The Budget is in: what John Healey’s plans mean for Cornwall

If you drive for work, run a small café on a Cornish high street or wince when the gas bill lands, John Healey’s first Budget had something in it for you. Some of it arrives this winter. Some of it won’t turn up until 2030.

The Chancellor sat down this afternoon after a speech built around what he called “breathing space” for families and businesses. The money to pay for it, he told MPs, will come from the banks, gambling machines and higher tax on income from savings and property.

Earlier today we looked at what was already known before he spoke. Here’s what was confirmed, and the parts most likely to be felt in Cornwall.

Energy bills

A £100 payment for most households

Around 20 million households in council tax bands A to D will get a £100 Household Energy Payment this winter, paid straight into their bank accounts. The scheme is costed at £2.6bn.

Gas standing charges to go

Standing charges on household gas bills are being scrapped. The Treasury will ask Ofgem to remove them in 2027, or as soon as possible after. Taking standing charges off electricity bills is expected to take longer.

No VAT on electricity until July

The zero rate of VAT on household electricity, in place since 1 October, has been extended to July 2027. The Chancellor said this takes £50 off the annual price cap.

That split between gas and electricity matters here. Only around half of homes in Cornwall are on mains gas, compared with roughly three in four across England and Wales, so a cut to gas standing charges will reach fewer Cornish households than it does elsewhere. Many homes rely on electricity or heating oil instead, and tariffs on kerosene were already being removed in a package announced on Tuesday.

Driving and fuel

The 5p cut to fuel duty, and the low rate on red diesel, have both been extended to July 2027. Healey said the move would support “households, hauliers, and farmers” while the war in the Middle East keeps prices high.

For people who use their own car for work, the 55p-a-mile tax-free rate is now permanent. Above 10,000 miles, the rate rises from 25p to 35p a mile.

Pay

The National Living Wage and National Minimum Wage are both going up by 3.9%, which the Chancellor said covers 2.3 million of the lowest-paid workers.

For those aged 21 and over, the rate rises to £13.21 an hour, the first time it has passed £13. The rate for 18 to 20-year-olds goes up to £11.27.

With so much of Cornwall’s work in hospitality, retail and seasonal jobs, this is one of the figures that will show up on both sides of the counter.

Business rates and the high street

Small business rate relief for retail, hospitality and leisure firms is being widened, with the threshold rising from £12,000 to £18,000. Healey said this would take 70,000 more businesses out of business rates altogether, and that half of all shops, restaurants and gyms would now pay none.

Other businesses in those sectors will have their rates frozen in real terms, so none faces an above-inflation rise for two years. That comes on top of the 20% cut for pubs, clubs and live music venues already due from April 2027.

Small brewers and cider makers get £10m of alcohol duty relief, shared between around 2,000 businesses.

Who pays for it

To fund the high street package, machine games duty on higher-stakes gambling machines rises from 20% to 25%. Vape shops and adult gaming centres will not qualify for business rates relief. Healey said pubs and seaside arcades would be protected.

Side hustles and start-ups

The trading allowance, which lets people earn a small amount from selling or freelancing without paying tax on it, rises from £1,000 to £3,000.

Business owners planning to sell up should note a change going the other way. The lifetime limit on Business Asset Disposal Relief, which lowers the tax paid when selling a business, halves from £1m to £500,000 from April 2027.

Savings, rent and ISAs

Tax on income from savings and property is going up by a further two percentage points from April 2027, on top of the rise already planned. That covers anyone earning rental income. Tax on wages and dividends is unchanged, and Healey said 88% of people would pay no more tax on their savings.

The planned cut to the cash ISA limit has been dropped, so the £20,000 tax-free allowance stays. The Government will also work with the investment industry on a new Starter ISA for first-time investors.

Housing

A further £1.5bn is going into the Social and Affordable Housing Programme, and land sold to social housing providers will be free of VAT. Councils will also be able to borrow more cheaply.

For first-time buyers, Your First Home, a new equity loan scheme backed by £4.7bn of government lending, launches next spring.

Biodiversity requirements on brownfield sites are being removed as part of a wider loosening of building rules.

Devolution and the visitor levy

Regions will be handed business rates and a share of income tax to fund big projects, with mayors receiving a share of income tax receipts from 2028. Areas will also be able to bring in an overnight visitor levy, a power already confirmed in September for mayors and leaders of Foundation Strategic Authorities.

For Cornwall’s tourism businesses, that leaves the big local question where it was this morning. Whether a levy comes here, and when, depends on how Cornwall fits into the new devolution structure.

The speech named a string of local projects around the country. The nearest to Cornwall was £3m for youth jobs in defence in Plymouth.

Carers and new dads

Carer’s Allowance is changing so that people who earn over the limit no longer lose the whole payment in one go. Instead, it will drop by £1 for every £1 earned over the limit. The change is planned for 2030-31 and will apply in England and Wales.

Self-employed fathers and partners will be able to claim paid parental leave for the first time.

The bigger picture

The Office for Budget Responsibility now expects the economy to grow by 1.2% this year, 1% next year and 1.6% in 2028.

The Government’s buffer against its main borrowing rule falls to £15bn in 2029-30. Healey said the Budget would clear the current budget deficit within three years.

Banks will pay an extra 3% on the bank surcharge, taking it to 6%, for 15 months from January. The Chancellor said the money would pay for immediate support with energy bills.

Healey set a target of 3% of GDP for defence spending by 2030 but left the detailed timetable for next year’s Spending Review.

The full Budget documents are now on GOV.UK. The House of Commons Library is due to publish its own summary this evening.

The Conservative response

Responding in the Commons, Conservative leader Kemi Badenoch said the Budget was “not good enough, not strong enough and not bold enough”. She said the country was spending more on debt interest than on the army and schools combined, and that the tax burden next year would be the highest in its history.

Her alternative, she told MPs, was to cut government spending, reduce the deficit, fund the Armed Forces and cut taxes.

Kemi also took aim at this week’s tariff cuts. “The Prime Minister came in promising to reverse 40 years of neoliberalism,” she said. “Instead, we got 4p off gherkins.”