John Healey
Appointed Chancellor by PM Burnham after resigning as defense secretary over spending disputes; now preparing his October 28 budget against gilt yields at 1998 highs and a £5bn defense funding gap.
John Healey is preparing his first budget as Chancellor of the Exchequer, due October 28, under mounting fiscal pressure. UK gilt yields hit their highest since 1998 on September 1, with debt interest projected to consume 3.7% of national income and national debt at 94.9% of GDP. Treasury modeling Healey reviewed with PM Andy Burnham warns the US-Iran conflict could drag GDP growth to 0.9% in 2026 if Strait of Hormuz disruption persists, with inflation peaking at 4.3% in early 2027. Healey says cost-of-living is his main focus but has pledged to maintain fiscal discipline and honor the commitment against raising income tax, VAT, or National Insurance.
The budget's sharpest tension is defense. Healey resigned as defense secretary in June over the government's reluctance to commit defense resources; now he is the one setting the spending path. He has outlined a trajectory toward 3.5% of GDP by 2035 with a 3% interim goal by 2030, but deferred the 3% target announcement to the 2027 multi-year spending review. The October budget will instead focus on a £5 billion gap in the defense investment plan. He has pledged to balance day-to-day spending by the end of the decade, yet the government is weighing borrowing or tax rises to cover a £4.7 billion deficit in the Defence Investment Plan.
Beyond defense, Healey authorized £71 million through the National Wealth Fund to reopen the Hemerdon tungsten and tin mine in Devon, securing a board seat and option on up to 50% of future tungsten output to reduce reliance on China for critical minerals. He is implementing a mansion tax, a council tax surcharge on English properties over £2 million taking effect April 2028, projected to raise over £400 million. London borough leaders warned it could force pensioners to sell their homes. He also invited all Treasury staff to submit budget proposals, bypassing Whitehall hierarchies, with the best ideas to be pitched to him directly.
On their plate
Healey's first budget as Chancellor is set for October 28 and must contend with gilt yields at 1998 highs, debt at 94.9% of GDP, and Treasury modeling warning that the US-Iran conflict could slump GDP growth to 0.9% in 2026. He has invited all Treasury staff to submit cost-cutting proposals and pledged to maintain fiscal discipline while honoring the pledge against raising income tax, VAT, or National Insurance.
Healey has set a trajectory toward 3.5% of GDP defense spending by 2035 with a 3% interim goal by 2030, but deferred the 3% target announcement to the 2027 multi-year spending review. The October budget will instead focus on fully funding the defense investment plan, which faces a £5 billion gap. He resigned as defense secretary in June over the government's reluctance to commit resources; now as chancellor he cites fiscal discipline as the first priority.
Healey is rolling out a high-value council tax surcharge on English properties over £2 million, taking effect April 2028 and projected to raise over £400 million by 2029/30 across 165,000 properties. HMRC will use Valuation Office Agency inspectors for physical inspections when public records are insufficient. London borough leaders warned the tax could force pensioners to sell their homes; a deferral scheme for low-income owners is under consultation.
Healey authorized up to £71 million through the National Wealth Fund to reopen the Hemerdon tungsten and tin mine in Devon, securing a 7.4% stake, a board seat, and the option to purchase up to 50% of future tungsten output. The move targets reduced reliance on China for critical minerals supporting domestic defense, aerospace, and energy supply chains.
Healey and Foreign Secretary Ed Miliband jointly announced a sanctions package on August 6 adding 19 entries to the UK's Russia sanctions list, targeting 13 individuals and entities and six vessels of Russia's shadow fleet, plus financial institutions and rare-metal importers fueling the war in Ukraine.
Key relationships
Burnham appointed Healey as Chancellor and the two jointly reviewed Treasury modeling on the economic risks of the US-Iran conflict ahead of the October budget.
Healey publicly backed Rayner's overhaul of planning rules, framing the NPPF rewrite as a driver of growth and home ownership aligned with his budget agenda.
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