{"id":762022,"date":"2026-09-06T16:18:12","date_gmt":"2026-09-06T16:18:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/762022\/"},"modified":"2026-09-06T16:18:12","modified_gmt":"2026-09-06T16:18:12","slug":"burnham-talks-of-radical-change-but-treasury-mood-music-says-otherwise-heather-stewart","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/762022\/","title":{"rendered":"Burnham talks of radical change, but Treasury mood music says otherwise | Heather Stewart"},"content":{"rendered":"

In John Healey\u2019s bright Treasury office, overlooking St James\u2019s Park, the artwork has not changed since his predecessor, Rachel Reeves, selected a row of Bridget Riley prints in her feminist rehang<\/a>. Judging by the signals emerging from No 11 about the chancellor\u2019s 28 October budget, not much else has changed either.<\/p>\n

Voters listening to Andy Burnham\u2019s promises to overthrow 40 years of neoliberalism<\/a> and vanquish the ghost of Margaret Thatcher would be excused for expecting a radical policy reset. Early signs suggest they may be disappointed.<\/p>\n

Healey will give a speech about growth policy on Monday in his bluff, reassuring style, less than six months on from Reeves\u2019s Mais lecture<\/a>. He is expected to lean heavily on two of her favourite themes: investment and devolution.<\/p>\n

That\u2019s hardly surprising. The UK economy has been held back by decades of underinvestment, and growth has been far too concentrated in London and the south-east.<\/p>\n

But the speech seems likely to be followed up six weeks or so later with a \u201csteady as she (or rather he) goes\u201d budget \u2013 with key decisions, including when the UK will be spending 3% of GDP on defence, deferred.<\/p>\n

When he resigned in June, Healey was adamant that the UK should set a \u201cheadmark date\u201d of 2030 for hitting the 3% target. Treasury sources indicate that he has not changed his mind, yet he has made clear he intends to defer setting out a timeline<\/a> until next year\u2019s spending review.<\/p>\n

That suggests Reeves\u2019s promise of one major fiscal event a year \u2013 the autumn budget \u2013 with a low-key forecast in the spring has been ditched.<\/p>\n

Usually, the budget before a spending review would set out the \u201cenvelope\u201d \u2013 the broad path of future public spending \u2013 and, where necessary, the tax rises to finance it, leaving the details to be hammered out later. But the priorities for 28 October appear to be more immediate. Healey will fill in the gaps in the defence investment plan \u2013 the one he resigned over three months ago.<\/p>\n

There may be also modest further moves towards giving consumers \u201cbreathing space\u201d from higher energy bills in January \u2013 though judging by the mood music<\/a>, it will not be funded, as the Trades Union Congress has urged, by a windfall tax on banks<\/a>.<\/p>\n

Healey told the Financial Times this weekend: \u201cPeople look at the banks largely as big profit-making multinationals, but their fundamental role is too often overlooked. That\u2019s something that\u2019s strong in my mind.\u201d<\/p>\n

There is some logic for projecting what the chancellor has called \u201csteadiness\u201d. He has just returned from the G20 finance ministers\u2019 meeting in Asheville, North Carolina, where volatility in government bond markets was a hot topic.<\/p>\n

Higher interest rates on the Treasury\u2019s debt pile already appear to have wiped out up to half of the \u00a324bn headroom Reeves left against her fiscal rules.<\/p>\n

Up to another \u00a34bn is expected to have evaporated as a result of lower-than-forecast migration, and Burnham\u2019s VAT cut on electricity bills<\/a> will have to be paid for, too.<\/p>\n

It must be tempting to paper over the cracks and hope for the best. But the truth is that it will be all but impossible to raise defence spending to 3% by 2030 and avert the Whitehall funding squeeze pencilled in by Reeves for the back end of the parliament without raising taxes.<\/p>\n

Last year\u2019s spending review was predicated on generous increases in spending for key departments including the NHS and defence for Labour\u2019s first two years in power, followed by a much tougher three years.<\/p>\n

skip past newsletter promotion<\/a>Free newsletter | Every weekday<\/p>\n

Sign up to Business Today<\/p>\n

Get set for the working day \u2013 we’ll point you to all the business news and analysis you need every morning<\/p>\n

\"\"<\/p>\n

That means, as Helen Miller, the director of the Institute for Fiscal Studies told me, \u201cthings are so tight that if the government knows for sure, for example, that they want to increase defence spending to 3% by the end of the parliament, that would mean that to stick within the current plans, you\u2019d have to hold all other departments, including the NHS, flat.\u201d She added with typical understatement: \u201cThat seems pretty unlikely.\u201d<\/p>\n

Miller said: \u201cIf you don\u2019t want to do that, you probably want to find the money now, for the spending review next year. If you really want to get defence to 3%, that is a real challenge \u2026 the budget is the right time to be making preparations that would allow that to be possible.\u201d<\/p>\n

That\u2019s an extremely tough message to announce for a government that claims to be \u201cbringing back hope\u201d.<\/p>\n

One approach would have been to point to the fragility of the global environment \u2013 Iran, Ukraine, Donald Trump\u2019s tariffs \u2013 and ditch some of Labour\u2019s manifesto promises on tax and spend. But Burnham has already rejected that idea.<\/p>\n

There is no doubt more to be done on reforming welfare \u2013 so that more young people are encouraged into work instead of left without help, for example, as Alan Milburn\u2019s forthcoming review is expected to recommend. And certainly, Burnham\u2019s erstwhile friend Lord O\u2019Donnell is right that the triple lock pensions promise should go.<\/p>\n

But that is unlikely to take Healey to the \u00a310bn-ish additional spending he needs to get to 3% of GDP \u2013 let alone the 3.5% Labour has promised by 2035 \u2013 while still convincing the bond markets there is a plan for balancing the books.<\/p>\n

As the Resolution Foundation pointed out this week, the 3.5% target looks impossible to meet without tax rises on middle-earners<\/a> \u2013 who still face less of a burden on average than in many other major economies, but may feel otherwise.<\/p>\n

Burnham\u2019s choice of Healey as chancellor read like an endorsement of 3% defence spending by 2030. Postponing the decision will just unleash another six months of the destabilising speculation so depressingly familiar from Reeves\u2019s tenure in No 11. Healey should bite the bullet at the budget and take the tough decisions now.<\/p>\n","protected":false},"excerpt":{"rendered":"In John Healey\u2019s bright Treasury office, overlooking St James\u2019s Park, the artwork has not changed since his predecessor,…\n","protected":false},"author":2,"featured_media":762023,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[59,57,58,50,56,54,55],"class_list":["post-762022","post","type-post","status-publish","format-standard","has-post-thumbnail","category-united-kingdom","tag-gb","tag-great-britain","tag-greatbritain","tag-news","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/762022","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=762022"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/762022\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/762023"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=762022"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=762022"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=762022"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}