Chancellor promises growth but acknowledges economic concern

The Chancellor promised growth will be the focus of his autumn Budget but acknowledged that the global economy is a growing concern.

In his first major speech in the role, John Healey insisted that the UK economy was "turning a corner" and promised to control the government's spending.

Healey acknowledged the concerns around the impact of high government borrowing costs and promised to address the rising burden on businesses.

Striking the same tone as the prime minister, Healey tried to present an optimistic assessment of the UK's economic situation despite the impact of global crises like the war in the Middle East and Russia's invasion of Ukraine.

Healey said: “The Prime Minister and I are in lockstep in our commitment to meeting the fiscal rules at the upcoming Budget, to balancing the books with a buffer to protect against uncertainty.

“To controlling borrowing to bear down on inflation and reducing long-term pressures on our public finances.”

He said the rising burden of debt interest showed “staying true to our values means being honest about the need to control government spending”.

But he insisted there was an “optimistic story” about the UK economy which had “huge latent potential”.

Healy promised “a country turning a corner, a country whose people, businesses and communities are ready to seize the opportunity of new technologies and new ideas”.

Giving an overview of his plans for the economy, Healey said the government would extend its reforms of judicial review from energy projects to all major infrastructure programmes.

He said the reforms would mean “vexatious litigation and challenge can’t block economic growth”.

The Chancellor also reiterated the government’s commitment to transferring power out of Whitehall, saying he would set out a “roadmap to fiscal devolution” at next month’s Budget.

Healey said he would set out plans for “a permanent transfer of power and resources” away from Whitehall at the Budget.

The Chancellor said: “The next chapter of Britain’s growth story will be written in more places.

“That’s not sentimentality, that is supply-side economics. A transport bottleneck in South Yorkshire is too often invisible from Whitehall, but it can have a real impact on economic growth and on business investment decisions.

“That’s why, at the Budget, I will set out a roadmap to fiscal devolution, a permanent transfer of power and resources from Whitehall to our regions, with greater business rates retention for local councils and strategic authorities, grants from central government replaced by a share of local income tax for every mayoral strategic authority beginning in 2028.

“London, of course, is our powerhouse, but if our city regions could emulate the success of those in France or Germany, growth in our country would be transformed.”

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Ahead of that, he confirmed that the British Business Bank would be providing £150 million for fast-growing firms in the North of England and announced the creation of a “Northern 500” group of “the North’s most ambitious mid-sized businesses”, to be led by regional mayors.

The fund will see offers of investment between £5 million and £15 million to help innovative companies across the North of England, and the money is already allocated to the government bank. The Treasury hopes the specific fund will draw in additional private investment to create opportunities.

Speaking at a manufacturing site, the Chancellor said: “The Prime Minister laid out a clear diagnosis of what has gone wrong in the past. The fundamentals of our economy hollowed out through a series of past policy decisions.

"Political power was centralised, weakening the relationships between the people, the businesses and the institutions who can make things happen beyond Whitehall."

Healey went on to promise that his plans will focus on devolution and said: “the next chapter of Britain’s growth story will be written in more places.”

“I want to see wealth creation in this country. I want to see businesses make a profit,” the Chancellor said.

“And to create the conditions for that we need an active, accountable state at all levels to remove blockages and create the conditions for more investment.”

Healey was keen to avoid speculation around his Budget and refused to comment on potential tax rises in the Budget on 28 October.

He told journalists he wants "to be the Chancellor that gets things done" and said his purpose in the role was to change the path of growth the country has been on.

He said: "Britain's growth trajectory has been weak, this now must change.

"This is essential. It is possible. It is central to my purpose as Chancellor."

Economists have warned that Healey may need to raise taxes or cut departmental spending to protect the fiscal buffer built up by Reeves at her last budget.

The Conservatives criticised the speech saying Labour were destroying jobs.

Shadow Chancellor Andrew Griffith said: “John Healey sounds increasingly like continuity Rachel Reeves. Warm words about growth will not make growth a reality or cover up the enormous damage Labour have done to businesses and family finances.

“Healey failed to end uncertainty by ruling out more tax rises, failed to set out a serious plan to reform welfare, and failed to commit to funding defence properly – the very issue he resigned over as Defence Secretary. Even as Jaguar Land Rover cuts jobs, he offered no pause to Labour's job-destroying employment red tape and no measures to get ruinously high energy bills down.

“The Conservatives are the only party with a fully funded plan to spend 3 per cent of GDP on defence, cut the welfare bill, cut energy bills with our Cheap Power Plan and deliver an economic revolution that will get Britain working again.”

Reform UK Treasury spokesperson Robert Jenrick said: “On the day 4,000 people are losing their jobs, Healey gave a dire and dreary speech that will change absolutely nothing. John Healey is beginning to make even Rachel Reeves seem inspiring.

"Burnham said he wanted to raise the tax-free personal allowance, but he’s bottled it. He promised growth in every postcode, but the West Midlands have just been gutted. The markets have worked out that this Government is going nowhere. It's about time Westminster woke up to that."

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