TUC submission for the 2026 budget
The Prime Minister came into office acknowledging the scale of the challenge facing our country, and the urgent need for change. As he said in his first Commons appearance:
“When it comes to the biggest issues facing the country, the economy and the cost of living crisis, people are looking for much more substantial change as promised in our manifesto and that is what I will bring.
“Britain is not where any of us would wish it to be. Things are not working as they should. Life is too expensive and too hard for too many." 1
This is right diagnosis – the imperative now is to deliver for working people.
Too many middle earners work hard but still struggle to enjoy life. Those at the sharp end have been pushed from just keeping their heads above water to struggling to get by at all.
The affordability crisis is a problem for households and their children, and a problem for our economy.
The government inherited an unprecedented set of challenges from the Conservatives – a stagnant economy and high public debt, an historic living standards crisis, rising youth worklessness, rock bottom investment rates and decimated public services. Trump’s tariffs and the costs of conflict in the Middle East continue to impact our immediate prospects.
As the Prime Minister also set out, this did not happen by accident. It was the result of a series of choices, taken by Conservative-led governments who continued with policy failures, rather than change course:
“Political power was centralised, economic power privatised, the country deindustrialised, austerity followed, hollowing out councils and depriving them of the agency to act to reverse any of this.
“And then Brexit compounded the damage, ushering in a decade of low growth and stalled regeneration.” 2
The Conservatives also took choices about who paid the price – and oversaw a cost-of-living crisis unparalleled in modern history. Time after time, workers borne the brunt of higher costs, insecure work, public sector pay squeezes, while those at the top continued to accrue wealth, and large corporations were gifted windfall profits.
In the face of this bleak inheritance, and a difficult international context, the Labour government has continued to act to support living standards, grow the economy and start to improve our public services. While constrained, our economy is performing better than many of our international competitors. Investment rates are up. Despite rising pressures, employment overall is steady. Evidence shows us that change is possible, and that progress has already started.
But the pace has not been fast enough - and too many long-term challenges remain. There is much more to be done to set the country on the right path. It’s time for a step-change to deliver an economy that works for working people across the country.
The living standards crisis remains the most significant issue facing households and recent high inflation, driven by international pressures, has exacerbated its impacts. So in the immediate term the government must support family budgets - both to target rising living standards and as an essential means to support stronger growth.
Alongside this, concerted action is needed to drive up investment, increase trade and reduce regional growth gaps.
In the jobs market, too many workers face a crisis of insecurity. Reducing the number of young people not in education, employment and training, closing employment rate gaps and boosting reindustrialisation must also be government priorities. Higher employment rates and more secure jobs go hand in hand – improving retention, labour market participation and incentivising much needed investment in training. More than a decade of increased insecurity at work has helped deliver today’s record NEET rates – we must learn the lessons from these failures and pull every lever to drive up the quality of work.
The crucial role public services need to play in rebuilding Britain – not least in improving living standards and supporting more people into good work - must be recognised, and properly funded.
A growing economy is the best way to support a higher tax base, and increase the revenue coming into government. But with the wealthiest and banks in particular making large profits, partly due to the high interest rates that have worsened household finances, taxes on wealth should be used to finance immediate support. Beyond these immediate actions, we need reform to corporate governance rules and a debate on the fiscal framework’s ability to support growth.
Despite this challenging context, the Budget is an opportunity to accelerate the pace the change. The TUC’s most urgent priorities include:
- A permanent, multi-level social tariff to support middle- and lower-income households with rising energy bills.
- Action to reduce uncompetitive industrial energy costs, expanding British Industrial Competitiveness Scheme (BICS) to cover all manufacturing and shifting all or a greater proportion of ‘policy costs’ onto general taxation.
- An ambitious plan for reindustrialisation including a reformed National Wealth Fund.
- Re-instatement of union-led learning across the country with a new Workplace Skills Partnership Fund alongside steps to stabilise the ongoing provision of Trade Union Education - a vital delivery mechanism ensuring the new Employment Rights Act makes a real difference across the country.
- Delivery of the Employment Rights Act 2025 and the wider Make Work Pay agenda in full, supported by an uplift in funding for the dispute resolution, enforcement and implementation costs that must be met if this agenda is to be effective.
- Tackling the crisis of one million young people not in education, employment or training by following the evidence and investing in high-quality employment programmes, training and wider public services.
- A long-term public service workforce strategy developed and delivered in partnership with trade unions and employers.
- Fully funded public sector pay awards and ensuring funding settlements provide sufficient resources to maintain staffing levels and service quality.
- Increased public investment, delivered via existing fiscal rules.
- Increased taxes on wealth and corporations including by increasing the bank surcharge, equalising Capital Gains Tax (CGT) and initiating a review of corporation tax reliefs.
- The importance of getting this right extends beyond growth figures and political headlines. This budget is a crucial opportunity to demonstrate that our country can be different. After years of promises, people are deeply sceptical about the possibility their living standards could improve, that their lives could get better, and even more sceptical that our current politics can deliver that improvement.
- We all have a role in showing change is possible, and working together to set our country on the right course.
- Trade unions, bargaining with employers to deliver improvements in workers’ terms and conditions, to broker better access to training and skills and work with businesses to drive up the quality of work.
- Employers, taking a chance on young workers with potential, giving them their first secure job and a foothold into the working world.
- And Government, providing the immediate support to households and businesses that will help them through a cost-of-living crisis not of their making, alongside the long-term vision and investment that will bring better jobs, better public services and ensure the benefits of growth are fairly shared.
- 1
Burnham, Andy. (2026) “Statement to the House of Commons.” https://www.gov.uk/government/speeches/pm-statement-to-the-house-of-com…
- 2
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