John Healey, the minister who walked out of Sir Keir Starmer's cabinet over defence spending, has been appointed as the nation's new chancellor of the exchequer. He will work under the leadership of Andy Burnham, the prime minister, in the first major appointment of his premiership. This unexpected choice has left business owners surprised, as many had predicted other candidates for the role.
Healey's background and experience make him a familiar face at the Treasury. He served as economic secretary to the Treasury between 2002 and 2005, working under Gordon Brown as chancellor during Tony Blair's Labour government. His knowledge and understanding of the department will likely serve him well in his new role.
However, Healey's appointment also raises concerns, particularly among small and medium-sized businesses. He resigned as defence secretary last month, citing a lack of funding for the defence investment plan. As chancellor, he will now be responsible for managing the very department he once condemned, as well as its budget.
The reaction from business leaders has been cautious, with a warning attached. Louise Hellem, chief economist at the CBI, congratulated Healey on his appointment but emphasized that a new name on the door does not necessarily change the challenges ahead. She urged the new administration to maintain business and investor confidence, stay committed to established fiscal rules, and protect capital investment.
Hellem also called for swift action to accelerate key Industrial and Infrastructure Strategy commitments and deliver the Mansion House reforms, which could unlock around £80 billion of investment for growing businesses and infrastructure. Additionally, she encouraged the new administration to tackle high energy costs and rising employment costs, which continue to act as a brake on growth.
The CBI has already proposed a plan to strip green levies from business energy bills, which would cut bills by a fifth. Hellem emphasized that the acid test for every major economic decision should be whether it makes it easier for businesses to invest, hire, innovate, and grow. Ultimately, tackling the cost-of-living crisis and the cost of doing business go hand in hand, and the government must create conditions that give firms confidence to invest and create jobs.
