Healey to deliver Budget on October 28

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

John Healey will deliver his first Budget on October 28, giving the new chancellor three months to find ways to fund the government’s ambitions to boost investment and deliver “growth in every postcode”.

The scheduled date is almost a month earlier than Rachel Reeves’ autumn Budget last year, which was held on November 26, preceded by weeks of speculation and leaks.

In a letter to the Treasury select committee on Friday confirming the date, Healey promised to stick to Labour’s fiscal rules while delivering a Budget to “move power and money out of Westminster”, a reference to Prime Minister Andy Burnham’s push for fiscal devolution.

The announcement marks the start of the to-and-fro process of forecast preparation and policy scrutiny between the Treasury and the Office for Budget Responsibility, the fiscal watchdog whose projections will show whether the government is on course to hit or miss its fiscal targets.

Healey will be preparing his first fiscal statement against a challenging backdrop, as higher inflation caused by the Iran war pushes up the government’s borrowing costs, squeezes departmental budgets and adds urgency to Burnham’s push to help citizens with the cost of living. 

Ten-year benchmark gilt yields remain above 5 per cent, near the post-2008 high set earlier in the US-Iran war, threatening the government’s fiscal buffer.

Healey said in a video posted on X that the Budget would be “built on fiscal discipline”.

Analysts say the combination of higher borrowing costs, a weaker outlook for economic growth and new spending commitments could mean the chancellor’s headroom against his key fiscal rule to balance the current budget is set to be less than half the £23.6bn forecast in March.

Since his appointment as prime minister this month, Burnham has announced a series of spending commitments, including a £2 cap on bus fares, a 5 per cent cut in VAT on energy bills and a reduction in business rates for pubs.

These measures had “provided a little breathing space for people and businesses who feel squeezed and lacking in hope”, Healey wrote in his letter.

Sir Mel Stride, the Conservative shadow chancellor, has called for Healey to focus on “controlling public spending, especially welfare”.

Burnham told the BBC this week that the UK had to “get really serious as a country” at getting the welfare bill down, ahead of outlining measures to get more young people into work.

Defence spending poses another concern for Healey, who served as defence secretary under Sir Keir Starmer before resigning in a row over funding.

The announcement of the Budget date comes the day after the government announced a radical shift in Treasury policy, pledging to give a share of income tax receipts to English mayors from 2028.