ScottishNews.com

The Budget comes against a difficult economic backdrop. The UK borrowed £24.5 billion in September – £1.9 billion more than the Office for Budget Responsibility had forecast – while public sector debt has passed £3 trillion. Borrowing in the first six months of the financial year was around £6 billion above the OBR forecast.

That leaves Healey trying to provide the “breathing space” promised to households and businesses while maintaining the Government’s fiscal rules.

The Chancellor has already said the Budget on 28 October will be designed to move “power and money out of Westminster” while maintaining fiscal discipline.

What to look for

Cost of living measures are expected to form one of the most significant parts of the Budget.

The UK Government has already removed VAT from domestic electricity bills from 1 October, a measure it says reduces the annual Ofgem price cap by around £45. Around six million households across Britain are also eligible for the £150 Warm Home Discount this winter.

Reports suggest Healey is considering more than £1 billion of additional support aimed particularly at lower-income households, potentially through increased discounts for people receiving certain benefits.

Any UK-wide energy intervention would apply in Scotland and could therefore be one of the most immediate Budget measures for households north of the border.

What happens to income tax?

This is where the Scottish picture becomes more complicated.

The Chancellor cannot simply change the main Scottish income tax rates paid on wages and pensions.

Holyrood sets Scotland’s income tax bands and rates on non-savings and non-dividend income. Scotland currently has six rates ranging from 19 per cent to 48 per cent.

The UK Government does, however, control the personal allowance, currently £12,570, meaning any change to that threshold would affect Scottish taxpayers.

Other taxes including National Insurance, corporation tax, VAT, capital gains tax and inheritance tax remain controlled at Westminster, meaning changes announced on Wednesday could apply directly in Scotland.

Reports ahead of the Budget suggest the Government wants to avoid increases to the headline rates of income tax, National Insurance and VAT, although smaller tax increases remain possible as Healey attempts to rebuild his financial headroom. Taxes on banks are among the measures reported to be under serious consideration.

Pressure for a whisky duty cut

Scotland’s whisky industry will be watching closely.

The Scotch Whisky Association has called for Healey to cut excise duty on spirits, arguing that successive increases have damaged confidence, sales and Treasury revenues.

First Minister John Swinney has backed the industry’s campaign for a reduction.

Alcohol duty is controlled by Westminster, so any change announced by Healey would apply directly to Scotch whisky producers and consumers.

Whether the Chancellor has enough financial room to deliver a duty cut remains uncertain.

North Sea jobs and energy tax

There will also be intense interest in Aberdeen and the north east over the future taxation of the North Sea.

The Energy Profits Levy raised £2.6 billion in 2025-26, down from £2.9 billion the previous year.

Industry body Offshore Energies UK has been pushing the Government to bring forward its proposed replacement, the Oil and Gas Revenue Levy, from 2030 to early 2027, arguing that greater certainty could unlock investment.

The issue has taken on additional significance following the UK Government’s decision this week to allow production at the Jackdaw gas field.

Alongside that announcement, ministers confirmed the creation of a new Energy Wealth Fund with an initial £2 billion intended to reinvest revenues from oil and gas into the transition to cleaner energy.

The Budget could provide more detail about how that fund operates and where its money will be invested.

Investment outside London

There could also be opportunities for Scottish infrastructure and businesses.

Healey has confirmed that the Government will change the Treasury’s Green Book – the system used to assess whether public investment projects offer value for money.

The Government says the reforms are intended to stop investment being disproportionately concentrated in already prosperous areas and make it easier for projects elsewhere in the UK to secure support.

The Chancellor has also confirmed that artificial intelligence investment will form part of the Budget, with hundreds of millions of pounds expected to be committed to infrastructure, growing UK technology companies and protecting against AI-related threats.

What to expect from the budget

For most households, the key announcements will be any additional help with energy bills and changes to UK-wide taxes, benefits and pensions.

For Holyrood, attention will quickly turn to the size of any Barnett consequentials and what the OBR’s new forecasts mean for Scotland’s block grant.

For Scottish businesses, the most important details could lie deeper in the Budget document: whisky duty, investment incentives, the treatment of the North Sea and the Government’s plans to direct more public and private investment away from London and the south east.

And unlike many Budgets, the biggest Scottish announcement may not necessarily come during the Chancellor’s speech.

The real impact will become clearer once the Treasury publishes the detailed spending figures – and Scotland discovers exactly how much of Healey’s promised investment in “every postcode” is heading our direction.