Healey vows to stick to fiscal rules in budget built on hope

John Healey has pledged to use next month’s budget to inject hope into Britain’s economy while sticking to the government’s fiscal rules, arguing there is “nothing progressive” about losing control of public finances.

In his first speech as chancellor to Labour conference, Healey warned that next month’s highly anticipated tax-and-spending event would need to take into account a challenging global backdrop.

Setting out measures to support jobs and growth, the chancellor announced a new local apprenticeship service, led by mayors, targeted at young people to deliver “thousands more apprenticeships” across the country.

He also signalled Labour was gearing up for welfare reform designed to tackle a sharp rise in youth unemployment, saying that it “falls to us to act” to overhaul the benefits system and it is “simply not progressive to allow a bigger and bigger benefits bill”.

Insisting he would balance the books while fleshing out Andy Burnham’s plans to strengthen “growth in every postcode”, Healey said he and the prime minister were in “lockstep” in their commitment to balance the books.

“That commitment is so important. There is nothing progressive about losing control because it’s always working people who pay for it,” he said.

Against a backdrop of jitters in financial markets as the Iran war rattles the global economy, the UK government’s borrowing costs have risen to the highest levels for almost two decades.

Economists have warned that the chancellor could be forced to increase taxes or cut spending in response to rising spending pressures, and the economic fallout ripples through global bond markets.

In a speech aiming to strike a balance between promising to fund the new prime minister’s priorities while committing to fiscal discipline, Healey drew a comparison with the 1990s when he was an adviser to Gordon Brown.

Wearing a red tie that he had lent to the then chancellor to wear for a Labour conference speech in Bournemouth more than two decades ago, he said the money New Labour had in the 1990s “is simply not there now”.

Teeing up a tough budget, in which Burnham has warned “difficult decisions” will need to be taken, Healey said the government needed to hold firm in its main fiscal rule requiring day-to-day spending to be matched by revenues by 2030.

He also sought to draw a distinction between Labour’s approach and that of the Conservatives, saying Britain was suffering from the “reckless actions” the party had taken since 2010.

“Britain has it harder now. We had 13 years of flatlining tory growth in living standards when Cameron’s austerity gutted our public services, when Johnson’s Brexit hammered our exports and Truss’s mini budget crashed our economy,” he said.

He also accused Reform of taking a reckless approach to the public finances while prioritising the interests of “dodgy” billionaire donors, saying that Nigel Farage was “Liz Truss with a bitcoin account.”

Healey’s local apprenticeships announcement comes as ministers await recommendations from a highly anticipated report by Alan Milburn, the former Labour cabinet minister, who is leading a review into Britain’s crisis in youth worklessness.

The chancellor also said he wanted to usher in a “new age of industrialisation,” announcing £6bn of contracts for our British shipyards

Using Labour’s annual conference in Liverpool to spell out his agenda for government, Burnham has pledged to “rip the plaster off” to fix Britain’s social care system and announced a new help-to-buy scheme to support young people to get on the housing ladder.