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 .