John Healey has said boosting economic growth will be his defining mission as chancellor as he warned Labour had to “be honest” about the need to control public spending at next month’s budget.
In his first big speech since taking the job in July, Healey said the top priority for his 28 October budget would be to support stronger growth across the UK while sticking firmly to the government’s fiscal rules.
“I want to be the chancellor that gets things done and I want to see growth driven from more places across the UK,” he said.
Against a backdrop of jittery global financial markets, the chancellor said he and Andy Burnham were “in lockstep” in their commitment to meeting the government’s self-imposed target to balance day-to-day spending with tax receipts by 2029-30.
With the public finances under pressure from soaring long-term bond yields, which hit an 18-year high last week, Healey argued that stronger growth was the most sustainable way to balance the books. However, he also signalled that his budget would require Labour “being honest about the need to control government spending”.
Economists have warned the chancellor could be forced to increase taxes or cut spending in response to rising spending pressures and the economic fallout from the war in Iran triggering turmoil in global bond markets.
Aiming to soothe concerns in a speech to business leaders at a manufacturing centre in Coventry, Healey said Britain was continuing to pay a “Truss penalty” almost four years since Liz Truss’s ill-fated mini budget triggered a meltdown in the UK government bond market.
With Labour under pressure amid questions over Burnham’s tax and spending priorities and as the UK carmaker Jaguar Land Rover – headquartered down the road from the venue for his speech – announced plans to cut 4,000 jobs, Healey said maintaining fiscal discipline was important in an uncertain and volatile world.
“It makes our task in government harder. It makes the task of every business looking to invest much harder, too,” he added.
Refusing to be drawn on his tax and spending plans less than two months before the budget, Healey said he intended to stick to Labour’s manifesto commitments not to raise taxes on working people. However, he signalled Labour was aiming to find savings from the welfare bill by taking steps to tackle rising youth unemployment.
“As the prime minister has said there is a need to bring down welfare costs. And most importantly for me we have to get more of Britain working again,” he said.
The chancellor ducked questions on whether taxes would need to rise and also refused to respond to a suggestion from the British Chambers of Commerce that the government should scrap the pensions triple lock to help fund a cut in employer national insurance contributions for all under-25s to tackle soaring youth unemployment.
The government is awaiting the findings of a highly anticipated review into youth worklessness by the former Labour cabinet minister Alan Milburn, which Healey said would “address this scar of youth unemployment”.
Healey said there was both a “moral duty” and a “fiscal duty” to supporting young people to find work.
“A person coming off benefits and into work saves the taxpayer money. And that becomes a win-win when those people start paying tax themselves,” he said.
Healey said the budget would provide a roadmap for more devolution of tax and spending powers to regional mayors, including through the retention of business rates and a share of income tax.
Arguing that investment, innovation and jobs would form the backbone of his budget, the chancellor said turning the page on years of sluggish growth in the UK economy was his overarching mission in an agenda that would include raising government investment and cutting business red tape.
“[We are] deeply concerned about the cost of living and cost to business. In the long run the only way that you deal with that is greater growth. I put growth at the heart of my commitment. This is my mission as chancellor,” he said.