John Healey will attempt to cool nerves about Budget tax hikes today as he vows an ‘industrialisation’ drive in his Labour conference speech.
The Chancellor is making his first address to the party gathering in Liverpool amid mounting alarm at the state of the public finances.
Surging inflation from the Middle East crisis and sluggish growth is thought to have slashed the Government’s ‘headroom’ against fiscal rules.
Ironically, lower immigration forecasts from the Treasury’s OBR watchdog could also deal a blow to Mr Healey’s figures – potentially as much as £7billion – by reducing expected revenues.
Meanwhile Andy Burnham has made a series of big spending commitments, including a pledge yesterday to introduce an NHS-style social care service that could cost £18billion a year.
There is speculation that could be partly funded by downgrading the state pension ‘triple lock’ – which sees the payments rise by the highest out of inflation, earnings and 2.5 per cent.
Capital gains tax is among the levies floated for the Chancellor to bring in more cash and reassure markets that the Government will balance its books.
Chancellor John Healey is making his first address to the party gathering in Liverpool amid mounting alarm at the state of the public finances
Andy Burnham has made a series of big spending commitments, including a pledge yesterday to introduce an NHS-style social care service that could cost £18billion a year
The backdrop for Mr Healey is looking increasingly bleak with renewed Iran war tensions seeing Brent Crude hit $108 a barrel overnight.
The pain for Brits could be about to get worse as Donald Trump has said he is ‘seriously’ looking at a US diesel exports embargo.
That would curb prices for Americans, but push them up dramatically in the rest of the world.
Mr Healey will try to strike an upbeat note in his speech, saying Britain can enter a ‘new age of industrialisation’.
The Chancellor is expected to argue that the UK cannot return to the coal mines of its past.
Describing his politics as ‘shaped by the industrial heartlands of South Yorkshire’, he is expected to point to the example of the former Orgreave mine, now the site of Rotherham’s Advanced Manufacturing Park.
He will say: ‘Our coal mines are not coming back.
‘But this is how Britain’s industrial past is being remade now for the modern world.
‘This is the new age of industrialisation. A new confidence in Britain.’
Mr Healey, who quit as Keir Starmer’s defence secretary in a row over funding for the military, is also expected to confirm more support for Britain’s shipbuilding industry, with investment in the Royal Navy’s Scottish submarine base at its heart.
He will confirm that three new floating docks at HM Naval Base Clyde, Faslane, will be procured through a UK-only competition.
Known as Programme Euston, plans for the new docks were first set out in 2023 and are expected to upgrade Faslane’s facilities for the next generation of British submarines.
The Ministry of Defence has previously said they are expected to come into service in the early 2030s, and the docks form part of a wider £15 billion upgrade programme for the Royal Navy’s shipyards.
The announcement follows a commitment by Louise Haigh, the First Secretary of State, who said on Sunday the Government would commission a new marine research vessel as part of plans for a ‘new era of reindustrialisation’.
Mr Healey is expected to announce £115 million in funding for the ship, which is also set to come into service in the early 2030s.
Ahead of his speech, he said: ‘By backing British shipyards, we are not only boosting national security but also securing resilience in the industries that will drive growth today while building the capabilities the country needs for the future.’
Plans for a new age of industrialisation echo Prime Minister Andy Burnham’s pledge to prioritise ‘reindustrialisation’ as a way of boosting Britain’s sluggish growth.
But the Chancellor’s conference speech coincides with more gloomy economic news from the Confederation of British Industry (CBI).
In a survey published on Monday, the CBI found private sector firms saw falling activity in the three months up to September, and expect activity to continue to decline for the rest of the year.
Much of that decline was driven by retail and services, with manufacturing declining more moderately.
CBI deputy chief economist Alpesh Paleja said rising energy and employment costs combined with weak demand were continuing to put pressure on profit margins.
He added: ‘Uncertainty ahead of next month’s Budget is also holding back activity in some sectors.
‘Against the backdrop of renewed fiscal pressures, the Budget must draw a clear red line under any more rises in the cost of hiring, investing and doing business.’
The pain for Brits could be about to get worse as Donald Trump has said he is ‘seriously’ looking at a US diesel exports embargo
Shadow chancellor Andrew Griffith said: ‘These are more reheated announcements without clarity on where the money is coming from. Additional docks were announced months ago in the defence investment plan, which still has a £4.7 billion black hole.
‘John Healey resigned warning that Labour’s failure to fund defence was making Britain unsafe. Now that he is Chancellor, he still won’t fund the 3% target he walked out over.
‘Labour are running scared of making the tough choices needed to pay for Britain’s defence. All they can offer is reannounced docks and more hot air from Healey. Only the Conservatives will cut the welfare bill to fund defence.’
