31st October 2026
The Budget Is Over, But Are Britain's Financial Problems Really Solved? The Big Decisions Still Awaiting the Government
The Chancellor has delivered the Budget, set out his tax and spending plans and attempted to reassure financial markets that Britain is getting its public finances under control.
But the Budget has not settled some of the most difficult questions facing the Government. Several important reviews are still awaiting their final recommendations, while decisions on welfare reform, youth unemployment, social care and future public spending have been pushed further down the road.
The result is that some of the biggest financial commitments facing Britain remain uncertain.
The latest assessment from the Office for Budget Responsibility (OBR), published alongside the Budget, makes clear that the Government's financial position remains fragile. It also identifies several areas where future spending could be substantially higher than currently forecast.
So, although the Budget is over, the argument about how Britain pays for its public services and supports its population is far from finished.
The Chancellor has limited room for manoeuvre
The OBR forecasts that government borrowing will gradually fall over the coming years, reaching around 1.8 per cent of GDP by 2031-32.
However, public debt is forecast to peak at approximately 97 per cent of GDP in 2028-29 before falling slightly.
The Government's fiscal rule requires the current budget to be in surplus in 2029-30. The OBR believes this target will be met, but the margin is only £15 billion.
That sounds a considerable amount of money, but it is relatively small when measured against total government spending and the uncertainties surrounding the economy.
Indeed, the OBR estimates that there is only a 56 per cent probability of the Government meeting its fiscal mandate.
In other words, the Government is currently forecast to meet its target, but there is little certainty that it will do so.
There is another important consideration. The tax burden is forecast to reach a historic high as a proportion of national income, while the Government is also relying on reductions in departmental spending to help balance the books.
This leaves ministers with difficult choices if economic growth disappoints or public spending pressures increase.
Youth unemployment: the Milburn Review
One of the most important outstanding reports concerns young people who are not in education, employment or training, commonly known as NEETs.
Alan Milburn, the former Health Secretary, has been examining why the number of young people in this position has increased and what can be done to reverse the trend.
His interim report identified nearly one million young people aged 16 to 24 who are not in education, employment or training.
This is not simply a question of young people being unable to find jobs. A growing proportion are economically inactive, often because of health conditions, disabilities, mental health difficulties or problems transitioning from education into employment.
The interim report warned that, without significant changes, the number could rise to more than 1.25 million within five years.
The review is examining how education, health services, employment support and the benefits system could work together rather than operating as separate organisations.
This could lead to substantial changes in the way young people receive support.
For example, instead of waiting for someone to become sufficiently unwell or detached from employment to enter the benefits system, the Government could intervene earlier with mental health support, training, apprenticeships and employment assistance.
There is an important financial argument too.
Supporting someone into sustainable employment costs money initially, but long-term inactivity can mean years of benefit payments and lost tax revenue.
Milburn's final report is expected this autumn. The Government has promised to respond before the end of 2026.
The difficult question will be whether ministers are prepared to invest in the support needed to make a difference, rather than simply concentrating on reducing benefit expenditure.
Disability benefits: the Timms Review
Another important report concerns Personal Independence Payment (PIP).
The review, led by Sir Stephen Timms, is examining whether the existing system properly reflects the additional costs faced by disabled people and those with long-term health conditions.
PIP has become an increasingly expensive part of the welfare system, with rising numbers of claimants and concerns about how assessments are conducted.
However, it is important to understand what PIP is intended to do.
It is not an unemployment benefit. It is designed to help people meet the additional costs of disability, whether they are working or not.
The interim review found that the current arrangements are not working as intended. Many claimants value the financial assistance, but the assessment and decision-making processes can be stressful, complicated and dehumanising.
The review has now completed its main evidence-gathering and consultation exercises. Its October update confirmed that its final recommendations are being prepared.
The Government has indicated that it wants to reform the system, but the details remain unknown.
This is potentially a sensitive area. Reducing expenditure by making it harder to qualify for support would have very different consequences from redesigning assessments and providing more appropriate assistance.
The Government needs to explain how it intends to distinguish between genuine savings and simply transferring costs to families, local authorities and the NHS.
There is also a Scottish dimension. Scotland has taken responsibility for disability benefits and replaced PIP with Adult Disability Payment. The Timms Review therefore does not directly determine Scotland's arrangements, although its findings may influence the wider debate about disability support.
The wider welfare system
The Milburn and Timms reviews are connected to a much bigger question about the future of the welfare state.
The Government wants to reduce the number of people who remain outside employment because of health conditions or other barriers.
However, it must also protect people who genuinely cannot work and ensure that the benefits system provides adequate financial support.
The OBR highlights the uncertainty surrounding health and disability-related benefits.
Its central forecast assumes that the number of claimants will continue to increase, but more slowly than in recent years.
If caseloads continue growing at their post-pandemic rate, welfare spending could be around £25 billion higher by 2031-32 than currently forecast.
If growth returns to pre-pandemic levels, spending could instead be around £13 billion lower.
That is a £38 billion difference between two possible outcomes.
It demonstrates why welfare reform is not simply a matter of announcing changes to eligibility rules. The Government needs to understand why the number of people requiring support has increased.
Mental health, long NHS waiting lists, disability, employment opportunities and the availability of suitable work are all part of the picture.
Social care: another expensive problem waiting for an answer
The future of adult social care is another major issue which remains unresolved.
Baroness Casey is leading a commission examining how England's adult social care system should be reformed.
The commission is now expected to report by summer 2027, with the Government planning to respond afterwards.
This is an important issue for public finances because the pressure on social care is closely connected to the pressure on the NHS.
People who cannot obtain suitable care at home or in residential accommodation may remain in hospital longer than medically necessary.
That affects hospital capacity, waiting lists and the availability of beds for other patients.
The problem is also particularly relevant to families who find themselves providing unpaid care because suitable professional support is unavailable or unaffordable.
The eventual reforms could involve significant additional public expenditure, but ministers have yet to settle the funding arrangements.
The OBR has previously highlighted estimates suggesting that more ambitious social care reforms could cost between £3.5 billion and £17 billion annually, depending on what is introduced.
The difficulty is that delaying reform does not necessarily save money. It can simply allow existing pressures to become more expensive.
The next Spending Review: where will the cuts fall?
The Budget has also left another important decision for 2027: the next Spending Review.
This will determine how much money government departments receive in the years ahead.
The OBR warns that, after allowing for commitments to the NHS, schools and defence, some less protected areas of public spending could face real-terms reductions averaging 2.6 per cent annually over the final three years of its forecast.
That could affect local government, transport, housing, justice and other public services.
For Scotland, the position is slightly different because many of these services are devolved and the Scottish Government makes its own spending decisions.
However, the overall financial position of the UK Government has a direct influence on the funding available through the block grant.
Highland Council and other local authorities will therefore be watching developments closely.
The question is whether the Government can meet its spending commitments without placing further pressure on services already struggling to cope with demand.
Young people and work interim report
Timms Review
Autumn Budget 2026 A summary