Martin Lewis delivers his Budget verdict with three key takeaways

Martin Lewis has delivered his reaction to the first Autumn Budget under new prime minister Andy Burnham.

Chancellor John Healey laid out his plans to give families “breathing space”, while sticking to Labour’s strict fiscal rules on debt and borrowing.

One of the key announcements was a £100 in energy bill support for around 20 million households this winter, alongside tax breaks for high street firms. This will come alongside the scrapping of the gas standing charge in a boost for lower income households.

The chancellor said the UK was being battered by a global economic storm, with the Budget watchdog, the Office for Budget Responsibility, slashing its forecast for gross domestic product growth next year.

Public finances have also been hit, with the cost of borrowing soaring and the UK spending £14bn more on debt interest this year, Mr Healey said.

He told MPs: “Those are the storms we face. We can’t wish them away. We must choose the course we steer through them.”

Reacting to the event, Mr Lewis highlighted several announcements – or lack thereof – that he thought were significant.

There had been some speculation that the chancellor was considering ending the freeze on income tax thresholds at the Budget, or at least reducing its time limit.

Last year, his predecessor Rachel Reeves announced a three-year extension to the policy to 2031.

The tax-free personal allowance was first frozen at £12,570 by the Conservatives from 2022, creating what economists call “fiscal drag” – where more people are pulled into higher tax brackets as average earnings increase, but the thresholds stay the same.

Reacting to the end of Mr Healey’s statement, Mr Lewis said: “He has sat down... we will check now, but unless you hear, no news here, fiscal drag (and double fiscal drag for plan 2 students) stays”.

The “double fiscal drag” mentioned by Mr Lewis refers to an issue faced by students on Plan 2 loans, who repay nine per cent of everything they earn above a fixed threshold.

These former undergraduates are getting hit twice, both because of the frozen tax bands, but also because their student loan repayment threshold is frozen at £29,385 until 2030.

This means ordinary pay rises push a higher portion of a graduate's earnings across that line, exposing more of their monthly income to the nine per cent deduction.

In a more positive reaction, Mr Lewis said he was “delighted” at the confirmation that the government would reduce the penalty fee for taking money out of a lifetime ISA (LISA) from 25 per cent to 20.

The government-backed scheme is designed to help first-time buyers get on the property ladder by topping up their deposits by 25 per cent, to a maximum of £1,000 extra a year. This means £4,000 can be invested every tax year.

To use the funds for anything else, the LISA holder must withdraw them and forfeit 25 per cent back to the government.

This mechanism means that savers are charged a 6.25 per cent penalty on top of their withdrawal, money experts including Mr Lewis have pointed out, as it takes 25 per cent from the total balance, rather than just removing the Treasury top ups.

Reacting to the change, he said: “I've long suggested this and am pleased the chancellor listened.

“It means there's no risk to putting money in a LISA if you're definitely going to buy a house. As if you're priced out, and have to go above threshold, you still get your savings and the interest, you just don't get the extra.

“This will be a great relief to many young people. I'm still checking when it comes in.”

Mr Healey also confirmed that a new ISA for first-time buyers will replace the LISA, but work on this will likely take a few years.