The new chancellor needs to be very different from the last one. The signs aren’t good.
John Healey sounds a little too like Rachel Reeves for comfort (Image: Getty)
John Healey does not want to be the next Rachel Reeves. Nobody wants that. Taxpayers and the country can’t afford another walking disaster in Number 11. Unfortunately, I’m not sure he’s going the right way about it. Throughout this morning’s speech, Healey kept inadvertantly raising memories of Reeves’ woeful tenure. When he talked about “fiscal discipline”, I shuddered. She did that too, while simultaneously piling taxes on the economy and borrowing up to £130billion a year.
Healey talked at length about youth unemployment, without acknowledging that it’s soared thanks to Reeves’s crazy decision to slap a £25billion tax on job creation. This hit youngest people hardest. Two big minimum wage hikes and Angela Rayner’s union-friendly Employment Rights Act have made employers reluctant to hire youngsters even if they can afford it. Is Healey going to reverse her jobs tax? Fat chance. Instead, we get blether.
Healey did talk of cutting business red tape by 25%. Politicians often talk about cutting red tape. It never happens. Reeves and Rayner just spent two years strangling business with as much as they could. So what will Healey cut? He didn’t say. If history is any guide, business will by strangled by even more rules and regulations, rather than less.
Earlier, UK borrowing costs climbed again, with 10-year gilt yields hitting 5.16% on renewed Iran war fears. Healey did reference this, noting that UK borrowing costs are at their highest for years. But, like Reeves, he chose to pin it all on former Tory leader Liz Truss.
Healey says Britain is paying a “Truss penalty” on its borrowing costs. But 10-year gilt yields were 4.6% when Labour took power. Last week, they rocketed to almost 5.2%. Was that down to Liz Truss? She was only in power 49 days. The bond market doesn’t care about Truss. It cares about what Labour is doing today.
In another Reeves echo, Healey noted that roughly £1 in every £10 of government spending goes on debt interest. That’s money that could be spent on public services. Reeves used to mention this, to remind left-wing Labour MPs that Britain cannot just spend as they like. She was right about the problem. Then made it worse. As ever.
Investors are demanding a higher return to lend to the British Government because they are worried about inflation, debt, borrowing and the credibility of new PM Andy Burnham.
Healey knows this. He was sending a message to the bond market today that he cares about fiscal discipline. But Reeves did that too. She repeatedly said she was “laser focused” on stability and wouldn’t play fast and loose with the economy. Healey used different words, but the message was the same.
Will he get a different result? He’d better. Britain desperately needs faster growth because without it, living standards stagnate, tax receipts disappoint and the Government becomes ever more dependent on borrowing. But if Healey hikes taxes in October, more growth will die.
Maybe Healey really will be different. We won’t know until October 28. But if his Budget hammers us with another round of tax rises, the result will be exactly the same as it was under Reeves.
While he spoke Jaguar Land Rover has announced plans to cut around 4,000 jobs. None of Healey’s fine words will do anything about that. At this rate, he could crash and burn even more dramatically than his predecessor.