John Healey pledges to keep fiscal rules as October Budget approaches

Chancellor John Healey has pledged to keep the government’s fiscal rules in next month’s Budget while seeking to support jobs and growth. Speaking at Labour’s conference in Liverpool on 28 September, he said the prime minister shared his commitment to balance the books. The pledge matters because recent borrowing has exceeded forecasts, narrowing the room for decisions that increase spending or reduce revenue.

According to the Guardian’s account of his first conference speech as chancellor, Healey said he and the prime minister were in “lockstep” and argued that there was “nothing progressive about losing control” of the public finances. He presented fiscal discipline alongside measures intended to create jobs, but did not settle the tax and spending choices that will appear in the Budget.

What the fiscal rule requires

The government’s main current-budget target requires day-to-day spending to be covered by revenues by 2029–30. The House of Commons Library describes it as a target for a current-budget surplus in that financial year. It concerns routine public spending and receipts, rather than a promise that all government borrowing will stop.

Healey had made a similar commitment in a Treasury speech on 7 September. He called fiscal discipline his first priority as chancellor and said the coming Budget would meet the rules, including balancing the books with a buffer against uncertainty and controlling borrowing. At conference, he repeated that position as the Budget drew nearer. The Guardian reported that he said the government needed to hold firm to the rule on day-to-day spending.

Borrowing above forecast

The Office for National Statistics estimated that public-sector net borrowing reached £18.3 billion in August 2026. That was £2.9 billion, or 19%, more than in August a year earlier and £3.5 billion above the Office for Budget Responsibility’s forecast. These are estimates for one month, not a forecast of the Budget’s outcome.

For the financial year to August, the ONS estimated borrowing of £77.3 billion. That was £2.2 billion below the same period in the previous year, but £8.1 billion above forecast. The two comparisons point in different directions: borrowing was lower than a year earlier across the period, while still running ahead of the official forecast used to assess the public finances.

The ONS put the current-budget deficit at £12.4 billion in August and £51.9 billion for the financial year to that point, the latter £4.8 billion above forecast. The agency defines the current budget in terms of borrowing needed to fund day-to-day public-sector activities. That makes the figure particularly relevant to Healey’s pledge on routine spending and revenues.

Debt interest added another pressure. The ONS estimated central-government debt interest payable at £8.8 billion in August, its highest August figure since monthly records began in 1997, without adjustment for inflation. It also said the sum was below the interest recorded in each of the first three months of the current financial year. About £2.1 billion of August’s total reflected an uplift on index-linked government bonds, largely associated with a rise in the Retail Prices Index.

The ONS estimated public-sector net debt at £2,985.5 billion at the end of August, equal to 93.8% of gross domestic product. The debt-to-GDP ratio was 1.3 percentage points lower than a year earlier. These figures describe the position before the Budget; they cannot establish which taxes, services or programmes the chancellor will change.

Jobs, welfare and the Budget

Healey’s conference speech also set out measures he linked to growth. The Guardian reported that he announced a local apprenticeship service led by mayors, aimed at young people and intended to deliver “thousands more apprenticeships”. The report did not establish its funding, launch date, detailed design or how many places will ultimately be delivered.

The Guardian also reported an announcement of £6 billion of contracts for British shipyards as part of Healey’s proposed “new age of industrialisation”. That is an announced contract value, not a measure of completed work or jobs created. Details of the individual contracts, their timing and their eventual economic effects were not established in the report.

On welfare, the Guardian reported that Healey linked possible reform to youth unemployment and a rising benefits bill, saying “it falls to us to act”. Ministers were awaiting recommendations from a review of youth worklessness led by former Labour cabinet minister Alan Milburn. The conference remarks signalled a policy direction; they did not specify the reforms or their effects.

In his 7 September speech, Healey had described the number of 16-to-24-year-olds outside education, employment or training as nearly one million after a rise following Covid. That was his earlier characterization, rather than a new figure established at conference. It helps explain why he placed young people’s access to work alongside his promise to control spending.

The ONS said the Budget was scheduled for 28 October, when the Office for Budget Responsibility would publish updated fiscal forecasts. Those forecasts and the Budget’s tax and spending measures will provide the next test of how Healey intends to meet the rule while funding his stated priorities. For now, the conference speech establishes a commitment, not the final Budget choices.