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Healey also says he and the prime minister are in "lockstep" on meeting Nato defence spending requirements of 3.5% of GDP by 2035.

When BBC economics editor Faisal Islam puts to him that he resigned as defence secretary just months ago over the government's inability to commit to spending 3% by 2030, Healey says this is not the case.

"I resigned on the fact that we were not making enough of a commitment to defence, and we will do that now," he says.

Fully funding the defence investment plan in the upcoming Budget is the first step, Healey says, followed by a spending review which will "set out a clear path to how Britain will meet that Nato 3.5% commitment" by 2035. "We will set a target date for that 3% along the way," he adds.

The BBC's economics editor Faisal Islam has spoken with John Healey after his first major speech as chancellor this morning - asking about the 4,000 job cuts announced by Jaguar Land Rover (JLR) this morning.

"It is a sign of how tough it is," Healey says, adding that JLR made these decisions to stay competitive in a global market.

He acknowledges it's a "worrying time for workers and suppliers", but says JLR is part of a "strong manufacturing base that we can build for the future".

Healey says the West Midlands mayor has announced a £500,000 support fund to help these "really well skilled workers" find new work and "new opportunities to build their careers".

The economy has been more resilient than some feared. But reality is still bitingpublished at 12:12 BST

12:12 BST

Dharshini David
Deputy economics editor

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The new Chancellor John Healey was aiming to lift spirits.

After all, analysts warned his predecessor’s warnings of black holes and tax rises may have left households nervy about spending, and businesses hesitant to expand, hire and invest - vital components for a flourishing economy.

Sentiment matters – and the economy has been more resilient than some feared. But reality is still biting.

Even as the chancellor talked, details of job losses at the nearby carmaker Jaguar Land Rover (JLR) were being shared. And over 100,0000 jobs were lost in retail and hospitality in the last year.

The chancellor promises to boost growth by devolving more spending decisions – but the evidence if that works is mixed; it’s all in the execution.

And then there’s fiscal reality. John Healey, like Rachel Reeves, emphasised a tight grip on the finances, unsurprising given recent market jitters.

Some analysts think £10-15bn of extra funds may need to be found in the Budget, to keep the public finances on an even keel; the government has already curbed some ambitions.

Growth is the answer to many of these woes – but getting there is the hard part, and there is still much to be fleshed out.

Chancellor John Healey has just given his first speech since taking over the Treasury in July. With pressure piling up, and a little under two months to go before the Budget, here's what we heard:

• Local growth: Healey announced £150m fund to support the most innovative scale-ups in the north. And a new initiative, the Northern500, will bring together the most ambitious mid-sized businesses into one community
• Fiscal devolution: A roadmap to fiscal devolution will be set out plans for a permanent transfer of power and resources to the regions. This will lead to greater business rates retention for local councils and strategic authorities, and the replacement of grants from central government with a share of local income tax for every mayoral strategic authority beginning in 2028
• Tax rises? Healey said he won't respond to tax speculation ahead of the Budget, adding that Labour made "very strong, very clear, very specific" commitments on tax in its 2024 manifesto
• The economy: Fiscal discipline remains the "first priority", Healey added before saying that his mission is to "make Great Britain, growth Britain"
• AI: The chancellor said he will not allow the opportunity of AI to "pass Britain by" while also pledging not to let the technology proliferate "with no oversight"
• Youth unemployment: He said the government has a "moral" and "fiscal" duty to address the "scar" of youth unemployment, and to create opportunities for people of all ages - with a focus on those not in employment, education or training (Neets)

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More reaction now as Liberal Democrat Treasury spokesperson Daisy Cooper says John Healey failed to acknowledge that the "huge costs facing business" were saddled on them by the Labour government.

Cooper says the chancellor will have to come up with a "far more radical vision" if he is serious about unleashing economic growth.

Reform UK Treasuryspokesperson Robert Jenrick says Healey delivered a "dire speech that will change nothing" and failed to reassure the markets as it included "nothing about cutting wasteful spending".

"Healey’s beginning to make even Rachel Reeves seem inspiring. He’s 49 days into the office and he’s out of ideas already," Jenrick writes on X.

The chancellor is promising "a new economic vision of the future" but ultimately delivering "more of the same", says Green Party Treasury spokesperson Dr Ellie Chowns.

The "biggest priority" remains "building economic prosperity that is sustainable, equitable and genuinely meaningful", she adds.

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The Conservatives' new shadow chancellor Andrew Griffith says John Healey is sounding "increasingly like continuity Rachel Reeves" following the chancellor's first speech since taking up the role.

"Warm words about growth will not make growth a reality or cover up the enormous damage Labour have done to businesses and family finances," says Griffith.

He says Healey has failed to end uncertainty over tax raises, failed to set out a "serious plan to reform welfare" and failed to "commit to funding defence properly".

"Even as Jaguar Land Rover cuts jobs, he offered no pause to Labour's job-destroying employment red tape and no measures to get ruinously high energy bills down."

Image source, Getty Images

While Healey was giving his speech, Jaguar Land Rover (JLR) announced it is to cut 4,000 jobs as it struggles with Chinese competition, US tariffs, and the transition to electric vehicles.

The cuts will happen over the next two years and will mostly affect the head office, which is based in the UK.

Chief executive PB Balaji said the firm was "committed to supporting everyone with care, fairness and respect" through the redundancy process.

• You can read more about the announcement in our story

Chancellor strikes more cautious tone on AIpublished at 11:04 BST

11:04 BST

Faisal Islam
Economics editor

Intriguing words from the chancellor on AI. We have heard comparatively little from the PM on an issue which has dominated the speeches of most world leaders.

While the chancellor said AI will transform the economy, every firm, community, hospital and school, he also acknowledged it will replace some jobs, and take up space and resources, a reference to data centres.

He said the government would “grasp the opportunities” but do so in a way that “guards” against risks to business and national security. He was especially focused on the idea that AI, unlike previous waves on new technology “self improves”- ie the models create better versions of themselves.

It sounded a little less cheerleading of AI, a little more focused on risks, than we heard from the Starmer administration.

Healey will not please MPs looking for substantial shift in policypublished at 10:58 BST

10:58 BST

Henry Zeffman
Chief political correspondent

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It was interesting to hear John Healey go out of his way early in this speech to praise Sir Keir Starmer and Rachel Reeves.

He hailed his predecessor as chancellor for recovering Britain’s fiscal discipline.

That was a clear and deliberate signal - especially to financial markets - that he wants to continue in that vein and is not going to be a profligate chancellor.

Yet there is an interesting political tension here. Healey is the chancellor, and not Reeves, because Starmer was ousted by Burnham.

Some of the Labour MPs who pushed for a change of leader did so because they wanted broadly the same governing approach, sold better. But others wanted a substantial shift in policy direction.

Those in the latter category will not find that much in this speech to encourage them.

Healey’s allies insist that while he does indeed want to build upon Reeves’s approach, his focus on boosting growth around the country as his first priority is a significant difference of emphasis.

In the final round of questions, Healey is once again asked if taxes will be raised and if Labour would scrap the pension triple lock to fund support for young people amid high youth unemployment.

The chancellor says Labour made "very strong, very clear, very specific" commitments on tax in its 2024 manifesto, adding that "this is what we are keeping".

"On tax specifics, I'm the chancellor less than two months out from the Budget, I'm not going to speculate on questions of tax," he says.

Answering a separate question before finishing, he explains how he will achieve his direction for growth given the challenging fiscal backdrop.

He says: "My defining mission as chancellor is growth, good growth in every postcode. And I've set out today the way this government will set about it: more devolution, more public leadership and control, more investment, more innovation, more jobs."

• The speech has now concluded. We'll bring you a round up of the top lines from Healey and analysis from our correspondents in the next few posts

Healey is then asked whether he'll consider corporation tax being devolved - and what promise he can make to voters about the "meaningful change" this government can deliver.

He says he won't respond to tax speculation ahead of the Budget on 28 October.

In terms of what's different now, he says this government is focused on "doubling down" on growth in more places, calling it the "first economic priority of this government".

He says it's about getting beyond that "long-term reliance" of "good growth in too few places". With more investment, innovation and jobs, the UK can start to lift the "level of growth" and the "level of hope", he says.

"That is the way we can start to tell a fresh story about Britain," he adds.

Image source, UK Pool

Moving on to questions, the chancellor is asked about the surge in cost of government borrowing and whether he can truly say that the economy is turning a corner, and is asked to rule out tax rises.

He says there is no doubt that global conflicts, trade tensions and an increasingly dangerous and uncertain world are weighing on the UK - making the task in government harder.

But he says he is setting out plans for growth and wants to be the chancellor that "gets things done", driving growth from more places in the UK.

He says Britain has great potential and strengths in how it can deal with the challenges it faces and reaffirms his commitment along with the PM to meet the fiscal rules and drive growth.

Healey concludes his speech saying that if his plan succeeds, young people will start businesses that will "storm to global scale", self employed people will have profits to "put back into their businesses" and Britain's economy will be "on the up".

"Of course, we will not deliver all this tomorrow, but we are delivering the start of it today," the chancellor says.

This plan, Healey says, will "guide the government" throughout the rest of the Parliament and through the prime minister's 10-year-plan.

Healey says the UK is "underusing the huge potential of Britain's workers", noting that there are nearly one million Neets in the country - that is people aged 16-24 who are not in employment, education or training.

Too many others are in jobs "that don't pay enough" or are "without the skills and opportunities to be able to get on", he adds.

This autumn, former minister Alan Milburn will set out his full recommendations to the government on "how to address this scar of youth unemployment", Healey says, calling it a "moral duty".

He says it is not right that so many young people in their 20s are "stuck on benefits" or "not looking for work".

He also calls it a "fiscal duty", saying a person who comes off benefits and gets into work "saves the taxpayer money" - which becomes a "win-win" when they also start paying tax themselves.

Image source, UK Pool

The UK is a world leader in several areas including AI and advanced manufacturing, the chancellor continues.

But too often ideas born in Britain have to go elsewhere to find the capital needed to grow, taking jobs and intellectual property away from the UK as well, Healey adds.

He says he's setting the ambition to double number of unicorn firms in the UK, and the government will go further over the coming months working with departments to earmark funds to back British innovation.

Healey also acknowledges AI is "one of greatest innovations in a generation" and understands concerns surrounding it. But he says that while we need to face risks to both national and business security, the opportunity of AI needs to be grasped.

"As chancellor I will not let this opportunity of AI pass Britain by, but nor will I allow the technology to proliferate with no oversight."

Healey says he's also looking at national policy to create the right conditions for the private sector to flourish.

He says the UK has had one of lowest rates of investment in the G7 "for the last decade and a half" but that "real progress" has been made in last two years. "But we need to do more," he says.

He says he is making changes to the Treasury Green Book - the government's document that guides decisions on whether projects are value for money - changing the discount rate to help projects with long term potential.

Alongside this, he says he is introducing economic potential analysis, putting that into business case decisions that the government makes.

Image source, UK Pool

Healey goes on to announce a £150m fund from the British business bank for the most innovative scale ups in the north.

He also announces the Northern500 - bringing the north's most ambitious mid-sized businesses into one community, led by the mayors, and supported by the private sector and central government.

"Across all the nations in the UK, we will support local leaders to deliver local growth."

Healey says the government has already begun this work, making Aberdeen the home of GB Energy, investing in Welsh railways and investments in Northern Ireland businesses.

He further announces that that South Yorkshire, Liverpool, North East England, Cardiff will all become the latest strategic partners of national wealth fund.

Healey says he wants to see British people working in the jobs created by the government as it seeks to encourage growth.

He says this will involve "No 10 North and the Treasury acting together" through devolution and greater public control.

Healey says Burnham set out a "clear diagnosis of what has gone wrong with the UK in the past" in his Commons speech last week, including the centralisation of power, privatisation and increase in regulation "without the predictability or pace that underpins a thriving market economy".

Healey says these reason led to the UK being "deindustrialised", including in areas critical to national security - leading to communities losing out and high streets "blighted by loss".

A "fundamental shift" is needed, Healey says - including giving local leaders the power "to unlock the potential of their region to do things in the best way that Whitehall can't".

He says he will set out a roadmap to fiscal devolution which he described as a "permanent transfer of power and resources" from Whitehall to the regions.

"London of course is our powerhouse," he says, but if city regions can emulate the growth of those in France or Germany he says "our economy would be transformed".

Healey says that while Britain's growth trajectory has been weak, "this now must change" - calling it "central" to his purpose as chancellor.

He says his mission is to "make Great Britain growth Britain" again.

The chancellor says he recognises the costs businesses are facing, from energy bills to planning constraints and higher labour costs since Covid.

Growth is the only way to tackle costs for businesses and the cost of living, he argues.

He adds that he wants to see UK as a country of wealth creation, and wants government policies to help create confidence in British businesses.

Healey says when he spoke to his colleagues at the G20 he told them a "fresh" and "optimistic" story of Britain - a country "turning a corner".

He says UK businesses and communities are ready to seize the opportunity of new technologies and ideas. Since the election in 2024, interest rates have been cut six times, Healey adds, and productivity is finally taking off after "decades of lagging behind" its peers.

From day one as chancellor, he says fiscal discipline was his "first priority" and he and both the PM are committed to meeting the fiscal rules at the Budget, controlling borrowing, and reducing long term pressures on public finances.

He says if debt interest were a government department it would be the second biggest in Whitehall after health, bigger than defence, home office and justice put together.

"That's why staying true to our values means being honest about the need to control government spending."