In the Autumn budget, chancellor Rachel Reeves has made some significant reforms, committing to a plan of easing living cost pressures with widespread energy bill support, changes to the National Living Wage for 18-20 year olds, higher taxes for the most expensive homes and an £18m spend to improve and update children's playgrounds.
Professor Sarah Brown, Head of the School of Economics and Low Pay Commissioner (2015-2021) addresses changes to the National Living Wage:
When the National Minimum Wage was introduced in 1999, it was designed to tackle the worst extremes of low pay, with the focus on avoiding adverse effects on employment. With the introduction of the National Living Wage (NLW) in 2015, the focus shifted to meeting a target related to median earnings.
The Low Pay Commission’s remit for the rate of the NLW in 2026 explicitly includes taking account of the cost of living, moving the focus beyond employment. The 4.1% increase in the NLW takes this into account and reflects a balance between the effects on workers and businesses.
The National Minimum Wage rates for young people are shaped by the Government’s ambition to lower the NLW age of entitlement to 18. There, it will be interesting to see how businesses react to the 8.5 per cent (85 pence) in the 18-20 Year Old Rate. Of course, many businesses pay all workers the NLW regardless of age. However, some businesses are not able to do this due to the prevailing financial pressures. For example, the pressures faced by the hospitality sector, which employs a high proportion of young workers, are well-documented.
It will be interesting to see how such sectors respond to these changes over the coming months.
Dr Emily Whitehouse, The School of Economics, comments on the Mansion tax:
Today’s mansion tax announcement is bad news for wealthy homeowners, but may bring comfort to the rest of the market. Whilst house prices in the UK fell by 1.8% month-on-month in November 2025 (a larger fall than we usually see in November each year), some of this can be attributed to the uncertainty households faced in the wake of today’s budget.
The past few months have seen speculation that Rachel Reeves would introduce a much wider-set of housing reforms, including a recalibration of council tax bands, reforming stamp duty, or introducing a proportional property tax on houses valued over £500,000.
We now know that a mansion tax targeting houses valued above £2 million is the extent of housing market reforms in the budget, impacting an estimated 100,000 households. This provides some certainty to house-buyers and may lead to a recovery in housing transactions below this £2 million threshold.
Dr Andrew Burlinson, The School of Economics, comments on energy bill support:
Typical household energy bills (at £1,725 per year) remain more than £450 higher than pre-crisis levels. Reeves is therefore pledging to “grip the cost of living” with a package of short- and long-term solutions.
Instead of axing the 5% VAT paid on energy bills, as had been widely trailed, Reeves has removed certain social and environmental levies from electricity bills, which she says will save households up to £150. These levies funded government policies supporting vulnerable people and low-carbon technology adoption, which will now be paid for through general taxation.
This is a welcome progressive shift. Sharing these costs across all households disproportionately hurt people on lower incomes who paid the same percentage in levies as wealthier customers. What’s more, while these levies represent a relatively small chunk of people’s bills (about 16%) compared to wholesale costs, removing them will help bring down energy-related inflation.
The chancellor is also rightly extending the warm homes discount scheme, which takes an additional £150 off some people’s electricity bills and which will now reach six million households. Yet the temporary discount does not reverse a decade of low, even substandard, government-backed energy-efficiency schemes.
However, the warm homes plan, which aims to improve energy efficiency in homes, will now receive an extra £1.5 billion to tackle fuel poverty. Done properly, investment in energy efficiency and low-carbon technologies can cut bills, improve people’s health and reduce emissions – a “win-win-win”.
Dr Michael Martin, School of Geography and Planning and Dr Paul Brindley, School of Architecture and Landscape, respond to the announcement of spending on children’s playgrounds:
We are absolutely delighted that our research and evidence on playground inequalities has informed Government decision making and the chancellor’s budget - allocating £18m for children, young people and caregivers across the country.
We are equally excited that our ongoing partnership with Play England will also see us engage with members of the All-Party Parliamentary Group on Play to discuss how to maximise the impact of this funding for children and play in the most extreme contexts of play deprivation.
Children and young people have a democratic right to play - this funding together with Pride in Place funds is a starting point to begin to address the stark inequalities that exist for children’s playground provision. But more is needed!