Chancellor John Healey has vowed to maintain fiscal discipline whilst supporting job creation and economic growth in next month's budget. Speaking at the Labour conference, Healey announced a new local apprenticeship service overseen by mayors and signalled significant welfare reforms designed to encourage employment and reduce the rising benefits bill. The speech marks Labour's fresh attempt at welfare overhaul following Rachel Reeves' previous U-turn on similar proposals, and comes amid mounting pressure from rising government borrowing costs.

The government faces a challenging economic backdrop, with UK borrowing costs at their highest level in almost two decades, partly driven by global market volatility linked to the Iran war. Healey emphasised the moral imperative for welfare reform, arguing that the current system traps people rather than supporting their progress, whilst pension and welfare costs are projected to reach £409 billion by 2030. Committed to a fiscal rule requiring day-to-day spending to be matched by revenues by 2030, and bound by manifesto promises not to raise income tax, national insurance or VAT, the government views welfare reform as essential to demonstrating fiscal responsibility ahead of the 28 October budget.