Yorkshire Chancellor John Healey is set to announce his first Budget, but amid the expectation of an Andy Burnham Government there are turbulent economic headwinds.
Published 26th Oct 2026, 06:00 GMT
At the Labour Party Conference, Chancellor John Healey focused on the past while Prime Minister Andy Burnham looked to the future.
The Rawmarsh and Conisborough MP brought out his miner’s lamp and spoke of the impact that Margaret Thatcher’s closing of the mines had on South Yorkshire.
While Mr Burnham announced plans to change the triple lock, reform the voting system and potentially rejoin the European Union, all of which would come after the next election.
Wednesday’s Budget, the pair’s first in No10 and No11 Downing Street, means the Prime Minister and the Chancellor have to focus on the here and now.
And for Mr Healey this is a tough picture. Earlier this week, inflation hit its highest rate for almost a year.
This was triggered by the ongoing war in Iran as diesel prices pushed above £2 a litre.
Economists are forecasting multiple interest rate hikes before Christmas. This will mean the Chancellor will have to be careful not to pour fuel on the fire like Liz Truss did.
Government borrowing also rose above the forecasts to a whopping £24.5bn.
Consumer confidence has tumbled before the Budget against the backdrop of rising inflation and ongoing geopolitical tensions, figures from the British Retail Consortium has found.
For a Chancellor and Prime Minister, who have promised to offer “breathing space” and tackle the small things, they will certainly need to keep an eye on the big issues.
The inflation is linked to higher prices at the pub, which in particular is continuing to cripple rural families and businesses.
This was the number one priority of the Countryside Alliance to Mr Healey ahead of the Budget.
“Given the recent spike in global oil prices and the necessity of private vehicle usage by residents and businesses in rural areas, the 5p fuel duty cut, first introduced in March 2022, should be made permanent,” chief executive Tim Bonner wrote.
“Given current prices we believe that as a further emergency measure, the rate of VAT payable on fuel should be reduced from the standard rate of 20 per cent.”
Whether Mr Healey listens remains to be seen, but we do know he is focused on cost of living issues.
Zoe Billingham, director of IPPR North, the Manchester-based think tank which is close to Mr Burnham’s government, told The Yorkshire Post: “Economic headwinds continue, but we still think the Government needs to lead on cost of living measures that they have been trailing so far.
“We wonder whether they might choose to go further, for instance on energy bills - we’ve already seen discussion of standing charges being taken off gas bills.
“We have also called for a household energy bills cap and we have also called for rent stabilisation, where you put a ‘double lock’ control on private rents where they can only go up by inflation.
“We think these areas are still very much where the public is focused, still very much the ‘Makerfield Test’ - how does it make a difference to people’s lives.”
Ms Billingham said she was “feeling positive” about IPPR North’s call for an online sales tax to help support high streets.
“We think it’s the right thing to do and a good signal of who the Government stands for, which is something I think the Burnham administration is very good at.
“Hence the focus on the cost of living and the more retail end of politics which we hope they will lean into that.
“This is making a direct link between online retail, that can undermine high street businesses, who can effectively pay higher taxes.
“That is something that when you go door knocking or what we hear from the public, even if the nature of the high street is changing, people still want places to meet friends and family.
“So making sure that those tangible, on your doorstep, improvements are felt is really important and chimes with the Makerfield Test and the Prime Minister’s agenda.”
One of IPPR North’s suggestions to equalise capital gains tax, which is charged on wealth and investments, and income tax appears to have fallen on deaf ears.
Despite having the hugely influential Louise Haigh, the de facto deputy prime minister and Sheffield Heeley MP, in its corner, it appears as if Mr Healey is not going to take this on.
“This would be a big revenue raiser and would help support cost of living measures,” Ms Billingham said.
“We’re not sure if that will go ahead as we’ve called for.”
Mr Healey ruled out the move after warnings it could end up costing the Government money if wealthy people leave the country or defer selling off assets, The Times reported.
Lord O’Neill of Gately, who has advised Mr Burnham and worked on the Northern Powerhouse project, told the newspaper that “raising capital gains tax would send very much the wrong message to business”.
The biggest revenue raising measure set to be in the Budget is an increase in the rate banks pay on their profits, widely reported across the media last week.
That is expected to fund cost-of-living support for households and businesses.
The Chancellor has acknowledged that Britain finds itself in a “tough” position ahead of the Budget, and is reported to be downplaying the prospect of major revenue-raising measures in his October 28 statement.
Departments have been asked to “reprioritise” and “live with their means”.
However, Transport Secretary Heidi Alexander is feeling bullish about her prospects in Mr Healey’s statement.
Speaking to this paper earlier this week, ahead of her announcement about a new rail station in Bradford, she said: “I think we're in quite a fortuitous position to be honest because earlier this summer the Prime Minister Andy Burnham obviously announced the fact that we would be reintroducing the £2 bus fare cap from January of next year, which I think will be welcome news to a lot of people.
“The Prime Minister does let a week go by without talking about buses.
“From my perspective as Transport Secretary that's all music to my ears and whether it's been the announcement of the £2 bus fare cap, the fact that we are changing the rules next year so that disabled people can use buses for free 24/7.
“I think that gives you some sense of what the Prime Minister is focused on and that's about making improvements to people's everyday lives.
“We've also got you know a really strong investment program for the region as evidenced by me coming up to Bradford to announce the new station. and so whether it's on rail, whether it's in roads, we've got investment flowing into the region because we know that a well functioning transport system is the backbone of a successful local economy.”
Another department, which is set to get a lot of attention this Budget, is the Ministry of Defence.
Mr Healey dramatically resigned as defence secretary at the start of the summer, after accusing Sir Keir Starmer of not giving the Armed Forces the funds to keep the country safe.
However, it is understood that he will not set out the Government’s path to spending 3 per cent of gross domestic product on defence (GDP), instead waiting for next year’s spending review.
It comes amid reports of belt tightening in the military.
Almost £2bn of funding for decrepit military accommodation has been deferred until the next Parliament.
Current Defence Secretary Wes Streeting told the Commons earlier this week that the Armed Forces were being asked to “live within their means”.
He told the Commons that there were historic issues of “routine overspending” that had required “reprioritisation”.
This will not be welcome news to backbenchers like Al Carns, the former defence minister who resigned with Mr Healey.
The Chancellor is finding the choices keep getting tougher in his first Budget.