In his first question session since becoming chancellor in July, and one day after his opening big speech on budget goals, John Healey faced a familiar political squeeze. Conservative and Reform UK members pressed him to rule out tax hikes or even lower the overall tax take. He stuck to the script: "No chancellor ahead of a budget will comment on speculation or rule measures out." Healey added that "we've started to see the economy turning the corner," but borrowing is "still too high."
Healey underscored that fiscal discipline is nonnegotiable as market moves raise funding costs. A recent bond selloff is chipping away at the £23.6 billion headroom he currently has under his spending rules. He cited forecasts that borrowing comes in at 3.6% of GDP this year, equal to £116 billion, saying it is at a six-year low and could keep declining if the government sticks with consolidation. The Office for Budget Responsibility projects the figure easing to £63.4 billion in 2029-30, reflecting higher taxes alongside significant reductions in public spending.
When it comes to taxes, Healey pointed back to Labour's initial pair of budgets, crafted when Rachel Reeves served as chancellor, which lifted receipts by £66 billion and put the UK on track for a tax burden moving toward the highest since World War II. He also argued that devolving more power to regions will help unlock growth.
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Healey said the government will "take steps where we can" to reduce living and business costs. As he put it, "This is a country in which interest rates have been cut six times since the election, in which borrowing, still too high, is down to a six-year low, in which growth, still fragile and under pressure, was fastest in the first half of this year in the G7." The through-line here: hold the line on the public finances, try to coax more growth from the regions, and keep options open on tax ahead of next month's budget.
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