Chancellor John Healey has pledged to make fiscal responsibility the cornerstone of his upcoming budget, even as he prepares to introduce a series of measures aimed at stimulating the British economy. In his debut speech to the Labour conference, Healey emphasized that the government must balance its accounts while fostering growth, setting a rigorous tone for the tax-and-spending plan scheduled for October 28. According to teeing up a tough budget on 28 October, in which Burnham has warned “difficult decisions” will need to be taken, Healey, The government needed to hold firm on its main fiscal rule requiring day-to-day spending to be matched by revenues by 2030. Analysis: Healey offers upbeat vision but little light on how to pay for it.
A key component of the Chancellor’s strategy involves a push to overhaul the welfare system. Arguing that the government has a moral duty to encourage employment, Healey indicated that the current system requires reform to ensure benefits act as a bridge to work rather than a trap. He specifically criticized the escalating costs of the benefits bill, noting that failing to curb these expenses is not a progressive approach. “Our social security system must always be there for those who can never work. Since he replaced Keir Starmer this summer, Burnham has signalled that Labour remains willing to overhaul welfare, amid predictions that the overall cost of pensions and welfare benefits could reach £409bn by 2030. Saying Britain was suffering from the “reckless actions” the Tories had taken since 2010, healey sought to draw a distinction between Labour’s approach and that of the Conservatives.
To support job creation, the Chancellor announced a new local apprenticeship service, which will be managed by regional mayors. This initiative is designed to deliver “thousands more apprenticeships” for young people across the country. Additionally, he confirmed that £6bn from the government’s defence investment budget will be directed toward contracts for British shipyards to help drive reindustrialisation.
The government is currently awaiting two major reviews on welfare that are expected this autumn. One report, led by former Labour cabinet minister Alan Milburn, will focus on young people, while the second, overseen by the Timms panel, will examine key disability benefits. These findings are expected to play a central role in shaping future welfare policy.
Healey addressed the current economic climate, noting that the government faces a challenging global backdrop as the war in Iran continues to impact financial markets. With UK borrowing costs climbing to their highest levels in nearly twenty years, the Chancellor insisted that he and the Prime Minister, Andy Burnham, are in lockstep regarding the necessity of balancing the books by 2030.
Economic analysts have warned that the Chancellor may be compelled to increase taxes or reduce public spending to alleviate rising pressures. However, the government remains committed to its manifesto promises to avoid raising income tax, national insurance, or VAT. Investors and business leaders are watching the welfare reform plans closely as a sign of the government’s fiscal seriousness.
Reflecting on his past as an adviser to Gordon Brown in the 1990s, Healey wore a red tie previously lent to him by the former chancellor. He acknowledged that the financial resources available decades ago are simply not available today. He explicitly stated that there is no progressive value in losing control of public finances, as it is working people who ultimately bear the burden.
Business groups have reacted with cautious optimism. Rain Newton-Smith, chief executive of the CBI, noted that the Chancellor’s speech provided several right signals. She stressed, however, that the upcoming budget must turn these intentions into tangible action to boost business investment and confidence in the UK market. Take a chance on a young person, and scale a business here in the UK.”, the budget now needs to turn them into action if we are to fundamentally change firms’ willingness to invest.
Healey used the opportunity to draw a sharp contrast with the previous Conservative administration, blaming the country’s economic struggles on the Tories’ past actions. He also targeted Reform UK, accusing Nigel Farage of prioritizing wealthy donors. Ultimately, the Chancellor positioned his upcoming budget as a vehicle for restoring hope, aiming to foster growth led by British workers and domestic firms. Saying Nigel Farage was “Liz Truss with a bitcoin account”, he accused Reform UK of prioritising the interests of “dodgy” billionaire donors. Average price of diesel on UK forecourts reaches all-time high.
