£4.4bn Cost of Living Package 'Badly Targeted,' Think Tank Says

The poorest half of UK households will gain just £158 on average from John Healey's £4.4bn cost of living support package — only £14 more than the £144 going to the richest half, according to the Resolution Foundation. The think tank's verdict, delivered the morning after Wednesday's budget: the help is "badly targeted" and represents a "complete failure to target help at those who need it most."

Here's the number that matters for household budgets. Typical energy bills net of support are forecast at £1,750 for 2026-27. That's higher in real terms than during the last energy price shock in 2022-23, when net bills stood at £1,685. Even families receiving the £100 winter handout end up worse off on energy than they were four years ago.

The chancellor funded that handout — targeted at 20 million families — by raising taxes on banks and landlords. Official forecasts accompanying the budget made clear there's no end in sight for the cost of living crisis.

What does the budget change for taxpayers?

The Resolution Foundation's analysis found the UK's fiscal consolidation is internationally remarkable — and entirely tax-driven. The £76bn improvement in the primary balance (the gap between receipts and non-interest spending) between 2023-24 and 2028-29 is more than fully accounted for by £107bn of higher tax revenues. The chancellor touted that consolidation in his budget speech; the think tank notes the entire parliament's fiscal repair rests on the rising tax take.

Whitehall fares better than households. The budget included a £9bn top-up to departmental budgets over the current spending review period — twice the size of the £4.4bn cost of living package.

The living-standards picture splits into two halves. Median real annual disposable incomes for working-age households are set to grow by a paltry £600 over the full parliament. But those gains are already spent. Between 2026-27 and 2028-29, typical incomes are forecast to fall by £1,050, or 3%.

Ruth Curtice, chief executive of the Resolution Foundation, said: "Faced with a tough backdrop amid global economic turmoil, the chancellor delivered a scattergun budget that did little to address the sharp challenges facing Britain. Cost of living support is being spread far too thinly and will leave even those families receiving help facing higher energy bills than they did during the last energy price shock."

Curtice added that the first half of the parliament — rising living standards, solid growth and extra public service funding, paid for by huge tax rises — "was not enough to prevent dramatic half-time substitutions in Downing Street." Her warning for the second half: a projected £1,000 fall in disposable incomes means "next year the choices will unavoidably get starker" between public service ambitions and household incomes.

Central banks hold, Shell cashes in

The US Federal Reserve left interest rates unchanged on Wednesday, at one of the highest pre-election levels in over 20 years. Two of 12 board members dissented, preferring a quarter-point hike. Fed chair Kevin Warsh told reporters the upcoming midterm election "played no role in deliberations."

The European Central Bank is expected to hold rates too when it decides at 1.15pm GMT today. The decision will likely be overshadowed by France's bond-market turmoil and questions over ECB president Christine Lagarde's future. The ECB has already raised rates twice since June and is expected to hike further as policymakers try to stop an Iran-war-linked oil shock feeding into wages and other prices.

Shell is one clear beneficiary of that shock. The UK oil and gas giant doubled quarterly profits to $10.8bn between July and September — its highest since 2022 — after the Middle East conflict drove up oil and gas prices. The company said it will lift its quarterly share buyback programme from $3bn to $5bn.

Oil markets eased overnight on peace-talk hopes. US vice-president JD Vance sent a letter to Iranian Security Council chief Mohsen Rezaei seeking to revive negotiations, the Wall Street Journal reported. Brent crude fell 0.6% to $114.62 a barrel.

Later today brings the Institute for Fiscal Studies' verdict on the UK budget at 10.30am, US third-quarter GDP at 12.30pm, and eurozone consumer confidence at 10am — with the ECB press conference at 1.45pm likely to set the afternoon's tone.