Healey announces early Budget
John Healey has confirmed he will deliver his first Budget on 28 October as he pledged to “shift power and money out of Westminster”.
The Chancellor said on Friday that his first fiscal statement would “back Britain’s communities” setting the stage for a Budget that economists have predicted will be the country’s third in a row in which the overall tax burden will rise.
“This will be a Budget that… will be built on fiscal discipline,” he said. “It will meet our fiscal rules. It’ll give businesses and families some of the stability they need to plan for the future.”
Speculation over when Andy Burnham and Healey will call their inaugural fiscal intervention had been growing, after the pair announced a flurry of unfunded spending measures in their first few days in office. Several think tanks and analysts have already predicted that Healey will need to raise taxes to the tune of tens of billions of pounds in order to stay within the government’s self-imposed fiscal rules.
Budget to find cash for suite of fresh spending pledges
City PM analysis found that the Chancellor will already need to plug a fiscal hole of at least £22bn, prompting several economists to warn that tax rises are “pretty much guaranteed” come the Autumn.
The intervention will also give the new-look government one of its first set-piece moments to set the course for the rest of the parliament, just weeks after Andy Burnham’s coronation as Prime Minister. The former Manchester mayor has already kickstarted a major devolution drive, promising to unlock “growth in every postcode” by giving the UK’s metro mayors more fiscal control and launching a Number 10 North operation.
In his Budget announcement on Friday, Healey said ministers had already “backed British jobs, British skills and British businesses” with the suite of measures already unveiled in Burnham’s first two weeks. Fresh policies have included cutting business rates for pubs, stripping VAT from households’ energy bills and ending homelessness across the UK.
Those measures have added to existing fiscal pressure on the public purse from the protracted war in Iran, which has pushed borrowing costs considerably higher than the official fiscal watchdog predicted at its last economic temperature check in March. Healey will also have to find cash to fund £4.7bn of the Defence Investment Plan announced during the final weeks of Keir Starmer’s government, as well as money for any additional spending pledges.
Healey confirmed in a letter to the Treasury Committee that he had asked the Office for Budget Responsibility to prepare its biannual fiscal forecast for the date.
“Fiscal credibility is the bedrock of economic stability and national security,” he wrote. “That is why we will abide by the fiscal rules, ensuring we retain a buffer to protect us against uncertainty and the impact of instability in the Middle East.”
The Labour veteran has already promised his debut Budget will include a ‘roadmap’ outlining how the Treasury plans to hand mayors more autonomy over income tax – a key plank of the government’s devolution drive.
By choosing 28 October, Healey will deliver the earliest Autumn Budget since 2021 as he looks to minimise speculation over the extent and nature of tax rises.
Under Rachel Reeves, the UK economy ground to a standstill between spring and autumn both years she was Chancellor. Economists have subsequently pinned the slowdown on firms pausing investment and growth plans in the months leading up to her two fiscal events.