John Healey’s first Labour conference speech as Chancellor was an attempt to connect two arguments that are often kept apart: Britain needs greater economic security, and it needs the confidence to build and make things again. Echoing the former Chancellor Gordon Brown, his phrase at the forefront of his agenda is a “new age of industrialisation”. The test at his first Budget is whether that ambition can produce skilled jobs and rising living standards across the country and crucially, drive growth.
This was Healey’s introduction to the British people. A chance for him to set the mood and ambition going int the Budget. He paid tribute to his predecessor, Rachel Reeves, and asked Labour to be confident in its record and its future. He also described his approach as a “politics of hope”. That gave the speech a purpose beyond announcing individual projects, to explain what the government wants growth to look like, and whom it expects to benefit. That vision is important, but what is more important are the policies to deliver that age of industrialisation and economic growth.
The clearest policy announcement was a commitment to three new floating docks at HM Naval Base Clyde. They will support maintenance of the Royal Navy’s current and future nuclear submarines. Programme Euston, as the project is known, will be procured through a UK-only competition. The government also committed to a new marine research vessel to be built by a British shipyard. This is a powerful example of the Chancellors determination to meet defence spending, to re-industrialise Britain and drive growth, but we need a lot more of it.
These choices show how the Chancellor wants the state to use its purchasing power. It is a very Keynesian approach. The docks are needed for national security; the research vessel has a scientific purpose. His wider argument is that commissioning them should also sustain British shipyards, engineering skills and their supply chains. A contract awarded to a yard can create demand for smaller firms far beyond it. But the benefits will depend on delivery: where work is placed, how many apprentices are trained, whether smaller suppliers can compete and whether costs are controlled. The docks are a concrete procurement commitment, though plans for Programme Euston predate today’s speech
A further announcement looked outward. A new UK Export Finance “Flexible Finance” pilot will make up to £5 billion in guarantees available to support commercial loans for selected overseas buyers. The aim is to help British suppliers win business in faster-growing markets, with Brazil, Morocco and Mexico cited as examples. This is a positive step because firms do struggle to secure overseas contracts. A guarantee is a commitment to cover part of a lender’s risk; it is not £5 billion of cash being handed to exporters. The government says the pilot will combine finance with help connecting overseas buyers to UK suppliers. Its success should be judged by the additional British exports and jobs it secures, alongside the risk borne by taxpayers. An active state supporting British exports is a positive move and is a different approach to recent governments.
What ties the shipbuilding and export measures together is a more active view of government and the state in the economy. The Chancellor is saying that public decisions about procurement and finance can help develop productive capacity within the economy. His example of Rotherham’s Advanced Manufacturing Park, on the former Orgreave colliery site, made the argument exceptionally personal: an industrial area need not recreate its old economy to have an industrial future with well paid jobs. That is an appealing proposition for communities that have heard promises of renewal for years all over the country. It also sets a demanding standard that the government now needs to meet across the country, new industry in old industrial areas, backed by finance.
The speech’s focus on hope also reached beyond manufacturing. Healey spoke of work as a route to a better future and argued that social security must remain available to people who cannot work, while helping others move towards employment. In particular, he signalled concern for young people who have not had a first job. There is a serious problem in the UK at present with mass youth unemployment, around 1 million young people unemployed, there is a serious challenge for a government seeking both stronger growth and a sustainable welfare system. The unanswered policy questions are equally serious: what training will be available, which employers will offer opportunities, and what support will help people facing illness or disability? Those answers matter more and the Chancellor will need to answer that in the Budget.
For Labour members, there was a welcome willingness to describe growth as something tangible: a skilled worker, an order won abroad, a supplier gaining regular work, contracts to British firms. But conference speeches are freer than Budgets. The Chancellor has not yet set out a complete account of what these priorities will cost, what other spending will give way, or how quickly families will feel the benefit or, indeed, where the funds will come from to cover the Government’s priorities. This will be his test at the Budget and if the new Labour government is to succeed it will need to be a budget that delivers.
The public finances explain the obvious caution. Official figures show borrowing of £18.3 billion in August, which is £3.5 billion above the Office for Budget Responsibility’s forecast. Borrowing in the financial year to August was £8.1 billion above forecast. That does not decide the Budget’s contents, but it narrows the room for easy promises, especially while energy prices and borrowing costs remain a concern. It is of course entirely possible that energy costs will rise even further as the conditions in the strait of Hormuz fail to improve and the war in Ukraine continues to rage. These cost implications will hit people in the next few weeks and the Chancellor will need to consider urgently how support to businesses and consumers can be met.
So what have we learnt ahead of 28 October? The Chancellor wants the Budget to be read through the themes of British industry, exports, skilled employment and growth reaching more places. His speech to the Labour conference supplied examples of that approach and a confident political language for it. It did not settle the major tax and spending decisions still to come. One would not expect the Chancellor to provide that information to a party conference, but it will need to be provided to Parliament. That is where the speech will meet its real test. A politics of hope must be able to show how an apprentice reaches a skilled job, how a small firm wins part of a major contract, and how growth makes life more secure for households. Liverpool offered a direction. The Budget must show the route and how Britain will pay for it and create a framework for business to thrive.
