Do You Know? Chancellor John Healey said the UK government will keep its main fiscal rule at the centre of next month’s budget, while pursuing measures intended to support jobs, growth and industrial investment.
What happened
Speaking at the Labour party conference in Liverpool on 28 September 2026, Healey said day-to-day government spending must be matched by revenues by 2030. He described fiscal discipline as essential against a challenging global backdrop and said the government would need to make difficult choices in the budget scheduled for 28 October.
Healey also set out measures focused on employment and regional growth. These included a new local apprenticeship service led by mayors, intended to deliver “thousands more apprenticeships” for young people across the country.
Welfare reform and employment
The chancellor gave his clearest indication yet that Labour plans to overhaul the welfare system. He said reform would be designed to encourage employment and curb what the source describes as a rising benefits bill.
“Our social security system must always be there for those who can never work. But for everyone else, benefits should be a bridge to work,” Healey said.
Ministers are awaiting recommendations from two welfare reviews expected this autumn: one on young people led by Alan Milburn and another on a key disability benefit conducted by the Timms panel. The source says the reviews are expected to consider changes to welfare alongside improved access to job support, education and training.
Apprenticeships and industrial policy
The local apprenticeship service is intended to give mayors a larger role in supporting young people into work. The Confederation of British Industry’s chief executive, Rain Newton-Smith, said the speech sent positive signals but that the budget would need to turn them into action to encourage business investment, youth hiring and company growth in the UK.
Healey also said £6bn from the government’s defence investment plan would be allocated to contracts for British shipyards as part of a project to reindustrialise Britain. The source does not provide further details on the contracts or their timing.
Budget pressures
The speech came as UK government borrowing costs had risen to their highest levels for almost two decades, according to the source, amid financial-market jitters linked to the Iran war and the global economy. Economists cited by the source warned that the chancellor could face pressure to raise taxes or reduce spending.
The source also reports that Labour has promised not to raise income tax, national insurance or VAT. Against that backdrop, investors reportedly view welfare reform as an important test of the government’s commitment to balancing the books.
What happens next
- The government’s tax and spending budget is scheduled for 28 October.
- Recommendations from the Milburn and Timms welfare reviews are expected this autumn.
- The government will need to detail how its employment, apprenticeship and industrial measures fit within its fiscal rule.
Bottom Line
Healey is presenting the October budget as a balance between fiscal restraint and measures intended to improve employment, investment and growth. The practical impact will depend on the budget’s detailed welfare, spending and industrial decisions.
Source
This report is based on information published by The Guardian Business.
