John Healey's cost-of-living measures look piecemeal and underpowered: Sarah Davidson
The Chancellor said he wanted to give hard-pressed families some breathing space. But the real test of this Budget will be whether his spending decisions improve people's lives over the long-term.
John Healey outlined measures to take the edge off council tax increases and winter fuel bills for thousands of households, while refusing to increase fuel duty, and confirming an increase to the national minimum wage. At the same time, we saw the UK Government announce plans to reduce trade tariffs on 100 food and drink products including baked beans and gherkins, suggesting a willingness to scour the bottom of the barrel, jar or can to reduce costs.
Every little helps. Or does it?
Carnegie UK research conducted this summer shows that one in 20 people cannot afford enough food for everyone in their household, a figure that hasn’t improved over the last four years. We also found that one in eight people can't afford to keep their home adequately warm, and a quarter of people can't afford £850 in an emergency - a figure that hasn’t changed since 2023.
This suggests UK financial insecurity is much more widespread, long-standing and deep rooted than many would think. Less a crisis of this moment, than a problem that’s become ingrained in everyday life.
Unfortunately, the raft of Budget tweaks looks insufficient to tackle the scale of UK hardship. Furthermore, while pressure on household finances captures the headlines, inequality shapes people’s lives in many other ways as well.
Our Life in the UK Index shows that life didn’t improve overall for the average person between 2025 and 2026. The collective wellbeing of the country got worse in key respects – the first time we’ve seen a significant change in the headline figure since 2023. Our survey of 6,731 people shows worsening living standards, rising discrimination, and more people living in poor physical health.
The research shows 36 per cent of people in the UK are dissatisfied with local job opportunities, up four percentage points from last year and up 13 percentage points from 2023.The paper also finds that only 7 per cent of people feel that they can influence decisions affecting the whole UK, while only 15 per cent feel that they can influence decisions affecting their local area. About one in six of people don’t have anyone to rely upon in their neighbourhood in 2026.
Crucially, the index also shows that people on low incomes; disabled people; people who live in social housing; and people who live in the most deprived areas have significantly lower wellbeing than the UK average.
The Budget alone cannot possibly fix all of this. Even the whole of Andy Burnham’s government can’t turn these issues around within 100 days - or across a parliamentary term. But they could make progress, if every single Budget, policy choice, investment and spending decision pulled in the same direction, systematically improving people’s lives and narrowing inequalities. The problem with the Chancellor’s plans is that they neither do all they could to tackle the urgent problems of today, nor lay the solid foundations for tomorrow. The cost-of-living measures look piecemeal and underpowered. And the way they’re being delivered seem likely to make our public finance system even more complex.
More damagingly, it doesn’t look like HM Treasury has taken many of the tough decisions experts believe are required, instead putting action off until the Comprehensive Spending Review.
This short-term delaying tactic contrasts with hints in the Budget papers that government thinkers are trying to look longer-term. For example, we now know that the Spending Review will introduce a new ringfenced category of preventative spending, with the aim of shifting more public money towards preventing problems rather than dealing with the consequences later. Done well, that could improve lives while reducing pressure on public services.
Meanwhile, the Government’s move towards ten-year plans gives it the opportunity to look beyond the immediate pressures of an annual Budget cycle and focus instead on the country and communities it wants to build.
Moreover, this Government’s commitment to push more power and resources out of Whitehall is an opportunity. Giving local leaders greater freedom to invest in their places recognises that decisions about communities are often better made closer to them.
Greater devolution, a stronger focus on prevention and longer-term planning could help this government improve lives. But if ministers want to know whether these approaches are working, they need to complement traditional measures of economic success with a wider data set like the Life in the UK index.
GDP, productivity and the public finances tell us important things about the health of the economy. They tell us much less about our collective wellbeing; whether we can afford the essentials, whether we are healthy, whether we feel safe and connected to our communities, and whether we have a say in the decisions that affect us.
Government should measure these things systematically and use that evidence alongside economic data when making decisions about spending and policy. If people cannot feel and see the difference in their everyday lives, ministers should not call it progress.
Sarah Davidson is chief executive of the wellbeing policy foundation Carnegie UK