Labour chancellor John Healey was hailed as a safe pair of hands. He must be shaking like a leaf right now.
Chancellor John Healey needs an iron hand to solve the problems he’s got (Image: Getty)
John Healey has to be an improvement on Rachel Reeves. His predecessor drove tax and spending to the stars, and left us on course to borrow £130billion this year. Both her Budgets triggered fury and confusion in equal measure. So far, Healey has kept the lid on speculation, but his Budget is shaping up to be a disaster anyway. That’s not wholly his fault. But he’ll still take the rap.
His first problem is boss Andy Burnham. Our new PM just wants to be loved. And as a Labour leader, the surefire way of doing that is to throw the cash around. Lower bus fares, energy bill support, rough sleeping initiatives, more council houses, a solution for social care… It’s all vote-winning stuff. But it costs money. And as Burnham made clear in Parliament, he won’t lay a finger on our spiralling welfare budget.
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Healey has another problem, also not of his making. Thanks to Donald Trump’s misfiring war in Iran, oil prices are soaring and so is inflation. That’s driving up government borrowing costs and putting the nation’s finances on a knife-edge. In August 2024, weeks after Keir Starmer‘s landslide, 10-year gilt yields slipped below 3.8%. As I started writing this article, they stood at 5.3%. Right now, they’re at 5.4% and still climbing. That’s the highest since 2007. Under Calamity Liz Truss, they peaked at 4.5%, and we know what happened to her.
Higher gilt yields are a disaster because they drive up the cost of servicing our national debt.
The interest already eats up around £1 in every £10 the government spends. Now it will be even more, leaving less for the NHS, military, pensions, roads and education. A rise of 1% in borrowing costs will ultimately cost us around £10billion a year in extra interest, as more debt is refinanced at the higher rate.
It took 300 years for our national debt to hit £1trillion, in 2010. It took 10 years to hit £2trillion, and just six years to hit £3trillion. That’s a terrifying procession. By the end of this Parliament, we could already be at £3.5trillion.
Bond investors look at that. Then they look at Andy Burnham. And realise he’s not the man to make the tough decisions required to cut spending, reduce the deficit or shrink the national debt. So they either demand we pay still more interest, or refuse to lend at all.
Healey inherited fiscal headroom of about £24billion from Rachel Reeves. That’s now shrunk below £10billion. That isn’t his fault either, but he has to find the solution. And it won’t be popular.
And here’s the big problem. Healey is chancellor of a party that only wants to tax more and spend more. And that is the last thing he must do. Taxes are as high as the economy can stand. So is spending. He must target that debt. It’s the only way to stop borrowing costs from running out of control. The IMF is scared stiff and begging us to take action.
But Healey knows Labour will hate him forever if he even tries. The party has descended into fantasy economics, blended with class warfare, just as it did in the 1970s. They wouldn’t listen to the chancellor then. His name was Healey too. Denis Healey. And it all ended in chaos on his watch.
John Healey’s Budget is descending into hell and being a safe pair of hands isn’t enough. He needs to get a grip. Both on the Budget, and the Labour Party. Best of luck.
Andy Burnham savaged as one in five UK working age adults now on benefits
Critics warn it is “unfair to taxpayers footing the bill” and Britain “can’t afford” it.
Andy Burnham is under pressure to get a grip on the benefits bill. (Image: Getty)
One in five working-age Brits is on universal credit, according to new research. Some 7.3 million people aged between 20 and 64 in England and Wales were receiving the benefit as of May 2026, the analysis by the Taxpayers’ Alliance found.
That includes 3.3 million under 40, with 1.3 million in their 20s. The research showed that 54 council areas have a quarter of the working-age population on benefits, which are for people who are jobless or on a low income to help with living costs.
William Yarwood, campaigns director at the TaxPayers’ Alliance, said: “In some places, dependency on universal credit has become endemic.
“Generations are being dumped on benefits: written off and condemned to a life of dependency as ministers make it harder for them to find a job.
“If Andy Burnham was serious about growth in every postcode, he would be making it more affordable to hire young people.”
Councils with the highest proportion of older people on universal credit are concentrated in London, including more than half of those in their 50s and 60s in Tower Hamlets.
Coastal towns such as Thanet, Great Yarmouth and Hartlepool tend to have more younger people on benefits.
Blackpool was the local authority with the largest share of the working-age population claiming universal credit at 35.2%.
Tory shadow work and pensions secretary Helen Whately warned it is “unfair to taxpayers footing the bill” and that Britain “can’t afford” it.
She added: “I’ve been to benefit hotspots like Blackpool, where welfare has become a way of life. This has to stop. A generation of talent is also being wasted when young people sign up for welfare instead of starting work.
“It’s clear Andy Burnham — like his predecessor — does not have the backbone to reform welfare. He said himself he puts social security before national security.”
A Department for Work and Pensions spokesperson said: “Three-quarters of the increase in Universal Credit cases since July 2024 is driven by people moving from legacy benefits – a transition started by the previous Government.
“Many people receiving Universal Credit are already in employment, and our reforms will go further to tackle the perverse incentives that discourage work, and we’re investing £3.5 billion in employment support for disabled people and people with long-term conditions.
“We’re putting work and opportunity at the heart of the system, and the final recommendations from the Timms and Milburn Reviews will lay the foundation for sustainable reform.”