Chancellor’s ‘new age of industrialisation’ claim raises eyebrows in the City
Chancellor John Healey will make upgrades to the Royal Navy central to his flagship speech at the Labour Party conference on Tuesday as he promised a “new age of industrialisation’.
The former defence secretary has indicated that shipbuilding will make a key part of Andy Burnham’s pledge to revive Britain’s industrial base across the country.
In his address to party activists on Tuesday, Healey will confirm that three new floating docks will support Britain’s sovereignty and a new marine research vessel, backed by a £115m government investment, will be built “in a British shipyard”.
Healey will make the announcements central to his economic philosophy, saying his politics were “shaped by the industrial heartlands of South Yorkshire”.
While coal mines in the region are “not coming back”, the burst of shipbuilding and maritime activity is “how Britain’s industrial past is being remade now for the modern world”, he is expected to say.
He will add: “This is the new age of industrialisation. A new confidence in Britain.”
The projects link Healey’s experience in the Ministry of Defence with his new position in the Treasury.
However, Liam Sides, director at Oxford Economics, said: “I personally cannot think of an advanced economy less suited for an industrial resurgence.” Sides pointed to “very high energy costs, a skills system that is not fit for purpose, trade barriers with the UK’s two main partners and a sluggish planning system” as factors holding back UK industry.
Shadow chancellor Andrew Griffith said the plans were “reheated announcements” with “no clarity on where the money is coming from”.
He added: “Labour are running scared of making the tough choices needed to pay for Britain’s defence.
“All they can offer is reannounced docks and more hot air from Healey. Only the Conservatives will cut the welfare bill to fund defence.”
Healey’s defence pitch
Healey resigned from Sir Keir Starmer’s government after he claimed the Treasury was “unwilling” and “unable” to boost defence spending to three per cent of GDP by 2030.
The shock resignation before the full publication of the Defence Investment Plan put Starmer in a more vulnerable position, effectively leading to his departure from Number 10.
Burnham’s government has not yet provided a pathway to raise defence spending by about £11bn a year to three per cent of GDP. Ministers have said a pathway will be laid out at next year’s Spending Review.
Healey’s bid to use defence expenditure as a pathway towards boosting growth could divide economists, who claim the effects on the UK economy are smaller than by investing in other sectors.
Defence is one of eight sectors the government outlines as having the potential to deliver high growth.
Healey said that his bid to back shipyards was “boosting national security” and building “resilience in the industries that will drive growth today”.