Chancellor John Healey has said the government is spending £1 in every £10 on debt interest, arguing that the bill is now larger than spending on Defence, the Home Office and Justice combined as he set out a new drive for economic growth.
Speaking at the Manufacturing Technology Centre today, Healey placed fiscal discipline alongside investment, innovation and devolution at the centre of his economic programme, saying Britain needed stronger growth to reduce the pressure created by high borrowing and debt costs.
Healey said: “There’s nothing progressive about the government spending £1 in every £10 on debt interest.
“If debt interest were a government department, it would be the second biggest in Whitehall, after Health – bigger than Defence, the Home Office and Justice put together.”
He said controlling government spending remained necessary despite the administration’s wider ambitions, adding: “That’s why staying true to our values means being honest about the need to control government spending.”
Healey said fiscal discipline had been his first priority on entering the Treasury and that he and the Prime Minister were committed to meeting the government’s fiscal rules at the upcoming Budget.
He said: “The Prime Minister and I are in lockstep in our commitment to meeting the fiscal rules at the upcoming Budget:
“To balancing the books, with a buffer to protect against uncertainty,
“To controlling borrowing to bear down on inflation,
“And reducing long term pressures on our public finances.”
The Chancellor also set growth as the central objective of his tenure, describing the UK as strong in areas including defence technology, life sciences, financial services and advanced manufacturing.
Healey said: “And while Britains growth trajectory has been weak this now must change. This is essential, it is possible, it is central to my purpose as Chancellor.”
He added: “I dedicate myself to this mission as Chancellor, to make Great Britain, Growth Britain again – with more investment, more innovation and more jobs.”
Among the measures announced was a planned roadmap to fiscal devolution at the Budget, including greater retention of business rates by local authorities and a share of local income tax for mayoral strategic authorities from 2028.
Healey said: “That is why at the Budget I will set out a roadmap to fiscal devolution – a permanent transfer of power and resources from Whitehall to our regions,
“With greater business rates retention for local councils and strategic authorities…
“…grants from central government replaced by a share of local income tax for every Mayoral Strategic Authority beginning in 2028.”
He also announced £150 million through the British Business Bank for scale-up companies in the North and said South Yorkshire, Liverpool City Region, North-East England and Cardiff Capital Region would become strategic partners of the National Wealth Fund.
Changes to government investment appraisal are also planned, with the Treasury Green Book discount rate due to fall from 3.5 per cent to 3 per cent. Healey said the change would give greater weight to projects with longer-term economic potential. The Chancellor also promised to reduce the regulatory burden on business by 25 per cent by the end of Parliament and extend reforms to judicial review beyond energy infrastructure.
He said: “And I can today announce that we will extend our reforms of judicial review from energy to all major infrastructure so that vexatious legislation and vexatious litigation cannot block economic growth.”
Healey added: “So I will end the consultation culture at the Treasury and beyond – supported by new guidance from the Attorney General today that legal risk is not the be-all and end-all of ministerial decisions.”
Defence also featured in his plans for growing British technology companies. Healey set an ambition to double the number of UK unicorn companies and said government could act as an early customer to help promising firms scale.
He said: “Together, with Johnny Reynolds I will identify the next wave of unicorns, with the state as an early first customer to ensure they have the necessary backing to scale. I did this at Defence, I announced this for Sovereign AI last week, we’re doing it with today’s scale-up fund for the North.”
Healey also linked industrial capacity with national security, arguing that the UK had become increasingly dependent on external sources in strategically important areas. He said the country had been “deindustrialised, as the cost to make anything, to build anything here soared, and our dependence on unreliable sources grew including in areas critical to our national security and sovereignty.”
On artificial intelligence, the Chancellor said the government wanted to exploit its economic potential while retaining oversight of risks to national and business security, pointing to the AI Security Institute and AI Economics Institute as part of that approach.
Healey closed by saying: “We will not deliver all this tomorrow. But we’re delivering the start of it today.”
So no extra funding for defence then.
I for one was full of Mr Healey’s praises when he resigned as Minster of Defence saying that he must be a man of principle, what a fool I was to think there are such people in politics today.
Yes the UK debt is high but there is plenty of ways the government could be saving money and one would be cutting the numerous amounts of middle management there is running just about every governmental department this and the previous governments have seen fit to put in place now he (Mr Healey) is talking of introducing more middle management not less. I just wonder is there any one in politics today that has the vision and the drive to bring the country back from the abyss.
Getting rid of a few middle managers in Whitehall isn’t giing to make any difference to the economy or public spending.
Few? you need Milei chainsaw…
They actually did that to the NHS and department of health.. 20,000 management and administrative posts cut.
Mate they have massively done this this, the NHS has cut about 20,000 management and administrative posts from the DOH, NHS and integrated health boards.. the only government to have done such a radical thing since I started as a nurse 30 years ago…
They have done it under the radar.. because cutting 20,000 jobs is not always seen as positive..
You reap what you sow…
Can’t say I take any chancellor seriously unless they’re talking about raising taxes on corporations and wealth in line with other developed countries.
“I’ve tried nothing and I’m all out of ideas”
All labour MPs lie it’s part of labour DNA blame others .
If this country got serious about defence thus increasing the deterrence perhaps the market might settle down a little.
The Laffer Curve:
‘Rachel Reeves, in her first Budget, raised the standard rate of CGT from 10% to 18% and the higher rate from 20% to 24% while also increasing the rate paid by entrepreneurs when they sell their business. The left of the Labour party is pushing for an even bigger increase, pressing for CGT rates to be equalised with income tax, which would take the top rate to 45%.
The results are now clear. According to the latest update from HMRC, in 2025 the amount collected from the tax actually fell by 8%, or by £1.3billion’
Additionally, losing the idiotic idea of net zero would free up tax revenue for defence, reduce electricity prices to encourage growth and encourage North Sea oil and gas production, increasing tax revenues.
Not easy but very simple.
In the end most of what the government can do is playing around the edges because nobody wants to face the truth elephant in the room which is killing economy and is just getting worse..
Unless we are willing to have a serious conversation about this problem the nation is fucked..
That problem is life expectancy.. the simple truth is our economic and social social care systems were built on the assumption that the median life expectancy was about 65…the simple truth was when we set up the NHS, pensions and social care half the population died by the time they had hit 65.. so what did this mean and only 10% of the population was over 65.
So in the 1950s
1) The NHS budget was about 4% of GDP and almost that entire budget was on looking after the health of working age people and children as essential the care of that over 65 population was not about extending life, but providing care.
2) the pension budget for that 10% population was about 2% of GDP..
Essentially we spent about 3% or less caring for the over sixties..
Now even when you got to the 1970s- 1980s the figures had not changed that much.. life expectancy had crawled up to 72 and the population over 65 was 13.5 percent or so..
But move to 2025 and we have shifted life expectancy to 83 and 20% of the population are over 65.. being kept alive in those extra 18 years or so by massive levels of health interventions. This means..
1) from almost all NHS spending being focused on the working age people and children now almost 50% of costs are directly attributed to healthcare for the over 65s so that’s about 5.5% of GDP for that groups healthcare up from less than 1% in 1950.. those extra 18 years of like cost vast amounts of money ( the elderly with multiple long term conditions can cost 20k average a year vs about 1.5k for a working age person).
1) pensions are now 6% of GDP from that 2 %
That’s almost 12% of our GDP on state pensions and state health costs for the over 65s.. that’s before bus passes, social care, winter fuel ect..
It’s gets worse because by 2070 we are looking at 27%of the population being over 65 with the state pension bill looking at 9% of GDP and healthcare for the over 65s at 10% of GDP.. so with massive increases in care we are looking at a massive 25% of GDP being used for state pension, NHS and social care for the over 65s
And we cannot really shift the state pension up more age wises because although we live far longer are healthily life years have hardly shifted.. we are not a very healthy population.
This is the the question.. everything else is just window dressing..