banking surcharge will be passed on to the banks’ customers*. It will be fascinating, though, to see whether these changes have unintended consequences. The Sky News City Editor, Mark Kleinman, has written articles this year speculating that Standard Chartered and Barclays are potential takeover targets. Could greater tax arbitrage potential be the catalyst that turns these rumours into something more concrete? If so, then the relatively small amount raised (in the grand scheme of things) might be more than offset.
Ultimately, though, our biggest frustrations remain similar to what they’ve been for many years. On bringing down government spending, there’s still an unwillingness to tell people that not everyone gets to leave the party with a balloon. On capital-market reforms, we continue to find it baffling why any British citizen can get a tax break for investing in SpaceX through their ISA. Over the past few decades, deliberate policy choices have led to a hollowing out of the UK equity market. Other countries, through either mandation or appropriately directed incentives, aim to steer capital towards productive investment within their own borders. The decision to reverse the planned reduction in cash ISA allowances is perplexing.
It’s not as mystifying, though, as the peculiar straitjacket that all political parties in the UK seem to love strapping themselves into whenever they gain power. The Holy Manifesto. The world in October 2026 is very different from what was imagined during the election campaign of 2024. But heaven forbid that any Chancellor respond to these volatile times by deviating from a PDF that has been largely forgotten by all but a handful of politics geeks. The Government has sought to do no harm with this Budget. Perhaps in future elections, they should just seek a doctor’s mandate and give themselves the freedom to do whatever is necessary to make the needed long-term changes.
John Healey’s first Budget contained few surprises of note. Clearly, the Government is trying to follow the medical principle of “first, do no harm”, an approach that many would wish had been followed over the past couple of years. Whilst not explicitly repudiating the mistakes made by his predecessor, many of the incremental changes made in the Budget (e.g. slowing the rate of increase in the Youth National Minimum Wage) demonstrate that the Government recognises the part it has played in driving inflation. These are all sensible and send out the right signals (which is important), but are hardly game-changing.
On the positive side, the launch of the ‘Your First Home’ scheme should prove supportive of an increase in new-build volumes. We do not believe that there has been any fundamental change in people’s desire to own their own homes. The dismal number of new homes being built in the UK is reflective of a lack of supply and affordability issues. Analysis of the impact of previous Help-to-Buy programmes suggests that they accounted for around 15% of new-build properties in England between 2013 and 2023. While, clearly, the interest-rate environment is very different today, Your First Home will make it easier for those first-time buyers who have struggled to save a large deposit to get on the housing ladder. It would have been good to see further supply-side reforms alongside this, reversing some of the sizeable increase in the regulatory burden the sector has had to bear in recent years, but this was never likely. The commitment not to introduce any new regulations will have to do. We would also have preferred the scheme to start ahead of spring 2027, as the lag in implementation will now lead to an inevitable few months of reduced activity as purchasers hold fire until the incentives are available. Regardless, with the housebuilding sector having a high multiplier effect on the broader economy, the stimulus is welcome.
It shouldn’t be surprising that we disagree with the decision to increase taxes on banks. Healey was correct prior to the Budget when describing the banking sector as a ‘jewel in the British economic crown’. We are sceptical when any tax rise is described as ‘time-limited’ – after all, income tax was originally introduced as a temporary wartime measure in 1799. Ultimately, though, the cost of meeting the increase in the banking surcharge will be passed on to the banks’ customers*. It will be fascinating, though, to see whether these changes have unintended consequences. The Sky News City Editor, Mark Kleinman, has written articles this year speculating that Standard Chartered and Barclays are potential takeover targets. Could greater tax arbitrage potential be the catalyst that turns these rumours into something more concrete? If so, then the relatively small amount raised (in the grand scheme of things) might be more than offset.
Ultimately, though, our biggest frustrations remain similar to what they’ve been for many years. On bringing down government spending, there’s still an unwillingness to tell people that not everyone gets to leave the party with a balloon. On capital-market reforms, we continue to find it baffling why any British citizen can get a tax break for investing in SpaceX through their ISA. Over the past few decades, deliberate policy choices have led to a hollowing out of the UK equity market. Other countries, through either mandation or appropriately directed incentives, aim to steer capital towards productive investment within their own borders. The decision to reverse the planned reduction in cash ISA allowances is perplexing.
It’s not as mystifying, though, as the peculiar straitjacket that all political parties in the UK seem to love strapping themselves into whenever they gain power. The Holy Manifesto. The world in October 2026 is very different from what was imagined during the election campaign of 2024. But heaven forbid that any Chancellor respond to these volatile times by deviating from a PDF that has been largely forgotten by all but a handful of politics geeks. The Government has sought to do no harm with this Budget. Perhaps in future elections, they should just seek a doctor’s mandate and give themselves the freedom to do whatever is necessary to make the needed long-term changes.
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