U.K. Offers £100 Winter Payment to 20 Million Households

U.K. Chancellor of the Exchequer John Healey announced a winter support package on Oct. 28 that includes a one-time £100 ($133) payment for 20 million lower- and middle-income households. The measures respond to rising energy costs as the Iran war and disruptions in the Strait of Hormuz tighten global oil and gas supplies.

The payment is due this winter. The package also keeps a sales-tax reduction on electricity bills in place and removes a charge from gas bills. Healey described the support as giving families and businesses “some breathing space” amid higher costs.

To help pay for the relief, the government will increase the surcharge on bank profits from 3% to 6% for 15 months starting in January. Banks have benefited from higher interest rates. The budget will also raise machine games duty, a tax on gambling machines.

Energy bills are expected to rise sharply in the coming months. The conflict and bottlenecks in the Strait of Hormuz have squeezed oil and gas supplies, adding to the pressure on households and businesses. The package combines direct payments with changes to charges on electricity and gas bills.

Healey said the U.K. economy is forecast to grow 1.2% in 2026, more than previously projected. Inflation has reached 3.5%, near a one-year high, and is expected to climb further. Government borrowing costs across the Group of Seven economies are at levels not seen in decades, he said.

The budget comes as the U.K.’s public debt has passed £3 trillion ($4 trillion). Debt interest is projected to cost the government £14 billion more this year, while servicing debt already accounts for 8% of government spending. The bank surcharge increase is set to begin in January and run for 15 months.