The Resolution Foundation, an economic research body that focuses on lower‑ and middle‑income households, has dismissed Chancellor John Healey’s latest fiscal package as a scattershot approach that fails to grapple with the pressing problems confronting the UK economy. The criticism is particularly acute because the think tank’s former director, pensions minister Torsten Bell, was intimately involved in shaping the measures and only stepped down from the role two years ago. In its assessment, the foundation warns that the cost‑of‑living assistance announced in the Budget will leave many families facing higher energy bills than during the previous price spikes triggered by the Iran War and Middle‑East crisis, and that disposable incomes are set to decline sharply ahead of the next general election.
A scathing verdict from a familiar face
The Resolution Foundation’s chief executive, Ruth Curtice, highlighted the disconnect between the government’s ambitions and the reality faced by households. She argued that the support being rolled out is “spread far too thinly”, noting that average annual energy costs are expected to climb to roughly £1,750 for the 2026‑27 period. This figure, she said, exceeds the peaks observed during the last energy price shock. The think tank also projected that typical disposable income will drop by about £1,050 over the next two to three years, a timeline that aligns with the scheduled general election. “A more dramatic change of tactics may be needed,” Curtice added, pointing to the government’s difficulty in balancing public‑service goals with household financial pressures.
Energy support criticised for poor targeting
Greg Thwaites, the interim chief economist at the foundation, singled out the £100 energy grant for homes in council tax bands A to D as “extremely badly targeted”. He explained that the flat amount does not correlate with actual consumption, meaning higher‑income households with modest usage receive the same aid as lower‑income families that consume far more energy. “£100 is nice, but the point is it’s extremely badly targeted … There are lots of people who are doing okay who probably can manage without that money,” Thwaites remarked. He suggested that a more progressive system, linked to usage or need, would be far more effective in alleviating the burden on the most vulnerable.
Political echoes and broader economic context
The criticism carries an added sting because the Resolution Foundation was previously led by Torsten Bell, who now serves as a pensions minister and was among six Treasury ministers photographed alongside Healey in Downing Street before the Budget’s unveiling. Bell played a pivotal role in drafting the fiscal package, lending his expertise from his tenure as the think tank’s chief executive before entering Parliament in 2024. His involvement underscores the tight-knit nature of Whitehall’s economic policymaking circles.
Meanwhile, the Office of Budget Responsibility (OBR) has painted a bleak picture of the UK’s fiscal health, describing the “economic and fiscal position [as] very challenging” after nearly two decades of shocks and sluggish growth. Professor David Miles, a member of the OBR’s Budget Responsibility Committee, warned that per‑capita real household disposable income has barely moved since before the Covid‑19 pandemic, calling the stretch “pretty unusual in the history of the UK”. He described the period as “a dismal period in British economic history”, underscoring the magnitude of the task facing the current administration.
Why it Matters
The Resolution Foundation’s assessment signals a growing unease among independent economic analysts about the adequacy of the government’s response to Britain’s cost‑of‑living crisis. With energy prices set to rise and disposable incomes projected to fall, the effectiveness of the Budget’s support measures will directly influence household financial stability in the run‑up to the next election. Moreover, the think tank’s former leadership’s close ties to the Treasury highlight the importance of evidence‑based policymaking, especially when the nation’s fiscal outlook remains fragile. The critique also serves as a reminder that short‑term political popularity can mask long‑term economic inefficiencies, urging policymakers to reconsider how aid is distributed to ensure it reaches those most in need.
