Healey promises growth but refuses to rule out tax rises before budget

Chancellor John Healey has used his first major speech in Coventry to promise that growth will be his defining mission, while refusing to be drawn on whether the 28 October budget will raise taxes. The speech was intended to strike an optimistic tone about Britain's prospects, but it came on the same day Jaguar Land Rover announced 4,000 job cuts in the UK.

He told an audience at the Manufacturing Technology Centre that he wanted to 'make Great Britain growth Britain again' and to deliver 'good growth in every postcode'. He argued that the only long-term answer to the cost of living and the cost of doing business is growth. He said costs have grown since Covid and that he wanted to draw the line. He also said growth is the sustainable pathway out of indebtedness into prosperity.

The chancellor set out a series of measures aimed at lifting investment and spreading growth beyond London and the South East. They included:

• A £150m fund for fast-growing firms in the North, allocated through the British Business Bank.
• Strategic partnerships between the National Wealth Fund and mayoral authorities in South Yorkshire, Liverpool City Region, the North East and Cardiff Capital Region.
• A renewed devolution push, including Number 10 North and a new National Economic Council.
• A cut in the Treasury Green Book discount rate from 3.5% to 3%, plus new economic potential analysis.
• A commitment to reduce the burden of business regulation by 25% by the end of this Parliament.
• Extended judicial review reforms from energy to all major infrastructure, a costs review of rail infrastructure, and work with regulators to identify barriers to business.
• An ambition to double the number of unicorn firms, a Scale Up Fund for the North, and new sandboxing powers for frontier technologies such as AI.

Healey also stressed fiscal discipline. He said fiscal discipline was his first priority as chancellor and that it underpins every government promise. He said there is nothing progressive about spending £1.10 in debt interest, and that if debt interest were a Whitehall department it would be the second biggest spender after health. He committed to meeting the fiscal rules at the budget and said he would not comment on budget speculation.

The economic backdrop is difficult. Government borrowing costs have been at or near their highest levels since the late 1990s. Debt interest payments now run into more than £100bn a year, more than the defence budget. The chancellor's headroom against his fiscal rules has been estimated at around £5bn, down from about £24bn, raising the prospect that he may need to find about £15bn through cuts or tax rises. Mortgage rates are close to 6%, oil prices have been near $100 a barrel, and energy analysts have warned the Ofgem price cap could rise by a quarter in January 2027.

Healey repeatedly declined to say whether taxes would rise. Asked about possible tax increases, he said: 'Look, if I respond to speculation now, that will only fuel more speculation.' He said the budget on 28 October would be the right time to set out his plans. He described it as a breathing space budget that would recognise the costs of business as well as the costs of living and back British business where possible.

The speech drew mixed political reaction. The shadow chancellor, Andrew Griffith, called the policy offer a word salad and attacked anti-business measures, including the increase in national insurance on some firms. The Liberal Democrats said the plans would not shift the dial on growth. Reform UK's Robert Jenrick warned that tax rises were expected in the budget. Critics in broadcast debate said Labour would tax £240bn more and borrow £260bn more than the plans it inherited from the Conservatives. Supporters welcomed the optimistic tone and the focus on devolution and cutting red tape.

Jaguar Land Rover's announcement added to the pressure. The company said it would cut 4,000 jobs over two years and seek £1.7bn in savings. The cuts are expected to hit management and engineering roles, particularly around Coventry. The company blamed significant challenges in the global car industry, including competition from Chinese manufacturers, energy costs and global uncertainty. The business secretary is due to meet JLR bosses, but the government has ruled out a bailout.

The prime minister, Andy Burnham, has promised the biggest change in British politics in 40 years. But Healey's message of continuity and fiscal discipline has raised questions about how far the government will go. Labour MPs are waiting for clarity on how the promised change will be delivered. The budget on 28 October will be the next test, with markets, businesses and households all watching for decisions on tax and spending.