What are we to make of John Healey? Time will tell.
Who exactly is in charge of this government’s economic policy? In a bid to find out, I’ve tasked two of our journalists to hit the phones, mooch around the bars of Whitehall and track down Westminster’s new power brokers. I’ll let you know what we find out, but he fact that the answer to this question isn’t immediately obvious should cause some concern.
Andy Burnham says he wants to reverse four decades of neoliberalism and rewire the economy so it’s safe to assume that he’ll set the tone, if not the strategy. But who is his Chief Economic Advisor? Downing Street remains tight-lipped on that. Big names were dropped in the days leading up to his coronation, including former Bank of England chief economist Andy Haldane and the ubiquitous Jim O’Neill, but there’s no indication that either man is taking a formal role.
This brings us to the choice of Chancellor. Undoubtedly, Shabana Mahmood was in the running, as was Ed Miliband. The trouble is the former would have upset Labour MPs on the left while the latter would have upset those on what passes for Labour’s right. John Healey, the former Defence Secretary, was deemed a less contentious choice. Indeed, a consensus view (always be mindful of those) emerged among Westminster watchers that the appointment was a masterstroke, one that reassured both the bond markets and those calling for higher defence spending.
Healey faces an intensely difficult environment
It’s also true that Healey’s first speech in the City hit all the right notes. He rightly observed that “businesses large and small have felt really squeezed” and promised to banish the “pessimism” that had “eroded our prosperity.” He also spoke to Treasury civil servants about wealth creation and profit. Heady stuff. Unfortunately, just days later he was antagonising Britain’s superb retail sector with daft warnings about “price gouging” in an echo of his predecessor’s most ridiculous moment.
On the bigger picture, he faces an intensely difficult environment. His headroom has been eroded, the bond market is febrile and the tax burden is painfully high. He will somehow have to carve a path through these realities that allows the government to increase spending while also, somehow, stimulating economic growth. Few at this stage imagine he will be successful.
A survey of 400 scale-up founders with combined revenue of £8bn, by the business groups Helm, finds that 43 per cent expect no change to business conditions under this government while 40 per cent expect things to get worse. A plucky 17 per cent expect an improvement.
I hope these optimists win the day, and that Healey surprises me on October 28 – Budget day. The clock is ticking.