Healey's welfare cut pledge unravels within hours

Plus: the Budget does cause considerable harm, and why you shouldn't ignore wage compression

Oct 29, 2026

Yesterday’s Budget ignored the urgent need to cut welfare spending – or even curtail its dramatic projected increase. This prompted renewed speculation of an early General Election that would allow the tough choices to be taken after it was out of the way. This cynical narrative was briefly challenged today when the Chancellor of the Exchequer promised that welfare spending would be cut before the election. ‘The system is unsustainable’, he said, seemingly agreeing there would be ‘a reduction in the benefits bill’ before the next election. But The Treasury then briefed that he had not meant any reduction would take place before the next election. It had all been a misunderstanding. Damian Pudner, writing on CapX, says we need a Chancellor with the ‘backbone’ to take the necessary measures. No sign of that yet.

In another cheery contribution, the Institute for Fiscal Studies said the current decade would be the worst for household income growth on record, adding that John Healey ‘has done nothing’ to ease household pain.

There was also further doubt cast on the Government’s ‘fiscal headroom’ – which has already been reduced from £24 billion to £15 billion in the 2029/30 financial year. The Energy Minister Baroness Curran said: “The OBR will have to republish the figures if Rosebank does not go ahead and it will need to be addressed.” Given that the OBR projects public borrowing of £71bn in the same year, the concept of there being any ‘fiscal headroom’ in such a context might strike some as esoteric.

Below you’ll find all the latest pieces from CapX, plus what we’re reading from around the web.

Harry Phibbs
Guest Editor, CapX

Today’s Takes

Fresh thinking from CapX

*Wiktor Szymanowicz/Future Publishing via Getty Images*

Labour hand booming benefits bill to workers

Damian Pudner

‘Britain needed a chancellor with a backbone and economic philosophy to do what’s right in the long term for the country, but got a nothing burger Budget designed to change as little as possible.’

Chancellor John Healey had the chance to confront a runaway benefits bill and a tax burden strangling growth. Instead, he decided to raise taxes on banks and hard working taxpayers. He blamed the war in the Middle East for the economic deterioration, but by this logic, spending restraint, especially on welfare, is even more important. It’s time he makes some difficult decisions. Read More

Healey's do-harm Budget

Peter Young

‘Healey’s new tax attack on the banking sector will only make matters worse.’

This Budget does cause considerable harm, not just by failing to tackle any of the real problems facing the country, but through its punitive new measures targeting the hardworking and productive. Read More

Politicians should have less say in the economy, not more

Tim Worstall

‘And do we really think government is going to speculate better than the assembled forces of the world’s speculators? Or is it more likely to be the idiot player in the market that others then profit from, at the taxpayer’s expense?’

Isabella Weber’s new book supposedly celebrates and promotes anti-fascist economics. The Guardian is loving it. Fascist economics was a system which was nominally capitalist, but with all aspects under close political control. Strange then that Weber's 'anti-fascist' economic prescription insists politicians should have far more power over prices. Read More

Stat of the Day

Best of the Web

Labour’s energy promises are fake news

David Frost, The Telegraph 🔒

‘Nothing that Healey announced will do anything to change the underlying, real, costs of energy in Britain. Indeed at least one measure hidden in the Budget documents, a carbon tariff on non-EU imports of petrol, diesel, and jet fuel, will increase them.’

The Chancellor did not address the real causes of rising energy bills. Doing that would require Labour to interrogate its net zero policy, which they won’t do. Instead, he decided simply to conceal the problem, subsidise some energy costs and hide the rest. Read More

Wage compression is the problem everyone ignores

John Oxley, ConservativeHome

‘Wage compression is slow poison for an economy. People are discouraged from training, moving on and taking harder jobs. Their relative spending power diminishes, especially as other costs rise. It spreads a sense of misery.’

The lowest level of pay, the minimum wage, has been rising and rising for the last decade. Meanwhile higher earners’ wages have been stagnating. This causes some social status anxiety and contributes to the sense of being squeezed, by stagnating wages and rising costs like in rent and energy. The Conservatives are right to get rid of the £100k tax cliff edge but they also need to help more people become better off. Read More