Healey’s £4.4bn cost living support package ‘badly targeted,’ says Resolution Foundation – business live

Key events9m agoLloyds finance chief hopes tax increase on banks is 'temporary measure'46m agoIntroduction: Healey's cost of living support package 'badly targeted,' says Resolution FoundationLloyds finance chief hopes tax increase on banks is 'temporary measure'Kalyeena MakortoffLloyds Banking Group’s chief financial officer William Chalmers said the bank hopes that the tax increase on banks announced in the budget is a “temporary measure,” as the lender’s quarterly profits doubled.John Healey used the budget to double the additional levy banks pay on their profits, to 6%.The additional bank tax will only last for 15 months and marked a less significant rise than some in the industry had feared. Banks’ share prices were among the highest risers in the blue chip FTSE 100 index on Wednesday.This morning, the Lloyds share price fell as much as 6% in early trading, and is now down 3.1%, despite the bumper results.The bank’s pre-tax profits in the latest quarter doubled to £2.3bn, with a 10% rise in net interest income, as the bank continues to benefit from higher interest rates. The figure was flattered by a £800m hit it took on motor finance provisions this time last year which was not repeated, thereby boosting the year-on-year comparison.Chalmers said: double quotation markWe lend out 99 pence of every pound we receive in deposits and our ambition is to do more. In this context, we know that the increase in the surcharge announced by the chancellor yesterday, we recognise the tactic is a matter for the government. The fiscal environment is challenging. Ultimately, it is important that the UK banking sector is able to deliver banking services to businesses and households and communities in a cost effective way. In order to promote UK growth, it is also important that the sector is internationally competitive and not disadvantaged compared to other financial centres. Additional factors make both of these objectives harder to achieve. We therefore very much hope that yesterday’s tax increase is indeed a temporary measure to help ensure the business environment remains consistent with supporting long term investment. The sun over Canary Wharf, London. Photograph: Ian West/PARichard Hunter, head of markets at the trading platform interactive investor, said: double quotation markWith provisions for the motor finance investigation all now but buried and with higher income flowing through, Lloyds has enjoyed a bumper quarter which puts the bank in prime position to meet its full year targets. Some of the clouds which have been overhanging the sector leading up to the budget, and the domestic banks in particular, have now partially parted. The increase to the bank surcharge was less than feared, manageable and temporary and led to a small relief rally in Lloyds’ shares yesterday. Other concerns also remain on the back burner, with the level of defaults and arrears low and stable, although in typically conservative fashion Lloyds has increased impairment provisions for the quarter to £313m, or £930m in the year to date. This of course anticipates potential rather than actual losses, such that releases are possible in the future should the bad debts fail to materialise. The higher figure is based on several scenarios, such as the inflationary impact of the Middle East crisis, lower GDP growth in the UK, a rise in unemployment and limited gains in residential and commercial property prices. Even so, at the moment, there are few if any signs of deterioration across its lending book. Introduction: Healey's cost of living support package 'badly targeted,' says Resolution FoundationGood morning, and welcome to our rolling coverage of business, the financial markets and the world economy.The £4.4bn cost of living support package delivered by John Healey’s budget on Wednesday is “badly targeted,” which means that even families receiving help face higher energy bills than during the last energy price shock, according to the Resolution Foundation.The poorest half of households will gain £158, on average, from support measures this year and next – just £14 more than the £144 received by the richest half – highlighting a “complete failure to target help at those who need it most,” the think tank said.Typical energy bills net of support are forecast to be £1,750 this year (2026-27) – higher in real terms than during the last energy price shock (2022-23) when net bills were £1,685.The chancellor raised taxes on banks and landlords to fund a £100 winter handout for 20 million families as official forecasts made clear there is no end in sight for the cost of living crisis.The Resolution Foundation’s analysis found that UK tax rises stand out globally. The UK’s internationally remarkable consolidation in its public finances, touted by the chancellor in his budget speech, is entirely due to a rising tax take during the current parliament. The £76bn improvement in the UK’s 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.Whitehall gets a bigger boost than households. The budget included a £9bn top up to departmental budgets over the current spending review period – twice as much as the £4.4bn cost of living support package.Past gain, future pain for living standards. Median real annual disposable incomes for working age households are set to grow by a paltry £600 over the course of the Parliament. Worse still, those gains are already behind us. Between now (2026-27) and the end of the parliament (2028-29), typical incomes are forecast to fall by £1,050 (3%).Ruth Curtice, chief executive of the Resolution Foundation, said: double quotation markFaced 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. Stepping back, this parliament is increasingly looking like one of two halves, which yesterday’s budget did little to address. The first half has been marked by rising living standards, solid economic growth and extra funding for public services – funded by huge tax rises – none of which was enough to prevent dramatic half-time substitutions in Downing Street. The new occupants will hope for better political fortune in the second half, but it could prove tough going against a projected £1,000 fall in disposable incomes. A more dramatic change of tactics may be needed, and we did not learn how the government will choose between public service ambitions and household incomes. Next year the choices will unavoidably get starker. The US Federal Reserve left interest rates unchanged on Wednesday during its last board meeting before the midterm elections, keeping rates at one of the highest pre-election levels seen in over 20 years.Two out of 12 board members voted against the pause, preferring to raise rates by a quarter point this meeting, the Fed board said.During a press conference on Wednesday afternoon, the Fed chair, Kevin Warsh, told reporters that the upcoming election played no role in deliberations.Today, the European Central Bank is also expected to keep rates unchanged at the end of its meeting.The decision is expected to be overshadowed by questions about bond-market turmoil in France and ECB president Christine Lagarde’s future.The eurozone’s central bank has already raised ⁠rates twice since June and is expected ⁠to hike further in the ​coming months as policymakers seek to prevent an oil-price shock linked to the Iran war from feeding into other prices and wages.The UK oil and gas giant Shell doubled quarterly profits to $10.8bn between July and September, the highest since 2022, after the Middle East conflict led to energy shortages and drove up the price of oil and gas.The company said this morning that it will hand back more cash to shareholders, lifting its quarterly share buyback programme to $5bn from $3bn.In financial markets, oil prices have fallen amid hopes for fresh peace talks. US vice president JD Vance sought to revive negotiations by sending a letter to the Iranian Security Council chief Mohsen Rezaei, the Wall Street Journal reported.Brent crude, the global oil benchmark, declined 0.6% to $114.62 a barrel.The Agenda 9am GMT: UK joint water regulator report on company performance 9.30am GMT: Bank of England consumer credit and mortgage approvals for September 10am GMT: Eurozone consumer confidence for October 10.30am GMT: Institute for Fiscal Studies verdict on UK budget 12.30pm GMT: US GDP for third quarter 1.15pm GMT: European Central Bank interest rate decision 1.45pm GMT: ECB press conference