Budget 2026: £100 energy payment for millions and rise in bank tax as watchdog warns on stalling living standards – as it happened

The article provides only partial information about these measures. It says the budget included a widely trailed bank surcharge, set at 3%, and that this was lower than expected. It does not describe the £100 energy payment or explain its eligibility rules.

The bank surcharge is an additional charge on the banking sector. The article places it among tax measures expected to raise money for the government. KPMG’s Tim Sarson describes the budget as a “pick and mix” approach because the 2024 manifesto limited the chancellor’s options.

The article says the measures announced would raise £7bn per year by 2031-32. It also says the surcharge was one of several measures, alongside further gambling taxes, with winners and losers. The payment’s design and cost cannot be established from the supplied text.

The supplied article does not state the expected number of recipients for the £100 energy payment. That means its reach cannot be calculated from the source. The only clear scale figure connected with the budget’s tax measures is the government’s expected additional revenue.

According to KPMG’s Tim Sarson, the announcements would raise £7bn per year by 2031-32. He links this total to several measures, including a bank surcharge and further taxes on the gambling sector. The figure is therefore an overall estimate, not an amount raised by one individual policy.

The source does not break down the £7bn by measure, nor does it give a recipient count for the energy payment. It also does not explain whether the £100 payment is universal or targeted. Those details would be needed to compare the payment’s coverage with the budget’s expected tax income.

A bank surcharge is an additional tax paid by banks, on top of the ordinary taxes that companies may owe. The article describes a widely trailed surcharge and says its rate was 3%, lower than expected. It does not provide the detailed calculation rules or name every bank affected.

Most businesses generally pay taxes under rules that apply across the corporate sector, often linked to their taxable profits. A bank surcharge creates a separate layer for banking companies. The key mechanism is that banks face an extra charge because they belong to a specifically targeted sector, rather than relying only on standard business taxation.

The budget’s surcharge formed part of what KPMG called a “pick and mix” package. Together with further gambling taxes, the measures were expected to raise £7bn annually by 2031-32. The article presents the surcharge as a revenue measure, but gives no estimate of its individual contribution.

Real household disposable income, or RHDI, is household income after taxes and transfers, adjusted for inflation. “Real” removes the effect of rising prices, while “disposable” focuses on money households can use. The OBR also examines RHDI per person, which adjusts the measure for population size.

This matters because pay or total income can rise while prices rise faster. In that case, households may have less purchasing power even though their cash income is higher. The article links weak RHDI growth to lower productivity and real-wage growth after the global financial crisis.

The OBR calls RHDI one measure of living standards. Its forecast shows growth over the previous ten years averaging less than 0.1% annually by 2029-30. That makes RHDI useful for showing the pressure on household living standards, although it is only one measure rather than a complete picture of wellbeing.

If RHDI per person is only 1% higher after ten years, households would have made very little real progress compared with before the pandemic. This is a measure of purchasing power after inflation, taxes and transfers, not simply a rise in cash wages. It signals an exceptionally weak improvement in living standards.

The OBR’s central forecast says that, by 2029-30, average RHDI-per-person growth over the previous ten years will be less than 0.1% a year. Compounded across the decade, that leaves RHDI per person just 1% above its pre-pandemic level. Growth had already reached a historic low of ¼ per cent a year over the ten years to 2025-26.

The implication is that the post-Covid decade would resemble the weak period after the global financial crisis. The OBR expects near-term growth to fall further, reflecting continued pressure from weak productivity and real-wage growth.

Productivity measures how much output is produced for the resources used, while real wages show pay after adjusting for prices. When productivity grows slowly, businesses have less scope to increase pay sustainably. When real wages grow slowly, household incomes and purchasing power also advance slowly. The article connects both developments to weak RHDI growth.

The OBR says RHDI-per-person growth slowed significantly after the global financial crisis because of lower productivity and real-wage growth. It records average growth of just ¼ per cent a year over the ten years to 2025-26. This is described as a historic low.

The OBR expects the pattern to remain extremely weak. By 2029-30, growth over the preceding decade is forecast to average less than 0.1% annually. The supplied text does not explain why productivity and real wages weakened, so it cannot support a more detailed causal account.

Inflation raises the cost of goods, services and public programmes. If departmental budgets do not rise with those costs, departments can buy less or face difficult cuts. Tax revenues provide the money for government spending, so weaker receipts restrict what a chancellor can promise. Higher taxes can raise funds but may create political and economic trade-offs.

The article gives two clear examples. James Smith asks how the government will account for higher inflation in departmental budgets and how it will fund defence. It says both questions were left unanswered. The budget also included tax measures expected to raise £7bn annually by 2031-32.

These pressures force choices between spending more, raising taxes, borrowing more or delaying decisions. The article says the budget pushed tough decisions into next year. It also reports a technical revision to defence funding, which the Treasury said did not reduce defence spending power.