It was trailed as a “landmark” UK budget, historic, one that would put down a marker for Andy Burnham’s government, setting it on a noticeably different course from its predecessor.
In the end, John Healey’s first address as Chancellor was anything but. Well before the end, the sense of it being a damp squib set in.
Partly as well, it was Mr Healey’s soft, measured tone. This is not a keeper of the nation’s financial purse who is given to wild bursts of energy and excitement. He is as steady as she goes, which is precisely how his speech went down.
There was some help with household energy bills, an increase in the minimum wage, rise in the state pension, an extra, temporary and smaller-than-expected tax on bank profits, business rate relief for small businesses, tweaks to boost social and affordable housing, tax-raising powers for regional mayors. And that was about all. As Tory leader Kemi Badenoch summarised, most people in the country listening would be thinking to themselves: “Is that it?”
Her attack focused on what was left out, or as she said, “redacted”, on what Labour chose not to do, in particular cutting spending and welfare benefits. Given Mr Burnham’s credentials, that was never likely to happen.
There was no mention of a “mansion” tax or steps aimed directly at the wealthiest. The City, which was bracing for the worst, heaved a sigh of relief. UK stocks and gilts rose, a rare occurrence for a Labour delivery, the consequence as well of Healey stressing that everything he was doing was fully-funded.
The banks got off lightly. Yes, they must pay an extra 3 per cent on top of existing taxes for the next 15 months on their profits, but again, they were preparing to be charged more. Likewise, bank shares climbed on the news.
But the lack of fizz, the absence of anything radical, was also the point. It made too, for a budget that was in its own way remarkable. History-making may be a stretch, but by doing very little, Mr Healey was signalling a lot. Sure, he did not take this administration careering down some left-wing, free-spending path. Neither did he hit business, as the previous incumbent Rachel Reeves did, in her first budget.
The shock she delivered of a sharp rise in employers’ national insurance resonates still. The fact Ms Reeves accompanied that blow with moves against farmers, non-doms and fee-paying schools compounded the impression that under Labour the wealthy were not welcome or at least they were, provided they paid for everyone else.
That led to uproar from the private sector, exacerbated by the belief they had been let down, that in the run-up to the general election, Ms Reeves and her boss, Keir Starmer, had gone out of their way to woo enterprise and the City, and now this. It prompted too, a highly damaging stream of defections of rich folks as they relocated to more tax-friendly surroundings.
It’s doubtful that anyone will be departing the UK’s shores because of Mr Healey’s statement. They might leave in spite of it, but compared to what occurred after Ms Reeves’s reforms, that is a significant improvement.
That is the point. Mr Healey and Mr Burnham were keen to repair the harm caused by Ms Reeves. They were especially anxious to assuage international investors that their UK wanted them.
At the same time, they did not wish to go mad and direct dollops of cash towards the poorer sections of society. The reality was that even if they desired to, they couldn’t – not without breaking the fiscal rule of taxation matching spending.
So, the phrase trotted out time and again by Mr Healey was “breathing-space”. He was benefitting ordinary households and the smallest firms but only by giving them a breathing-space to counteract spiking energy bills caused by the Iran conflict and increased cost-of-living.
That was all they were getting. Breathing-space, nothing else. It was a gap between Mr Healey and Ms Reeves, and between him and Liz Truss. Her “mini-budget” resonates to this day overseas, the shock that she was able so casually to flick a switch and send Britain along an unfunded, free-wheeling route.
Mr Healey’s message was this UK is safe, the economy is in careful hands, his approach will be caution first. It was directed as much abroad as it was domestically. He wants people and business at home and around the world to believe in him and Mr Burnham, to commit and to spend.
That was why in its own way his was a remarkable budget. This was a Labour chancellor presenting an un-Labour like catalogue of economic changes. There were some aspects that the Tories might even have implemented themselves had they, not Labour, been in charge, considering the current global backdrop. The rise in the banking surcharge may be 3 per cent, giving a total extra burden of 6 per cent, but it remains 2 per cent less than the amount introduced by a Tory regime in 2016.
The oddity that leaves Labour, Westminster and everyone else, among them foreign diplomats and leaders, scratching their heads is that this small budget, and it was most definably so, was in stark contrast to the vision mapped out by Mr Burnham in his recent party conference set-piece.
Then, he spoke grandly and ambitiously of creating a “National Care Service”, tackling the “neets” – not in education, employment or training – crisis among the young, transforming public housing, improving infrastructure, boosting defence. On he went, describing a new-look, all singing and dancing UK, roaring ahead economically and socially.
It was heady stuff. Little of it had any relevance to the now, to today. Mr Burnham was setting how he would like the UK to become, in the future, after 10 years of his premiership.
Charged with dealing with the current, of negotiating the present, is Mr Healey. He’s doing so with one eye firmly on the distant. This, make no mistake, was an uncontroversial budget, designed to cause little upset.
It was drawn up with one object in mind, to win over as many voters as possible within the prevailing circumstances. He could not embark on a tax giveaway pre-election bonanza but he would do what he could, while at the same time, reassuring and soothing nerves. It was then, just as much an election-minded speech as any eve-of-polling splurging.
In order to achieve Mr Burnham’s wishlist, Labour has to win the next election. Mr Healey’s responsible, steadying steering makes a ballot victory more likely. If he can repeat the formula of not rocking the boat, Mr Burnham has every chance of securing his aim. He made a virtue of being ordinary, for what was not said rather than included, not even beginning to put in place the building blocks of the Mr Burnham edifice.
That will come later, possibly starting next year, with the spending review and firm decisions on defence expenditure, social care, welfare, status of the public utilities and pensions. Mr Healey was buying himself and his colleagues time. To be fair, this budget landed barely 100 days into the Burnham administration. Taking into account the amount of time and effort devoted to bedding down the many ministerial and staffing changes and dealing with the party conference, not to mention the myriad geopolitical issues, they could not have prepared anything major.
This was definitely minor and presented in a deliberately sotto voce, unruffled manner. Mr Healey was brisk and business-like. It was easy to see why, when he was defence secretary, the generals and military suppliers were so applauding. Business leaders too, having met him, are warm in their praise. They were similarly inclined towards Ms Reeves but at the first opportunity, she blew it. The test was whether Mr Healey would follow suit and he didn’t.
The bigger examination is how he and the UK proceed in the year ahead. The economy has not been performing badly and has stood up well to the Iran war. The UK is nosing ahead of its EU counterparts, France and Germany, which languish. It would have been foolhardy for Mr Healey to risk undoing that admittedly slight progress but progress nonetheless, and again he didn’t.
Taxes are at post-1945 highs, borrowing is massive. No one should be under any illusion the UK has turned a corner or will do so any time soon. Nor though is it veering off course. Mr Healey has shown himself to possess a firm hand; he will need all the strength he can muster for the storms ahead and somehow setting up Labour and his demanding chief for election victory. It was a start, but only the start.
