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Jeremy Hunt’s budget leaves household incomes stagnant and people paying higher taxes despite cuts to public services, the Resolution Foundation has said.

The think tank, which aims to improve the standard of low and middle-income families, said the chancellor had announced an “impressively broad suite of policies” to encourage more people into work.

However, it said: “Britain’s economy remains stuck in a deep funk – with people supported into work but getting poorer, and paying more tax but seeing public services cut.”

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Here are the key findings of the Foundation’s budget analysis.

Beating the odds on a recession

The UK is forecast to have gone through “the biggest energy and inflation shock since the 1970s, while avoiding a recession, with unemployment peaking at just 4.4%,” the Foundation said.

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It compared it to the mid-1970s energy shock which saw a recession with a 3.9 peak-to-trough fall in GDP.

A decline in living standards

However, RF pointed to a “disastrous decline in living standards”, with typical real household disposable incomes on track to remain lower by the end of the forecast in 2027-28 than they were before the pandemic.

“If even the slow growth of the past decade had continued, incomes would still be £1,800 higher than currently projected for 2027-28,” it said.

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Key moments from Hunt’s first budget

Taxes on track to hit 70-year high

RF said taxes as a share of GDP are on track to hit 37.7% by the end of the forecast, a 70-year-high and a 4.7% increase since 2019-20, the equivalent to nearly an extra £4,200 for every UK household.

It said despite this the chancellor only has a quarter of the average fiscal headroom of his three predecessors and would not meet the fiscal targets set by Rishi Sunak, Philip Hammond or George Osborne when they were chancellor.

Help for parents

The analysis notes the budget includes the biggest increase in childcare support on record, which it said would encourage more parents to work and make it worthwhile for many to work longer.

RF said under the current childcare system, a single parent of a one-year-old earning the National Living Wage would see their income fall after childcare costs by £370 if they moved from 25 to 35 hours of work a week.

However under the new system the same single parent would receive an income boost of £700.

However, RF said the richest fifth of households are set to gain £180 on average from the extra childcare entitlement, compared to £130 for the middle fifth of households and £20 for the bottom fifth.

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The key points of the budget at a glance

‘An unneeded tax break for wealthy pension savers’

The report was critical of the chancellor raising the annual allowance and scrapping the lifetime allowance for tax-free saving, which it said cost around £1.2bn and were expected to increase employment by 15,000 – a cost of around £80,000 per extra worker.

However, the Foundation said “even those employment gains may be overstated, given that giving very large wealth boosts will actually encourage some people to retire earlier than they otherwise would have done”.

It said someone with a £2m pension pot will have received a tax cut of almost £250,000.

Austerity

RF said the chancellor had chosen to “ignore pressures on public services”, even though unprotected departments face 10% cuts to real day-to-day spending per capita by the end of the budget, raising to 14% if the newly announced aspiration to raise defence spending to 2.5% of GDP is met over the next parliament.

An investment ‘roller-coaster’

The Foundation said the £28bn three-year increase in investment allowances represents the fifth major corporate tax change in two years, which it said illustrated “the lack of certainty that has frustrated businesses”.

It said: “The policy will deliver a temporary 3% boost to investment, when what Britain actually needs is a permanent 30% boost to catch up with our competitors (France, Germany and the US).”

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‘UK’s underlying challenges remain largely unchanged’

Torsten Bell, chief executive of the Resolution Foundation, said: “Jeremy Hunt’s first budget was a much bigger affair than many expected, combining improvements to the dire economic and fiscal outlook with a significant policy package aimed at boosting longer-term growth in general, and the size of the workforce in particular.

“A step change in childcare support stands out.

“But stepping back, the UK’s underlying challenges remain largely unchanged.

“We are investing too little and growing too slowly. Our citizens’ living standards are stagnant. We ask them to pay higher taxes, while cutting public services.

“No one budget could turn that around, but it’s time Britain did.”

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Police investigating fire at Sir Keir Starmer’s house – and possible links with two other blazes

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Police investigating fire at Sir Keir Starmer's house - and possible links with two other blazes

Police investigating a fire at a north London house owned by Prime Minister Sir Keir Starmer are also looking into whether it is linked to two other recent blazes.

The Metropolitan Police said on Monday evening that detectives are checking a vehicle fire in NW5 last week and a fire at the entrance of a property in N7 on Sunday to see whether they are connected to the fire at Sir Keir Starmer’s house in the early hours of Monday morning.

The prime minister is understood to still own the home and used to live there before he and his family moved into 10 Downing Street after Labour won last year’s general election. It is believed the property is being rented out.

Counter-terrorism police are leading the investigation as a precaution, the Met said.

The blaze damaged the entrance to the house, but there were no injuries, the force said.

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Sir Keir Starmer house
Metropolitan Police
Fire 
Pic: LNP
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The entrance to the house was damaged by the fire. Pic: LNP

Sir Keir Starmer house
Metropolitan Police
Fire Pic: LNP
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Counter-terror police are leading the investigation. Pic: LNP

A statement from the Metropolitan Police said: “On Monday 12 May at 1.35am, police were alerted by the London Fire Brigade to reports of a fire at a residential address.

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“Officers attended the scene. Damage was caused to the property’s entrance, nobody was hurt.

“As a precaution and due to the property having previous connections with a high-profile public figure, officers from the Met’s Counter Terrorism Command are leading the investigation into this fire. Enquiries are ongoing to establish the potential cause of the fire.”

A police cordon and officers, as well as investigators from London Fire Brigade, could be seen outside and at one point, part of the street was cordoned off to all vehicles.

London Fire Brigade said firefighters were called just after 1am, and the blaze was out within half an hour. It described the incident as “a small fire outside a property”.

A forensics officer is seen in Kentish Town, north London. Police are investigating a fire at Sir Keir Starmer's house in north London. Picture date: Monday May 12, 2025.
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Pic: PA

A police officer is seen in Kentish Town, north London. Police are investigating a fire at Sir Keir Starmer's house in north London. Picture date: Monday May 12, 2025.
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Emergency services were deployed to the scene in north London. Pic: PA

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Sir Keir expressed his gratitude to the police and fire services via his official spokesman, who said: “I can only say that the prime minister thanks the emergency services for their work, and it is subject to a live investigation. So I can’t comment any further.”

On Monday, Sir Keir made a major policy speech on immigration, promising to bring down net migration by the end of this parliament with a system that is “controlled, selective and fair”.

He did not clarify how far he wants figures to fall, only saying numbers will come down “substantially” as he set out plans in the government’s Immigration White Paper, including banning care homes from hiring overseas.

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London Underground stations shut and lines suspended as power cut hits Tube

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London Underground stations shut and lines suspended as power cut hits Tube

A power outage caused major travel disruption on London’s Tube network on Monday, stretching into rush hour.

The Elizabeth, Bakerloo, Jubilee and Northern lines were among the routes either suspended or delayed, with several stations closed and passengers forced to evacuate.

A spokesman for Transport for London (TfL) said there was an outage in southwest London for “a matter of minutes” and “everything shut down”.

National Grid confirmed a fault on its transmission network, which was resolved in “seconds”, but led to a “voltage dip” that affected some supplies.

The London Fire Brigade said the fault caused a fire at an electrical substation in Maida Vale, and it’s understood firefighters destroyed three metres of high-voltage cabling.

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The scene in Piccadilly Circus as passengers were evacuated

That came just weeks after a fire at the same substation, which saw elderly and vulnerable residents among those moved from their homes.

But today’s fire – between Cunningham Place and Aberdeen Place – is understood to have involved different equipment to the parts in the 29 April incident.

TfL’s chief operating officer Claire Mann apologised for the disruption, adding: “Due to a brief interruption of the power supply to our network, several lines lost power for a short period earlier this afternoon.”

Passengers told Sky News of the disruption’s impact on their plans, with one claiming he would have had to spend £140 for a replacement ticket after missing his train.

He said he will miss a business meeting on Tuesday morning in Plymouth as a result.

Another said she walked to five different stations on Monday, only to find each was closed when she arrived.

Lines suspended and stations shut – as it happened

“Only on the last station did I find out it was a power outage affecting the entire Underground, after I approached ticketing staff,” she said.

“Again, no announcement made. So I looked for bus alternatives. In total, I spent two hours stranded in central London. Horrible experience.

“I feel bad for people who possibly missed their flights.”

TfL staff have said they are working to restore the entire network, with some disruption extending into Monday night.

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Minister does not rule out ‘supermax’ jails for most dangerous offenders following alleged Rudakubana attack on prison officer

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Minister does not rule out 'supermax' jails for most dangerous offenders following alleged Rudakubana attack on prison officer

“Supermax” jails could be built to house the most dangerous offenders following a spate of alleged attacks on staff, the prisons minister has said.

James Timpson told the Politics Hub with Sophy Ridge that “we shouldn’t rule anything out” when asked if the most dangerous criminals should be placed in top security prisons.

It comes after Southport triple killer Axel Rudakubana allegedly threw boiling water from a kettle at an officer at HMP Belmarsh on Thursday. Police are now investigating.

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Is the UK prison system broken?

Before that, three prison officers were also allegedly attacked by 28-year-old Hashem Abedi – the brother of Manchester Arena bomber Salman Abedi – with hot cooking oil and “improvised knives”, potentially made from a baking tray.

Speaking from HMP Preston for a special programme of the Politics Hub, Mr Timpson told Sophy Ridge: “We inherited a complete mess in the prison system.

“Violence is up, assaults on staff is up. But for me, we shouldn’t rule anything out.”

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He added: “What we need to do is to speak to our staff. They’re the experts at dealing with these offenders day in, day out. “

Mr Timpson – who was the chief executive of Timpson Group before he was appointed prisons minister last year – said the violence in prisons was “too high”.

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Are we sending too many people to prison?

He continued: “The number of people when you have prisons are so full, and the people in there are not going to education or into purposeful activity.

“You get more violence and that is totally unacceptable. Our staff turn up to work to help turn people.

“They want to turn people’s lives around. They didn’t turn up to work to get assaulted. It’s totally unacceptable.”

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Reflecting on the crisis facing the UK prison system ahead of the government’s sentencing review, Mr Timpson said a major problem was the high rate of reoffending, saying “80% of offending is reoffending”.

He said people were leaving places like HMP Preston “addicted to drugs, nowhere to live, mental health problems – and that’s why they keep coming back”.

Asked whether every prison had a drugs issue, he replied: “100%.”

“If we want to keep the public safe, we need to do a lot more of the work in here and in the community. But also we need to build more prisons.”

Put to him that making more use of community sentences – thought to be one of the recommendations in the government’s sentencing review – might be considered a “cushy option” compared to a custodial sentence, Mr Timpson said: “There are some people in this prison tonight who would prefer to be in prison than do a community sentence – but that’s not everybody.

“Community sentences need to be tough punishments outside of prison, not just to help them address their offending behaviour, but also the victims need to see punishments being done too and for me, technology has a big part to play in the future.”

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