Finance06 September, 20262 min read
John Healey Unveils £150m Northern Firms Fund To Boost UK Growth
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£150m fund for northern firms to boost UK growth Fund backs university spin-outs and other start-ups in Liverpool, Manchester, Leeds, Sheffield, Newcastle
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£150m Northern scale-up
Chancellor John Healey is set to unveil a £150m fund for companies in the north of England as part of a wider plan to generate more economic growth around the UK, using public investment to attract private capital. The fund will come from money already allocated to the British Business Bank and is expected to provide investments of between £5m and £15m, backing university spin-outs and other “most innovative and fast-growing firms”.
Healey’s speech is scheduled for Monday and is framed against pressures ahead of his first Budget on 28 October, including concerns about a jump in government borrowing costs and the inflationary impact of the Iran war. In the plan’s pitch for devolution, Healey is expected to say the “solution is a fundamental shift that starts with putting power in the right places,” and that “The next chapter of Britain's growth story will be written in more places.”
Tax pressure and market nerves
Economists warned that Healey is likely to have to raise taxes in next month’s Budget to maintain credibility with the markets, as the government seeks to balance the books. The i Paper reported that Healey’s spare cash against his so-called fiscal rules to deliver a balanced Budget had been halved from £24bn, after a surge in Britain’s borrowing costs last week tied to a global rout on bond markets.
Professor Edward Jones at Bangor University said Healey may need to find between £10bn to 15bn at the Budget to restore fiscal headroom back to around £24bn to reassure bond markets. Jones also said “a combination of both tax raises and spending cuts” could be needed so the market has confidence that a buffer is there if there’s another economic shock, while a bank tax was floated as one option.
Opposition attacks and stakes
Conservatives attacked Healey’s growth plan as insufficient, with Shadow chancellor Andrew Griffith saying it would “do little to comfort hard-working families and businesses across the country who are worried about more tax rises”. Griffith also tied the criticism to security spending, arguing that “We are facing serious threats from Russia and Iran on our doorstep, as well as threats to the Falkland Islands.”
Liberal Democrat deputy leader Daisy Cooper said re-announcing £150m across the entire north of England would “barely shift the dial on growth,” while Reform UK’s economic spokesman Robert Jenrick said Healey had “revealed himself to be an empty vessel”. The BBC said Healey’s plan is expected to be delivered in a speech on Monday as he faces pressures ahead of his first Budget on 28 October, with the Conservatives responding that what was being proposed would “do little to comfort hard-working families and businesses”.