Britain’s finance minister John Healey, in his first major speech since taking office seven weeks ago, set out the government’s plans to boost economic growth, attract private investment and reduce costs for businesses ahead of the October 28 budget.
Speaking at a manufacturing hub in central England on Monday, Healey said the government would give city regions greater powers to attract private investment and announced that £150 million of funding already allocated through the British Business Bank would be earmarked for firms in northern England, reported Reuters.
He also reaffirmed the government’s commitment to fiscal discipline and declined to provide details of his tax plans before the budget.
The government has retained the fiscal rules adopted under former prime minister Keir Starmer and former finance minister Rachel Reeves. One of the rules requires day-to-day government spending to be balanced with tax revenues by the end of the decade.
At the same time, the government faces spending demands in areas including social care and defence, while higher borrowing costs have increased the cost of servicing government debt.
Higher oil prices linked to the Iran war have added another concern for policymakers by raising the risk of renewed inflation.
What did Healey announce?
Healey said city regions would receive greater powers to attract private investment as part of the government’s plan to move more economic decision-making away from central government.
The £150 million earmarked through the British Business Bank will provide between £5 million and £15 million to firms in northern England to attract additional private capital, reported Reuters.
Healey also set a target of cutting regulatory costs by 25% before the next election, which is due in 2029.
The government plans to restrict legal challenges to major infrastructure projects, while also examining the cost of building new railways. “The role of government is to act, and I’ll end the consultation culture at the Treasury and beyond,” Healey said.
The measures are aimed at reducing barriers to business investment and speeding up infrastructure development.
Why is fiscal discipline important?
The government has pledged to retain its existing fiscal rules while pursuing higher spending in areas such as social care and defence.
One of the rules requires day-to-day government spending to balance with tax revenues by the end of the decade.
Healey also highlighted the cost of servicing government debt. Higher interest rates have made government borrowing more expensive, increasing the amount the government has to spend on debt interest.
That leaves the government having to account for its existing spending commitments while deciding how much additional revenue it needs to raise.
Healey has not disclosed his tax plans ahead of the October 28 budget. “Staying true to our values means being honest about the need to control government spending,” he said, as reported by Reuters.
Can higher growth improve government finances?
Healey is placing greater emphasis on economic growth and productivity. “While Britain’s growth trajectory has been weak, this must now change,” he said.
He pointed to stronger growth during the first half of the year and signs that productivity had started to improve after a prolonged period of weak performance compared with other advanced economies.
The government wants higher private investment and improved productivity to support stronger economic activity across the country.
But the immediate fiscal position will still depend on government spending, revenues and borrowing costs. Growth can increase tax revenues over time, but the October budget will determine how the government plans to manage its finances in the near term.
What does UK budget have to deal with?
The government’s growth plans come as businesses face their own challenges. Jaguar Land Rover, Britain’s biggest car maker, announced plans on Monday to cut 4,000 jobs worldwide over the next two years.
Healey said the announcement showed why the government needed to develop growth across Britain rather than depend on a small number of major economic centres.
The opposition Conservative Party criticised Healey’s approach. Andrew Griffith, the party’s finance policy chief, described the speech as “continuity Rachel Reeves” and said that “warm words about growth will not make growth a reality”, reported Reuters.
For now, Healey has kept his tax plans private. The budget will set out the government’s decisions on taxation, spending and its wider economic strategy.