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The United Kingdom’s 2026 Budget has come under criticism after the Resolution Foundation warned that measures introduced by Chancellor John Healey would provide limited relief to struggling households while leaving energy bills higher than during the previous energy crisis. In an assessment published on Thursday, 29 October 2026, the economic thinktank said the government’s support package was poorly targeted, with wealthier households receiving almost as much financial assistance as lower-income families.
The foundation estimated that the measures intended to ease the cost of living would deliver an average benefit of £158 to the poorest half of households across this year and next, compared with £144 for the richest half. Its analysis raised questions about whether the government’s approach would adequately protect families facing rising energy costs, inflation and pressure on household budgets.
The criticism comes as the government attempts to respond to international economic uncertainty and higher prices associated with the Iran war. Healey has presented the Budget as an effort to provide immediate financial relief while setting out a longer-term strategy to strengthen economic growth.
Ruth Curtice, chief executive of the Resolution Foundation, said the distribution of assistance demonstrated a failure to direct sufficient support towards households most in need.
The thinktank argued that the government’s approach risks spreading financial assistance too widely instead of concentrating resources on families facing the greatest hardship. Although lower-income households are expected to receive slightly more support on average, the difference between the poorest and richest halves remains relatively small.
The foundation also criticised the continued use of council tax bands to determine eligibility for energy assistance. Under the Budget proposals, households in council tax bands A to D would qualify for a £100 energy payment, potentially covering up to 20 million households.
The government has also proposed scrapping standing charges on gas bills as part of its efforts to reduce household energy costs.
However, the Resolution Foundation said the reliance on property valuations dating back around 35 years raised concerns about whether the system accurately reflected households’ current financial circumstances. Council tax bands do not necessarily correspond to present-day income, savings or the ability to absorb higher bills.
Beyond energy costs, the foundation warned that the outlook for household living standards remained difficult.
Its analysis projected that typical disposable incomes could fall by £1,050 between the current period and the end of the parliamentary term in 2028-29. That would limit the total increase in disposable incomes over the five-year parliament to approximately £600, according to the thinktank’s estimates.
Disposable income is the money households have available after taxes and certain compulsory payments, and it is an important indicator of how comfortably people can meet everyday expenses.
A decline in disposable income can leave families with less money for housing, food, transport, childcare and savings, particularly when essential costs rise faster than wages.
The foundation warned that the second half of the parliamentary term could prove especially challenging if household finances deteriorate while the government continues to pursue its public service commitments.
Curtice said the Budget had done little to address the difficulties expected in the years ahead. She also questioned how ministers would balance ambitions for public services against the need to protect household incomes as economic choices become more difficult.
Healey defended the Budget against a difficult international backdrop, arguing that the UK was being affected by a wider economic storm.
The Office for Budget Responsibility, the independent body responsible for scrutinising the government’s fiscal plans and producing economic forecasts, had reduced its forecast for UK gross domestic product growth next year.
GDP measures the value of goods and services produced within an economy. Slower growth can make it more difficult for governments to raise revenue, fund public services and improve living standards without making difficult decisions on taxation and spending.
Healey said his Budget was intended to steer Britain through current global economic difficulties while establishing a new direction for the country’s longer-term future.
His plans combine immediate household assistance with measures intended to support businesses and economic activity. The government has sought to present the package as a response to both the immediate cost-of-living pressures and the broader challenge of improving the UK’s economic performance.
Nevertheless, the Resolution Foundation’s assessment suggests that the relief may not be sufficient to prevent households from experiencing further financial strain.
The Budget also includes measures aimed at supporting high street businesses, alongside tax increases affecting banks and gambling.
Andy Burnham defended the government’s approach, highlighting the proposed energy assistance for 20 million households and changes to business rates.
He said the measures were significant because they would help families manage winter energy costs while lifting 70,000 businesses out of business rates altogether.
Business rates are taxes levied on most non-domestic properties in England and Wales, including many shops and commercial premises. Reducing this burden can help eligible businesses manage operating costs, although the overall effect depends on the details of the scheme and individual circumstances.
The government hopes such measures will support local high streets and give businesses greater scope to maintain operations and investment.
However, the wider economic impact will depend on whether the relief translates into stronger business activity, improved employment prospects and sustained growth.
The disagreement over the Budget highlights the challenge facing the government as it attempts to balance immediate relief with longer-term economic priorities.
For households, the central concern is whether the measures will make a meaningful difference to energy bills and everyday spending. For businesses, the focus will be on whether tax relief and improved economic conditions can support growth.
The Resolution Foundation’s findings suggest that the government’s support package may provide some assistance without fully shielding families from higher energy costs. Its projections for disposable incomes also indicate that financial pressures could persist well beyond the coming winter.
The government has defended the Budget as a response to difficult international conditions and a foundation for future growth. The extent to which its policies improve living standards will become clearer as household costs, wages, economic growth and public finances evolve over the remainder of the parliamentary term.
For now, the thinktank’s warning places renewed attention on a central question for British economic policy: whether financial assistance can be directed more effectively towards those who need it most while maintaining support for public services and businesses.
