What does Labour’s ‘hope’ agenda mean for the Budget?

The word “hope” featured 21 times in Chancellor John Healey’s speech to the Labour Party conference in Liverpool, said Tom Peck in The Times. “Hope Again” was on the stage backdrop (twice), on a lectern, and hanging from the ceiling in “7ft-high letters”. Hope was certainly “in the air” but maybe it was mainly Labour MPs “hoping, specifically, that they will not all be out of a job again in a couple of years’ time”.

During his hour-long speech, Healey recommitted the government to the fiscal rules set out in 2024, and then promised “a new age of industrialisation”, and more jobs for young people. But, with the Budget less than a month away, he gave few indications of when, and how, these promises will be realised.

What did the commentators say?

It would have been easy for Healey to “slip from hope into hype”, said The Independent’s editorial board. Instead he exercised caution. Despite the “spring in their step”, conference attendees were “under no illusion that the room was squeezed by the elephants in it”. Compared to the era of Tony Blair and Gordon Brown, the money “is simply not there now”, the chancellor said, but he made it clear he’s “playing hardball with what he’s been given”: focusing on buying British, addressing spiralling welfare costs and encouraging growth. None of that can “happen immediately, but it’s a start.”

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“Labour is caught between sunny aspiration and cold reality,” said Ian Dunt in The i Paper. This is not Healey’s fault: the scene was set by “austerity, Brexit, Covid, the war in Ukraine and the ineptitude of Liz Truss”. Healey “did a damn good job of sounding convincingly optimistic”. But that “doesn’t hide the brutality of the underlying conditions he faces or how unlikely it is that he can come through them unscathed”.

“Healey is in the uncomfortable position of a man who has just stepped into a lift in which someone else has recently farted,” said Will Dunn in The New Statesman. The air is thick with the “noxious” emissions of Donald Trump and his “cack-handed” war in Iran. That alone could cost the UK £28.5 billion in lost economic growth, and even that’s “assuming the disruption of energy supplies doesn’t get materially worse”. Then there’s borrowing costs – another thing over which Healey had “essentially no control” – reaching their highest level since 1998. But, if Healey does not support his hopeful agenda with action, the “acrid wafts of stagnation and inflation emanating from the UK economy will be assumed to be his fault”.

“With a Budget just weeks away, few policy announcements were expected but this was thin gruel indeed,” said The Telegraph’s editorial board. Healey called for increased growth, “yet everything this government has done has made life more difficult for businesses and entrepreneurs”. He’s right to tell Labour activists that the money they want for health and welfare can only come from increased growth but “few in his party are listening”.

It was what Healey “left unsaid” that is “far more important”, said The Guardian’s editorial board. He alluded to reducing the benefits bill but revealed no clear plan, and he talked of “revitalising industry” with “little explanation” of how this would create good jobs “across the wider economy”. With an “energy shock” on the horizon, the size of the fiscal headroom he is willing to “tolerate” will probably be the deciding factor between additional “taxing to fund a modest energy rescue package, or borrowing for a larger one”.

What next?

This was the “easy bit” for Healey, said Ben Zaranko in The Observer. What remains to be seen is whether he will use the coming Budget to announce “far-reaching reforms” or delay “the biggest and toughest decisions” until later. For now, he is betting that his “hopeful tone can survive rising borrowing costs, disruption to energy supplies, and all manner of painful financial trade-offs. We shall see on 28 October.”