The Chancellor, John Healey, will pay in full for the new spending in his Budget by 2029/30, the final year of the parliament, the FT reports, in a story carried by Reuters on 14 Oct.
Citing people briefed on the plans, the paper says the Budget will be "scorecard positive" in 2029/30. That means new discretionary spending is fully paid for. It says Healey will let the headroom act as a contingency fund and is expected to drop planned fuel duty increases of 3p a litre in January and 2p in March. A targeted package to help with higher winter fuel bills is also expected.
One person briefed on the Budget told the FT: "This will be the chancellor's way of demonstrating fiscal responsibility."
The Treasury has not confirmed the measures. A Treasury spokesperson said: "The Chancellor has been clear that fiscal discipline underwrites every promise this Government makes, which is why he and the Prime Minister are in lockstep on meeting the fiscal rules."
The fiscal rules require day-to-day spending to be met by tax revenues, with debt falling as a share of GDP, Reuters notes. It puts last year's deficit at 4.4% of GDP. The FT says the Iran war has added pressure on the public finances and left less headroom. The IMF has backed Britain's fiscal strategy and urged it to "stay the course" rather than speed up deficit reduction.