Budget 2026 MESL Impact Briefing
Issued: October 2025
Summary
This briefing analyses the impact of Budget 2026, assessing the announced measures against the MESL benchmark of minimum needs and income adequacy.
The briefing discusses inflation and the change in minimum living costs, as MESL costs have increased by an average of 18.8% from 2020 to 2025. Looking to the coming year inflation forecasts indicate the potential for further price increases, potentially bringing MESL costs to 21.0% above 2020 levels.
Budget 2026 brings a welcome focus on adjustments to core rates, after a reliance on temporary ‘cost of living’ supports in recent years. The lasting impact of this, and the income adequacy change which may arise is examined.
The adequacy of core social protection rates for adults and children is examined against individual MESL costs. The position of a set of illustrative household cases is also assessed. While the overall pattern of income adequacy for 145 test cases is discussed, highlighting the effect of the significant increases to Child Support Payment.
A review of measures in relation to household energy is also presented, examining the move from top-up ‘cost of living’ supports to an adjustment of the core Fuel Allowance rate.
Finally, the change to the National Minimum Wage is examined, along with an assessment of the support provided by Working Family Payment and One-Parent Family Payment for households in minimum wage employment.