Chancellor John Healey has pledged that “fiscal discipline” will run through the Government's Budget on 28 October, insisting that ministers will stick to their fiscal rules while seeking to support growth and ease pressure on households and businesses.
Speaking at Labour's conference in Liverpool, Healey argued that the cost of servicing Britain's debt is diverting money that could otherwise be spent on public services.
The remarks put a clear fiscal marker down ahead of the Chancellor's first Budget, although they do not by themselves reveal the tax and spending measures that will be announced next month.
Healey promises to stick to fiscal rules
Healey said the Government would maintain fiscal discipline and continue to operate within its stated borrowing and debt rules.
He presented control of the public finances as a prerequisite for economic stability and sustainable investment rather than an alternative to the Government's growth agenda.
The Treasury has previously confirmed that the 28 October Budget will be delivered within the Government's fiscal framework.
Debt interest draining money from public services
The Chancellor highlighted the amount Britain spends servicing government debt, arguing that high debt-interest costs reduce the resources available for priorities including public services.
Healey described excessive debt as an “affront” to Labour values and said the Government needed to bring greater discipline to the public finances.
His comments come as ministers balance demands for additional spending with pressure to demonstrate that the Government's plans remain financially sustainable.
Budget to combine discipline with growth measures
Healey said the Budget would seek to combine fiscal discipline with measures designed to provide breathing space for households and businesses and strengthen economic growth.
The Government has already announced a series of policies ahead of the Budget, but significant decisions on taxation, spending and borrowing remain to be set out on 28 October.
The Chancellor's conference remarks should therefore be treated as a commitment to the Government's overall fiscal approach rather than confirmation of any specific tax rise, tax cut or spending reduction.
Pressure building ahead of 28 October
The Budget will be closely watched for how the Government intends to fund its policy commitments while remaining within its fiscal rules.
Healey's intervention makes clear that the Government intends to present fiscal restraint and economic growth as complementary parts of its programme.
The confirmed position is that the Chancellor says the fiscal rules will be maintained and that “fiscal discipline” will be central to the Budget. The detailed measures needed to achieve that will not be known until the Budget is delivered.