Healey's play-safe budget raises early election question for Burnham
Guardian columnist Larry Elliott says John Healey's almost 100 budget measures buy the government time but lack strategy, as City pundits ask whether Andy Burnham wants his own mandate.
At a glance
- Guardian columnist Larry Elliott says John Healey's first budget of almost 100 measures lacked a clear strategy.
- Pundits, especially in the City, read the play-safe budget as a sign PM Andy Burnham may be preparing an early election.
- The OBR estimates living standards will fall next year and be only 2% above pre-pandemic levels by 2030-31.
UK chancellor John Healey's first budget set out almost 100 measures that buy the government time but show little sign of a coherent strategy, according to a Guardian column by Larry Elliott. The piece says the package has also fuelled speculation, particularly in the City, that prime minister Andy Burnham is preparing the ground for an early general election.
A ‘play-safe’ package
Elliott writes that Healey took what he inherited from Rachel Reeves and made only minor tweaks, describing the result as continuity with Keir Starmer rather than a break with the past. In his account, the budget is stage one of a three-part process, to be followed by a 10-year plan and next year's spending review. The government must use that time wisely, he argues, or slick presentation will stop impressing.
The chancellor played it safe for a reason, the column says. Energy prices have risen sharply since the US and Israel launched a war against Iran in late February, pushing up inflation and with it interest rates on mortgages, business loans and government borrowing. Optimism about a quick end to the conflict is fading, and the prospect of it intensifying after the US midterm elections has driven crude oil and gas prices higher again. The modest help the budget offers with energy bills will be dwarfed by expected price rises in January, Elliott predicts.
He adds that Britain remains dependent on bond markets, with governments wary of a repeat of the sell-off that followed Liz Truss's 2022 mini-budget. Even so, he credits Healey with borrowing £20bn more to invest in infrastructure, using flexibility in the fiscal rules set by Reeves – a move that did not appear to unsettle the markets.
On the wider economy, Elliott notes resilience in financial and business sectors, with growth in artificial intelligence particularly striking, while consumer-facing areas such as hospitality and housing have been much weaker. Consumer confidence recorded its sharpest monthly fall since the 2016 Brexit referendum. Taxes as a share of national income are on course to reach their highest ever level next year, and the Office for Budget Responsibility estimates living standards will fall next year and be only 2% above pre-pandemic levels by 2030-31.
Early election talk
Pundits see the budget's lack of substance not as dithering but as a sign Burnham wants his own mandate before big decisions on social care, relations with the EU and defence. He is enjoying a honeymoon period, Labour leads the polls, the right lacks a single challenger while the Conservatives and Reform compete, and the Greens and Liberal Democrats have their own problems.
Against that, an early election would be a considerable risk for a party with a commanding majority and two and a half years of the current parliament left to run. The OBR expects slower growth in 2027 than 2026, the Bank of England is expected to raise interest rates next week, and Burnham is arguably at the peak of his popularity. Burnham has repeatedly said he has no plans to go to the country early. If that holds, Elliott concludes, he will need to get a move on, because now is as good as it will get.
Source: The Guardian Business.
Questions and answers
- Is Andy Burnham planning an early general election?
- Burnham has repeatedly said he has no plans to go to the country early. Some City pundits, however, read the lack of big decisions in the budget as preparation for a snap poll, according to the Guardian column.
- What did John Healey's first budget contain?
- The chancellor set out almost 100 measures, including modest help with energy bills and £20bn of extra borrowing for infrastructure, within fiscal rules inherited from Rachel Reeves.
- Why are energy prices and interest rates rising?
- The Guardian column links the increases to the war between the US and Israel and Iran since late February, which has pushed up inflation, crude oil and gas prices.
