1. The Headline Numbers
The OBR forecasts that borrowing will fall from 4.4% of GDP in 2025-26 to 1.8% in 2031-32, though it is higher than in the March forecast in every year. Public sector net debt rises from 96% of GDP this year to a peak of 97% in 2028-29, then falls back to 96%. Debt interest, £109 billion in 2025-26, is forecast to reach £160 billion, 4.2% of GDP, by 2031-32.1
The government's main fiscal rule requires the current budget, day-to-day spending against revenue, to be in surplus in 2029-30. The OBR forecasts a surplus of £15 billion that year, £7 billion less than the margin at the 2025 Budget, and puts the probability of meeting the rule at 56%.1
Taken together, the Budget's 98 policy decisions cost £7.6 billion in 2026-27 and £2.5 billion in 2027-28, and then raise money each year, reaching £7.4 billion in 2031-32. Tax decisions account for £7.0 billion of that final figure.2
2. The Main Measures
Energy bills and the cost of living. A £100 council tax rebate for homes in bands A to D from January 2027, costing £2.6 billion; VAT on domestic electricity cut from 5% to zero from October 2026 to July 2027; the 5p fuel duty cut and freeze extended to July 2027; bus fares outside London capped at £2 for 2027; and free bus travel for children aged 5 to 15 in England for a year from August 2026.2
Tax. Income tax on property and savings income rises by a further two percentage points from April 2027. The Bank Corporation Tax Surcharge rises temporarily from 3% to 6% from January 2027 to March 2028. The main rates of capital gains tax are unchanged; a new 10% Founders' Relief applies to up to £10 million of lifetime gains, and the lifetime limit for Business Asset Disposal Relief halves to £500,000. Measures to close the tax gap announced in this Parliament are expected to raise over £12 billion a year by 2029-30.2
Pensions. From April 2030 the triple lock is to be replaced by an adjusted version, under which the state pension rises by the highest of inflation, 2.5% or the amount needed to keep its value against earnings, with the savings going towards a National Care Service. A Pension Tax Allowance from April 2027 means pensioners whose income is no more than the full new State Pension will not pay income tax because of uprating in this Parliament.23
Housing. A £4.7 billion "Your First Home" scheme offers 20% equity loans to around 70,000 first-time buyers in England, with the government estimating it will support 20,000 new homes. Funding is added for around 10,000 more social and affordable homes, and a First Time Buyer ISA replaces the Lifetime ISA for new savers.2
Regions. A Fiscal Devolution Roadmap assigns a share of income tax to all mayors from 2028, gives mayors a 20% share of locally retained business rates from next year, and moves local and regional government towards keeping all business rates income by the end of the decade.2
Energy and industry. A British Industrial Competitiveness Scheme to cut industrial electricity costs from April 2027; Carbon Price Support removed from April 2028; the Electricity Generator Levy raised from 45% to 55% until March 2028; £2 billion for a new Energy Wealth Fund within the National Wealth Fund, investing in low-carbon energy and linked to future North Sea revenues; and a delay to bringing energy from waste into the Emissions Trading Scheme.2
Defence and aid. The Defence Investment Plan is fully funded by reprioritising capital budgets, with details of reaching 3.5% of GDP on defence by 2035 to follow at the next spending review. On aid, the Budget restates the commitment to return to 0.7% of national income when the fiscal tests set in 2021 are met, and says they are not due to be met in this Parliament.24
3. The Budget Against the Reset's Proposals
Each relevant measure is compared with the proposal it relates to, using four plain labels:
- Moves towards: the measure goes in the same direction as the proposal, wholly or in part.
- Moves away: the measure goes in the opposite direction.
- Different approach: the measure tackles the same problem in a different way.
- Related: the measure touches the same area without going clearly towards or away from the proposal.
| Budget measure | Related proposal | How it compares |
|---|---|---|
| Adjusted triple lock from April 2030 | Replace the triple lock with a smoothed earnings link (Welfare; also State Pension Explained) | Moves towards. The pension is to track earnings over time, but keeps a 2.5% minimum rise the proposal does not have. Tagged on the proposal as partly adopted |
| Defence Investment Plan fully funded | Confirm and fund the existing strategic direction (Defence) | Moves towards, in part. The plan is funded; the proposal's named targets for fleet size, personnel and equipment, published each year, are not part of the Budget |
| Fuel duty cut and freeze extended to July 2027 | End the default fuel duty freeze, and publish a plan for one per-mile charge (Transport) | Moves away. The freeze continues; the OBR puts the cumulative cost of freezes since 2010-11 at £139 billion |
| £4.7bn "Your First Home" equity loans | Redirect subsidy from demand to supply (Housing) | Moves away. Equity loans support buyers' demand, although the government estimates the scheme will support 20,000 new homes |
| £2 bus fare cap and free child bus travel, each for one year | Fund bus networks outside London on multi-year settlements (Transport) | Different approach. One-year support for fares rather than multi-year funding for networks |
| Income tax assigned to mayors; business rates retention | Fund England's new strategic authorities on the same measure of need (Devolved Governments) | Different approach. Funding follows what each area raises rather than an assessment of what it needs |
| VAT cut on electricity, Carbon Price Support removed, industrial electricity scheme | Reform the wholesale electricity market to decouple consumer prices from gas (Energy) | Different approach. Lowers bills by cutting taxes and levies rather than changing how electricity prices are set |
| £2bn Energy Wealth Fund linked to North Sea revenues | Establish a Sovereign Wealth Mechanism (Public Debt) | Related. Links North Sea revenue to a fund, but one that invests in energy infrastructure rather than saving revenue for the long term |
| Bank Corporation Tax Surcharge raised to 6% for 15 months | Restore the bank levy (Revenue Architecture) | Related. A temporary tax on bank profits rather than a lasting levy on balance sheets |
| Measures to close the tax gap, over £12bn a year by 2029-30 | Resource HMRC's wealthy individuals unit (Tax Avoidance) | Related |
| High Value Council Tax Surcharge confirmed, with deferrals and exemptions | Revalue council tax and remove the top-band ceiling (Local Government) | Related. A surcharge on the most valuable homes, first announced in 2025, addresses the top band but not revaluation |
| R&D tax relief forms simplified | Publish a regular independent evaluation of R&D tax relief (Science and Research) | Related. Simplifies administration; no evaluation is announced |
| Energy from waste kept out of the Emissions Trading Scheme for longer | Give English councils statutory recycling targets (Environment) | Related. Delays carbon pricing on incineration, which handles half of council-collected waste in England |
| Aid fiscal tests restated; not met this Parliament | Put the tests for restoring 0.7% into law (Overseas Aid) | Related. The tests are restated and reviewed each year, but remain outside the 2015 Act |
4. What the Budget Does Not Address
The Budget document contains no measure on several of this site's proposals. A search of its full text finds no mention of land value tax, child poverty, flooding, recycling, the water industry or the full cost of university research, and no change to how relative need is assessed for the devolved nations. Proposals in these areas are unaffected by the Budget, including a phased Land Value Tax, a statutory child poverty target, ten-year funding for maintaining flood defences, an independent assessment of relative need, paying the full cost of commissioned research and a Generational Debt Statement at every Budget.2
5. How This Page Works
The figures on this page come from the Budget document (HC 726) and the OBR's Economic and Fiscal Outlook of October 2026. Later revisions to either are recorded in the Update Register.
The Generational Reset is a non-partisan, public-interest project. It is not affiliated with any political party, does not accept corporate funding, and publishes all its work under open licence for public discussion and adaptation.
For public discussion. Not affiliated with any political party. | generationalreset.org
The Generational Reset | S3_09: Budget 2026 and the Reset | For public discussion. Not affiliated with any political party. | generationalreset.org