Chancellor Healey warns ministers of cuts ahead of October budget
Chancellor John Healey told cabinet ministers to prepare for spending cuts and hinted at welfare bill control ahead of the October budget.
The Full Story
A plain summary built from the channels that reported this story.
Chancellor John Healey has set 28 October as the date for his first budget and warned cabinet ministers to prepare for spending cuts. In a joint letter with Andy Burnham, the Chancellor told every minister that there is no new money to fund recent policy announcements and that they must reprioritise existing spending. He also hinted that the welfare bill, which he said is 'inexorably rising', must be controlled.
The warning comes after a flurry of announcements from the new Prime Minister, including a major devolution drive to give England's regions more control over tax revenues. The government wants to break out of what the Prime Minister called a 'low-growth, low-investment' cycle. Under the plan, regions will be able to keep a share of income tax and business rates to fund local projects. However, the Chancellor's letter makes clear that these new powers will not come with extra central funding.
Several recent giveaways appear to be unfunded. These include VAT off energy bills (costing around £850 million), a £2 cap on bus fares (around £500 million), support for pubs and high street businesses (about £100 million), and a defence investment plan with a £4.7 billion gap that needs to be filled in the autumn budget. The Chancellor did not rule out tax rises but committed to Labour's manifesto promise not to raise income tax, VAT, or national insurance.
The devolution announcement was made by Andy Burnham in Sheffield. He said the aim is to give places an incentive to get more growth and keep more of the tax that comes from it. The Prime Minister said the policy is designed to break the cycle of low growth. But not all regions are on board: the Conservative mayor of Teesside said he might use the new powers to reduce taxes rather than invest. Some Labour MPs have voiced concerns that areas without mayors could miss out, but Burnham insisted every part of England will soon get a bigger slice of their region's revenue.
In a separate development, Labour won the by-election to succeed Andy Burnham as Greater Manchester Mayor, with candidate Bev Craig receiving two thirds of the vote.
On screen
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Key Claims
Claims reported during this story's coverage, mapped by channel. Ordered by how many channels carried each claim.
| Claim | ITV |
|---|---|
| The budget is scheduled for 28 October. | |
| The Chancellor and Prime Minister jointly wrote to all cabinet ministers instructing them to prepare for cuts. | |
| The welfare bill must be controlled. |
Channel Perspectives
What each channel focused on, with key quotes.
The report focused on the tension between the new government's spending promises and the Chancellor's warning of cuts. It highlighted the unfunded nature of recent giveaways and the need to control the welfare bill. The devolution announcement was presented as a backdrop to the fiscal squeeze, with the reporter noting that politicians are popular when spending but less so when cutting.
- “the big question during the new Prime Minister's flurry of policy announcements this past two weeks has been quite how they are all going to be paid for.”
- “the benefits bill, or the welfare bill, is inexorably rising, must be controlled.”
- “there will be no new money available to cover the latest announcements from number 10, including today's unveiling a major devolution drive.”
Broadcast Timeline
News broadcasts tracked for this story, in time order.