John Healey has refused to rule out further tax rises before next year’s crunch Spending Review as he warned that government department heads would also have to search for cuts to fund the Prime Minister’s long-term plans.

The Chancellor said he would set out a schedule for fiscal events in 2027 “in due course”, raising the risk that a fresh sweep of tax hikes could be announced before the Spending Review as the government rushes to top up budgets. 

Appearing before MPs on the Treasury Committee, Healey said the Spending Review would be “framed” by Andy Burnham’s 10-year plan, which will be delivered by 17 December. 

He warned that the mammoth task of raising defence spending and funding plans for “greater public control” in the face of rocky public finances would be a “jointly run” operation between himself, Burnham and the first secretary of state, Louise Haigh. 

Following a series of questions by the Liberal Democrats’ new chief secretary to the Treasury spokesman, Bobby Dean, Healey refused to confirm that new tax rises would not be announced before the major fiscal event. 

“Those decisions [around tax] will be decisions to take during the course of next year,” Healey told MPs. 

“I will set out and announce the timing and the more detailed method around the Spending Review in due course.”

Tax questions loom over government

Independent economists have widely warned that current government spending envelopes for the next few years assumes cuts of tens of billions of pounds across “unprotected” departments such as education and justice after 2030.

The Office for Budget Responsibility warned the Chancellor would need to top up budgets to prevent day-to-day spending from falling by 2.6 per cent in real terms from 2029

Separately, the National Institute of Economic and Social Research said on Tuesday that Healey could face a £30bn fiscal hole if he wished to fully fund plans around defence and social care while keeping departmental spending rising each year. The think tank urged Healey to stick to current fiscal plans on spending restraint and tax, which Healey has described as critical to “rebuilding confidence in Britain”.

It was also noted in Healey’s committee hearing that the health department, which is normally protected from proposed cuts, would have to identify cuts to fund extra defence investment, though he said the department would “manage” to protect “vital services”. 

Burnham, Healey and Haigh behind Spending Review planning

He said officials across Whitehall were currently “preparing and contributing” to ideas for the 10-year plan. 

Following the plan’s publication, Healey indicated that all focus across the government would turn to the Spending Review, which reportedly has been pushed back until the end of 2027. Burnham refused to say on Wednesday when the review would take place. 

Healey said that government department chiefs were “pretty well prepared” to find savings before the Spending Review before adding: “they will need to be”. 

Shortly after taking to Downing Street, Burnham and Healey wrote to Cabinet colleagues to demand they identify savings.  

“The Prime Minister and I – and you will have seen this from day one – have worked in lockstep on fiscal discipline and on fiscal restraint across government,” Healey said. 

“We will be running next year’s Spending Review as one that will be jointly-run between Number 10 and Number 11.”

Healey also argued that the Labour government’s proposal to reform the triple lock pension, which could take about 14 years before delivering savings worth about £15bn, would be crucial to the next Spending Review as it would feature “bigger and longer-term decisions”. 

While the Chancellor confirmed that reviews on welfare reforms for young people and disabled people would be published this year, full government plans would only be revealed in February at the earliest.