How much the Budget will actually save you after a week, a month and a year

The Chancellor unveiled a swathe of proposals aimed at tackling cost of living pressures in his maiden Budget on Wednesday. John Healey said he would give people “breathing space” during a challenging time for many as food, energy and rental costs rise across the country. Here we look at all the cost of living measures that were announced and how much they could actually save you per week, month and year. Shorts Energy bill help Healey announced the government would be awarding households in council tax bands A to D a £100 “household energy payment” this winter – paid directly into bank accounts for help with rising energy bills. On top of this gas standing charges – the daily fixed fee households pay to be connected to the energy network – will be scrapped next year and replaced with a cost per unit instead. This will save 60 per cent of households an average of £45 per year, according to the Treasury. This would mean an average saving of £3.75 a month and around 93p a week – although those with larger homes who use more energy will pay more. Gareth Kloet, energy expert at Go Compare Energy, said, for many customers the change could mean having greater control over their energy bills, as more of what they pay would be linked to how much gas they use. He said: “The move could also benefit people who own a second home for personal use, as they currently pay standing charges even during periods when very little gas is being used.” Currently, the average standing charge for gas is just under 30p a day, equivalent to around £108 per day. Earlier this year, prime minister Andy Burnham temporarily removed VAT from energy bills which came into effect on October 1 and saves households about £45 a year. Healey announced he would be extending this VAT cut until July 2027 and said the measure would take £50 off the annual price cap – though the cap is expected to be bigger next year due to rising wholesale energy prices. Fuel duty cut extended As the conflict in the Middle East continues to drive up oil prices, many households are being hit with higher prices at the pump. Petrol prices are up 34 per cent since the start of the year, now coming in at an average of £1.74-per-litre whilst diesel is more at £1.99-per-litre. It means that the cost of filling up a typical 70 litre family car with petrol is around £121, with diesel costing around £139. Healey announced yesterday he would be extending the current 5p-per-litre fuel duty cut which has remained at 53p a litre since March 2022 until July 2027. As the average motorist drives 6,550 miles a year, using around 767 litres of fuel a year, based on average annual fuel consumption, the measure would save the average motorist around 74p a week, £3.20 a month or £38.35 a year compared with the full duty rate. Scott Dixon, consumer rights expert, said: “It is a welcome yet modest saving, but hard-pressed motorists would be forgiven for asking why a temporary VAT cut couldn’t also be put in place.” Supermarket prices Tariffs on more than 100 food items have been suspended including on gherkins, garlic, sweets and baked beans. It is estimated that these tariff cuts would save a consumer up to £21 a year, £1.75 a month and around 40p a week – depending on how often you purchase the selected items. However, the savings will depend on whether importers and retailers pass on the reductions in full so a tariff removal does not necessarily mean shop prices will fall by the full amount, as other costs also influence what consumers pay. The saving will also depend heavily on each consumer, where they shop and how much they would normally spend. Minimum wage increase The national living wage and national minimum wage will rise by 3.9 per cent from next April helping 2.3m lower-paid workers. Workers aged 21 and over will see their wage rise from £12.71 to £13.20 per hour next April – £0.49 an hour, £19.60 on a 40-hour week and £1,019.20 a year. Working 40-hour weeks over a year, the new minimum wage comes in at £27,456. Meanwhile, younger workers aged 18 to 20 will see their wages increase from £10.85 to about £11.27 an hour. This is an increase of £0.42 an hour, £16.80 a week and £873.60 annually on a 40-hour week. Paternal pay increased Self-employed dads and partners will become eligible for paid parental leave – a measure expected to help over 150,000 additional parents per year. Eligible parents will receive two weeks’ worth of paternity leave worth up to £194 a week, meaning across two weeks dads and partners could receive around £388. State pensioners and the tax allowance Healey announced a Pension Tax Allowance that would shield pensioners who rely on the state pension alone from paying income tax. From next April, the full new state pension will rise by 3.9 per cent from £241.30 a week to £250.76, taking it to £13,036 a year and surpassing the frozen personal allowance threshold – the amount at which you must pay income tax – of £12,570 for the first time. This rise to the state pension equates to an increase of £9.46 more a week, £37.84 a month and £454.08 more a year. The increase is slightly less for those on the basic state pension who currently get £184.90 a week, rising to £192.10 – a rise of £7.20 a week, £28.80 a month and £373.40 a year. Pensions experts have said the pension tax allowance will create division among pensioners who have built up additional private pension savings – however big or small – and those who have not. David Brooks, head of policy at financial services consultancy Broadstone, said: “Policymakers will need to think more carefully about the incentives facing lower and moderate earners. “For some workers, particularly those expecting to rely heavily on the state pension, the value of additional pension saving becomes less straightforward than it once appeared.” First-time buyers To tackle housing affordability, from next Spring people will be able to buy their first home with just a 2.5 per cent deposit through the “Your First Home” scheme. Eligible first-time buyers will receive a 20 per cent equity loan to help them buy a new-build home with developers providing funding to the scheme. Analysis by Zoopla indicates the proposal could help up to 10 per cent of first-time buyers get on the ladder. It was confirmed in the Budget the scheme will have an earnings cap – the amount of income you can have a household – set at £140,000 in London and £110,000 outside London. However, Scott Clay, director of private clients at Together, said there will be a geographic disparity in the number of potential beneficiaries of the scheme. “The income cap may come to bite for those living in the London commuter belt, who miss out on the capital’s £140,000 income cap while having to contend with the higher house prices of the south-east.” According to latest figures from Zoopla, UK house prices increased 0.8 per cent over the past year with average prices reaching £273,100. ISA changes The government also confirmed first-time buyers will have access to a new savings product called the First-Time Buyer ISA from April 2029. It will replace the existing Lifetime ISA (LISA) for new savers and will allow them to save up to £4,000 a year with a 25 per cent government bonus that will be paid upon withdrawal towards a home worth £450,000, with the maximum value of the bonus capped at £20,000. Existing LISA holders will be able to continue contributing to their accounts. In addition, the government announced it will reduce the 25 per cent withdrawal penalty savers incur when withdrawing their funds for a house purchase worth more than £450,000. The withdrawal penalty will also fall from 25 per cent to 20 per cent for purchases exceeding the property price cap. The 25 per cent penalty will remain for other un-authorised withdrawals.