On 7th September, Chancellor of the Exchequer, John Healey, delivered his first major speech ahead of the Budget, taking place on Wednesday 28th October.
Mr Healey began his speech speaking positively about the work of his predecessor Rachel Reeves and former Prime Minister Keir Starmer in increasing economic growth, stability and international cooperation.
His speech reconfirmed his support for Ms Reeves fiscal rules, working with businesses, and the Labour manifesto pledge not to increase income tax, VAT, and employees related National Insurance contributions. He also recommitted to the government’s commitment to reduce the regulatory burden for businesses by 25% by the end of this Parliament and end “consultation culture” in government.
Mr Healey set out that growth will be his and the Prime Minister’s main mission and top priority and to deliver “good growth” in every postcode. His speech also recognised the role of the financial services sector in increasing investment in infrastructure and economic growth.
Main key headline announcements from the speech include expanding the National Wealth Fund’s partnerships with combined authorities, including South Yorkshire (where we’ll be holding our next roundtable on annuity investment and the £100 billion commitment), North East, and Liverpool Region.
The upcoming Budget will set out a fiscal devolution roadmap, granting combined and local authorities’ greater powers over tax and spending locally and the 10 Year Plan.
Mr Healey avoided answering questions about potential tax rises elsewhere. His speech was slightly overshadowed by Jaguar Land Rover’s announcement of 4,000 job cuts.
Please see below a summary of further key announcements made.
Growth and devolution
- Fundamental shift to put power with local leaders to boost investment, derisk public investment to match local needs and deliver local industrial strategies.
- Roadmap for fiscal devolution to be set out at the Budget with income tax raising powers for combined authorities to come into force from 2028.
- £150 million funding for the British Business Bank to support businesses across the North and the Cambridge-Peterborough growth corridor.
- A new Northern 500 partnership bringing together mid-sized enterprises together under leadership of Great North mayors. New National Wealth Fund partnerships with combined authorities including South Yorkshire, North East, and Cardiff City Region.
Public investment
- Changes to the Treasury Green Book to reduce discount rate to skew investment towards projects with long-term potential.
- Increased partnership with business to unlock investment in infrastructure projects.
- Greater backing for public sector investment and action to limit litigation against key infrastructure projects.
Role of the state
- Greater public control of key utilities and services, such as water.
- Active state needed for regulation to deliver quicker decisions which can delivery long-term investment and industrial strategies, with oversight of the essentials for business success.
- Strategic direction to be set by No.10 and No.10 North.
- Partnerships with businesses and trade unions to boost productivity, deliver more investment, more innovation and more jobs.
Regulation
- Recommitted to cutting business regulation by 25% by the end of this Parliament.
- Treasury will work with BIST and convene British regulators ahead of discussions on the Spending Review to remove barriers that are holding up investment and growth.
- End “consultation culture” at the Treasury, supported by new guidance by the Attorney General that legal risk is not the be all and end all of Ministerial decisions.
Innovation
- Government will seek to double the number of unicorns in the UK and identify next cluster.
- More focus on sandboxes and giving businesses space to test new technologies.
Employment
- Alan Milburn review on youth unemployment to be published this Autumn.