The £100 payment

The most direct measure aimed at household budgets is a £100 payment to 20 million households in council tax bands A to D, which Healey said would cost £2.6bn. The payment sits inside a wider package to cut consumers' energy bills, funded in part by a windfall tax on banks that proved smaller than expected.

Energy and fuel measures

The consumer measures in the statement included:

• •An extension of the VAT cut on electricity bills until next July.
• •The cancellation of fuel duty rises that had been pencilled in by Rachel Reeves.
• •A signal of longer-term reform to how energy bills are charged, which Healey called a new cost control framework to drive down all aspects of energy bills.

Households should not expect relief on their bills straight away. Because of continued high oil prices from the Middle East conflict, the energy price cap that determines household bills is expected to rise sharply in January.

Backing for businesses and first-time buyers

Healey framed the budget as support for firms as well as consumers, saying that for millions of people the cost of living and the cost of doing business are the same, with the home as the office and the van as the family car. The business rates relief threshold for retail, hospitality and leisure firms will rise from £12,000 to £18,000, funded by higher taxes on gambling and vape shops.

The statement also confirmed the My First Home mortgage scheme for first-time buyers, first mooted at Labour's party conference in September.

Fiscal position

The giveaways came against a weaker outlook. The Office for Budget Responsibility downgraded its growth forecast to 1% for next year, from the 1.6% it expected in the spring, and Healey blamed the ongoing war in the Middle East for the deterioration since Reeves's spring statement. Higher inflation caused by the Iran war is expected to cost the government an extra £14bn in interest costs.

The fiscal headroom is now £15bn, against the £24bn Reeves set aside in March. Healey described his statement as a budget built on fiscal discipline, matching immediate action today with clear direction for the future, and told MPs that analysts like to speak of economic headwinds, but what the country faces today are global economic storms.

On the diminished cushion, Healey said a buffer exists to be used when needed and rebuilt when possible, and pledged that it would be rebuilt to £22bn by 2030-31. He insisted the deficit-reduction plans stay on track, promising to meet Labour's first fiscal rule of balancing current spending with tax receipts by 2029-30.