Chancellor John Healey has set out plans to reindustrialise Britain with investment in industry and support for apprenticeships as part of the Government’s search for economic growth.
He used his speech to the Labour Party conference to seek to reassure financial markets with a commitment to being responsible with the nation’s finances while also attempting to build confidence in British industry.
He said reforming the welfare system to get people back into work was not just an “economic must” but a “moral duty”.
Funding and investment announcements
The Chancellor announced a new £100 million fund for local mayors to boost apprenticeships, set out a £300 million investment by Rolls-Royce in British factories and confirmed support for British shipbuilding.
In his speech in Liverpool, Mr Healey said: “Let’s bring back hope to Britain for the next generation of young people, for a new age of industrialisation, for growth made here by British firms and British workers.”
Mr Healey, who will deliver his first Budget next month, acknowledged that he did not have the money available to him that his predecessor Gordon Brown had in the New Labour era.
Fiscal discipline and welfare reform
Facing increased government borrowing costs, the Chancellor sought to reassure the markets that he would be responsible with the money he did have.
“Through the core of the Budget I deliver a month today will be fiscal discipline, to give families and businesses a bit of breathing space, to drive good growth and jobs in more places and to write a new chapter of hope for Britain’s future,” he said.
Mr Healey promised to help young people move from “generation jeopardy to generation hope” by improving job prospects.
He said: “It is not progressive to allow a bigger and bigger benefits bill, and a system which offers an income but doesn’t offer a future.
“So once again, as a Labour government, it falls to us to act. And this is more than just an economic must. This is a moral duty.
“I refuse to write off a million young people like the Tories have done.”
Apprenticeship service and shipbuilding
Under the plans set out by Mr Healey, mayors will be given £100 million to fund a new scheme aimed at getting young people into apprenticeships.
The new Local Apprenticeship Service would see teams acting like “football scouts” to link young people with firms, including those who had never been offered an apprenticeship.
“The best thing we can offer a young person isn’t a benefit payment, it’s a first job with training and a wage,” Mr Healey said.
“Our determination to help, matched by their determination to hope.”
The Chancellor described the service as “a down payment” on the work of former cabinet minister Alan Milburn to tackle the almost one million young people not in employment, education or training (Neet).
Mr Healey also announced that Rolls-Royce would invest £300 million in factories in Derby, Bristol, Glasgow and Rotherham, saying the investment showed a “new confidence in Britain”.
He confirmed previously trailed plans for £6 billion of government contracts for British shipyards.
“They’ll build the new docks for the new submarines that will defend us all for decades to come, built in Britain by British workers because of the decisions of this Labour government,” Mr Healey said.
Economic challenges and response
But the Chancellor’s speech came as diesel hit record prices and the Confederation of British Industry (CBI) issued a gloomy assessment of the state of the economy.
Analysis of fuel prices by the RAC has shown that a litre of diesel now stands at 199.18p, meaning that the cost to fill up an average family car now stands at close to £100 – £31 more than it was before the start of the Iran conflict.
The CBI said firms across the private sector expect activity to fall in the three months to December.
Mr Healey said the Government wanted to restore confidence in the economy and help boost family finances.
“Labour isn’t just here to cut the cake in a different way, we have to bake a bigger cake and make sure that it’s fairly shared,” he said.
“So whether it’s the cost of business or the cost of living, the only long-term answer is growth.”
The Government is committed to growth “in every postcode”, and Mr Healey said: “We need wealth created in more places and I want our government decisions and our policies to bring new levels of confidence, investment and, yes, profits in British business because it’s businesses that will create this country’s jobs and wealth and growth.
“Growth isn’t just a graph or a spreadsheet. It’s a family at the kitchen table saying ‘Yes, it looks like we can afford that holiday this summer’.
“It’s the sole trader saying ‘Yes, for the first time, I think I can take on an apprentice’ and it’s the community looking at its high street or its town centre, saying ‘There are new shops, there are new businesses, the pubs haven’t closed’.
“We’re turning a corner, and this is what I dedicate myself to as Britain’s Chancellor: the growth that drives progress, better wages, better lives.”
Shadow chancellor Andrew Griffith said: “John Healey’s new age of British industrialisation looks set to be powered by his own hot air.
“He is a month away from his first Budget and failed to say how he was going to tackle our out-of-control welfare bill, increase defence spending to 3% of GDP, scrap Labour’s fuel duty hike, or put forward a credible plan to get our economy growing and young people into work.
“He did, however, dedicate time to praising his disastrous predecessor Rachel Reeves.
“Only the Conservatives have a plan to cut welfare to fund defence and get our economy growing again by scrapping stamp duty, delivering cheaper energy, and backing the risk-takers and job creators who power our economy.”
The Confederation of British Industry said Mr Healey “set out a strong vision” with “many of the right signals”.
CBI chief executive Rain Newton-Smith added: “The Budget now needs to turn them into action if we are to fundamentally change firms’ willingness to invest, take a chance on a young person, and scale a business here in the UK.
“That means delivering what the CBI has consistently called for, including bearing down on the cost of doing business, protecting the foundations for long-term investment, and removing the planning, infrastructure and regulatory barriers that hold back growth.”
Ms Newton-Smith said the Chancellor’s “commitment to fiscal discipline and recognition that it is a precondition for sustainable growth should provide reassurance to markets”.
