John Healey pledges to be ‘sincere’ about public spending in first speech forward of Budget
John Healey refused to be drawn on what taxes might rise or mounting calls for the government to consider scrapping the state pension triple lock
John Healey giving his first speech as Chancellor(Image: POOL/AFP via Getty Images)
Chancellor John Healey pledged to be “honest” about containing public spending as he blamed the Tories for fuelling the government’s sky high mountain of debt.
Mr Healey used his first keynote speech to give more details about the new government’s vision for the economy under Andy Burnham’s premiership, and clues about the guiding principles for next month’s Budget. However, he refused to be drawn on what taxes might rise or mounting calls for the government to consider scrapping the state pension triple lock.
It came as Mr Healey used the speech, at a hi-tech manufacturing centre in Coventry, to tell an “optimistic story” about the UK, insisting the economy was turning a corner. Yet in awkward timing for the government, not far away car giant Jaguar Land Rover confirmed thousands of possible job losses.
Mr Healey and PM Mr Burnham are keen to show the government intends to bring down the public borrowing mountain, which has been thrown into sharp focus by a recent spike in bond yields on global markets, with the UK particularly exposed.
The yield – interest rate – on government gilts hit the highest level since the 2008 financial crisis last week, with a knock on impact to new fixed rate mortgage costs. The total owed by the taxpayer stands at close to £3trillion.
Mr Healey told an audience of business leaders that the government had inherited a black hole in the public finances, the causes of which stretched back years.
He said Tory PM’s David Cameron’s austerity drive “gutted” public services, while Boris Johnson’s Brexit hammered goods exports.
“Of course, UK debt costs were around the G7 average until Liz Truss’s mini Budget trashed the economy and collapsed confidence,” he said. “So since 2022, we have been paying the Truss penalty as we battle to re-establish belief in Britain and the UK’s fiscal sustainability.
“If you have the privilege to serve in government, you don’t get to choose the time, you don’t get to choose the circumstance. That is for the British people.”
However, he said he wanted to convey an “optimistic story” about the UK’s prospects, with “huge latent potential, of a country turning a corner.”
Mr Healey insisted he would maintain a fiscal “buffer” at the Budget, despite the recent spike in borrowing costs slashing that in half, according to some estimates.
“This isn’t about lines on a graph or numbers on a spreadsheet,” he said. “It is a matter of values.
“There is nothing progressive about government spending £1 in every 10 on debt interest. If debt interest were a department, it would be the second biggest in Whitehall after health.
“Staying true to our values means being honest about the need to control government spending.”
What that control means is not clear, but there is pressure for the government to tackle the soaring welfare bill.
Overnight, the British Chambers of Commerce added to calls for the government to consider scrapping the pension triple lock.
However, Mr Healey sidestepped the issue – along with all other regarding tax – when taking questions after the speech.
“If I respond to speculation now it will create more speculation,” he said in response.
