Two leading think tanks have delivered critical first verdicts on Chancellor John Healey’s first Budget. In their Budget 2026 analysis, both the Resolution Foundation and the Institute for Government (IfG) said the £100 energy rebate was poorly targeted at the households most in need, and that the hardest decisions on tax, public services, welfare and defence had been pushed into 2027.
Both published their responses on 28 October 2026, within hours of the Budget statement. The Treasury, for its part, says the Budget gives families breathing space while meeting the fiscal rules with a buffer.
Budget 2026 analysis: what the Budget contained
The centrepiece of the cost of living package is a £2.6 billion Household Energy Payment: £100 for households in council tax bands A to D in England from January 2027. The VAT cut on household electricity and the 5p fuel duty cut both run to July 2027, helped by a temporary rise in the bank surcharge. Tax rates on savings and property income rise by two more percentage points from April 2027.
The government says the stability rule is met with £15 billion of headroom in 2029-30, down from £24 billion in March, and that higher debt interest costs linked to the conflict in the Middle East more than explain the fall. “This is what a buffer is for,” the Budget document says.
Resolution Foundation: badly targeted help and a living standards squeeze
The Resolution Foundation, which focuses on living standards for low- and middle-income households, called it a mid-table Budget. By its count it ranks 19th of 34 fiscal events since 2010, with policy changes worth £7 billion by the end of the forecast, compared with an average of £72 billion at the previous two Budgets.
Its main findings included:
- Energy support: around four in five properties in England qualify, yet about one in eight households in the poorer half of the income distribution live in higher-band homes and will miss out. In London and the South East the figure is one in five.
- Bills: energy bills are projected to average £2,210 across 2027, up £600 on 2026. Support of up to £116 would cover less than a fifth of that rise. A properly targeted scheme could have given lower-income households twice as much for the same cost, the Foundation said.
- Public finances: it put headroom at £14.5 billion and estimated that, given the typical gap between plans and outcomes, the current budget could end up £26 billion in deficit in 2029-30.
- Services: unprotected departments such as Justice, Transport and Work and Pensions face real-terms cuts of 6.7%, or £12 billion, by the end of the forecast.
- Incomes: real household disposable income per person is £420 lower than two years ago and is not expected to recover until April 2029. Growth of 0.6% a year would make this the second-worst Parliament for living standards since the 1950s.
It called the higher tax rates on savings and property income sensible and welcomed the £20.4 billion added to the National Wealth Fund and British Business Bank. Its chief executive, Ruth Curtice, said: “The Chancellor has missed the mark with badly targeted support.”
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Institute for Government: decisions deferred to 2027
The IfG, a non-partisan charity that studies how government works, reached a similar conclusion. In an analysis by Tom Pope, it described the Budget as “big in size but small in ambition”. The scorecard ran to almost 100 measures, but only one tax change, to capital allowances, was worth more than £1 billion in the final forecast year.
The IfG estimated that, based on past forecast errors, the government now has a 56% chance of meeting its main fiscal rule, down from 59% at the previous Budget. It said the £100 rebate would be noticeable and would reach about 80% of households, but that poorer families would get the same amount as better-off households in homes with lower 1991 council tax values. It warned that higher taxes may follow if spending plans prove undeliverable.
The government’s case and the market view
The Treasury estimates the Household Energy Payment will reach 83% of fuel-stressed households in England and 88% of households in the bottom three income deciles, and it is giving councils an extra £100 million for targeted help, including for some households in higher bands.
Some investors were more positive. Huw Davies of Jupiter Asset Management told Trustnet that the measures left “a credible buffer against the fiscal rules” without adding much to borrowing, though he added that harder decisions remain before the end of the Parliament.
What happens next
The bigger tests come in 2027: a welfare White Paper following the Timms and Milburn reviews, decisions on reaching 3% of GDP on defence by 2030, and a Spending Review setting each department’s budget. Westferry Times has also covered the debate over the state pension triple lock, which the Budget confirmed will be adjusted from 2030.
Sources: Resolution Foundation, Budget balancing act leaves families braced for tough winter and four-year living standards downturn (28 October 2026); Institute for Government, John Healey’s underwhelming budget punts big decisions into 2027 (28 October 2026); HM Treasury, Budget 2026 (28 October 2026); HM Treasury, Budget 2026: Breathing space for today, hope for the future (28 October 2026); Trustnet, Credible, uneventful, boring: How the experts reacted to Healey’s first Budget (28 October 2026).
