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How a Budget works

A Budget is the government's plan for taxes and spending, which the Chancellor sets out in the House of Commons once a year. The next one is on Wednesday 28 October 2026. On the same day the Office for Budget Responsibility (OBR), the independent forecaster, publishes its forecast and judges whether the government is on course to meet the rules it has set itself. The gap between the forecast and each rule is the “headroom”.

The latest headroom: OBR, November 2025 forecast (Table 7.1)

£21.7bnagainst the stability rule in 2029-30The OBR put the chance of meeting it at 59%.

£24.4bnagainst the investment rule in 2029-30The OBR put the chance of meeting it at 52%.

£1.9bnagainst the welfare cap in 2029-30Forecast spending within the cap: £202bn.

No assessment since: the OBR's March 2026 forecast did not judge the rules. The next assessment comes with the Budget on Wednesday 28 October 2026.

What happens on Budget day

The Chancellor tells the House of Commons what the government has decided on taxes and spending.
The Treasury publishes the Budget documents: every new measure, with what it costs or raises in each year and how that was worked out.
The OBR publishes its forecast for the economy and the public finances with those decisions included, and its judgement on each fiscal rule. The government uses the OBR's forecast as its official forecast.
Changes to taxes then go through Parliament in a Finance Bill.

Source: Charter for Budget Responsibility, Autumn 2025, paragraphs 3.13 to 3.17

On the evening of the Budget, editors read the documents and update every promise they touch, with a link to the page that shows it: the promises to watch.

The rules the government has set

The Treasury sets its rules in the Charter for Budget Responsibility, which Parliament approves. The version in force became law on 24 February 2026. The government calls the first two the stability rule and the investment rule (Budget 2025). In the Charter's words:

Stability rule

“the current budget must be in surplus in 2029-30, until 2029-30 becomes the third year of the forecast period. From that point, the current budget must then remain in balance or in surplus from the third year of the rolling forecast periods”
Charter, paragraph 3.6

In plain words: Day-to-day spending, including the wear and tear on public buildings and equipment, is paid for by taxes and other income rather than by borrowing. Borrowing to invest, in roads or hospitals for example, does not count against it.

Headroom: how far income is forecast to exceed day-to-day spending in the target year.

Investment rule

“a target to ensure debt, defined as Public Sector Net Financial Liabilities (PSNFL), is falling as a share of the economy by 2029-30, until 2029-30 becomes the third year of the forecast period. Debt should then fall by the third year of the rolling forecast period”
Charter, paragraph 3.7

In plain words: Debt falls as a share of the economy. The debt it counts is everything the public sector owes minus the financial assets it holds, such as loans it has made and shares it owns.

Headroom: how much more the public sector could owe in the target year, in pounds, and still see its debt fall as a share of the economy.

Welfare cap

“a target to ensure that expenditure on welfare is contained within a predetermined cap and margin set by the Treasury”
Charter, paragraph 3.8

In plain words: Spending on welfare stays within a limit the Treasury sets, plus a margin. The state pension and payments closely tied to the ups and downs of the economy are outside it.

Headroom: how far forecast spending within the cap is below the cap plus its margin.

What it leaves out: OBR, Economic and fiscal outlook, November 2025, paragraph 7.4

Source: HM Treasury: Charter for Budget Responsibility, Autumn 2025 (laid February 2026), paragraphs 3.6 to 3.8 (publication page). The date it became law: OBR, March 2026 forecast, foreword.

The headroom, forecast by forecast

Headroom is how far the OBR's central forecast is from breaking a rule, in pounds, in the year the rule names. It is a margin in a forecast, not money set aside: a new forecast can widen or close it, and so can the Chancellor's decisions. The OBR forecasts twice, first without a Budget's new decisions and then with them; the table gives the headroom before them too.

Headroom against each rule in 2029-30, at each OBR forecast that assessed the rules, in £ billionHeadroom in the OBR's central forecast, with that event's decisions; the latest in full colour

Stability rule in 2029-30

October 2024£9.9bn
March 2025£9.9bn
November 2025£21.7bn
March 2026Not assessed: no assessment in a spring forecast

Investment rule in 2029-30

October 2024£15.7bn
March 2025£15.1bn
November 2025£24.4bn
March 2026Not assessed: no assessment in a spring forecast

Welfare cap in 2029-30

October 2024£9.7bn
March 2025£13.5bn
November 2025£1.9bn
March 2026Not assessed: no assessment in a spring forecast

Why March 2026 has no figure

Since February 2026 the Charter asks the OBR to judge the rules once a year, at the Budget, so its March 2026 forecast made no assessment (OBR, March 2026 forecast, foreword). That forecast still gave the measures the rules use: a surplus on day-to-day spending of £23.6bn in 2029-30, and net financial liabilities of 82.9% of GDP in 2028-29 and 82.2% in 2029-30 (OBR, March 2026 forecast, Table A.9). These are the OBR's forecasts of each measure; the OBR did not present them as headroom.

It is a forecast. The OBR gives the chance of meeting each rule: in November 2025, 59% for the stability rule and 52% for the investment rule.
It is one year. Each rule is judged in 2029-30, the year the Charter names.
Below zero, a rule would be missed. Bars to the left of the line would show that.

Questions

What is the Chancellor's headroom?

How far the OBR's forecast is from breaking a fiscal rule, in pounds. In its November 2025 forecast the OBR judged the government on course to meet the stability rule by £21.7bn and the investment rule by £24.4bn in 2029-30.

Why is there no headroom figure from March 2026?

Since February 2026 the Charter for Budget Responsibility asks the OBR to judge the rules once a year, at the Budget. Its March 2026 forecast said so and made no assessment.

Is the headroom money the government has spare?

No. It is the gap between the OBR's forecast and the line a rule draws, in one future year. A new forecast can widen or close it, and so can the Chancellor's decisions.

Who sets the rules, and who checks them?

The Treasury sets them in the Charter for Budget Responsibility, which Parliament approves. The Office for Budget Responsibility, an independent public body, judges whether the government is on course to meet them.

When is the next assessment?

With the Budget on Wednesday 28 October 2026, when the OBR publishes its new forecast.

How this page works

Every figure is the OBR's own, read from the table named beside it; nothing is worked out here. Each night the site checks the OBR's latest forecast; when a new assessment appears, its table is added after a review. The rules are quoted from the Charter word for word.

See the promises the Budget could fund or break, what has been trailed before it and how the numbers are made.