New Chancellor John Healey 'gets £9bn extra a year to spend as Labour piles on more borrowing'

By GREG HEFFER, POLITICAL CORRESPONDENT Published: 11:51, 5 August 2026 | Updated: 11:51, 5 August 2026 Chancellor John Healey could get an extra £9billion a year to spend under Labour plans to pile on more Government borrowing, it has emerged. The Treasury is said to be looking to exploit Labour's fiscal rules to provide billions of pounds more for spending in a scramble for economic growth. A change made by Rachel Reeves when she was Chancellor will allow the Government to count some spending as 'assets' to be offset against borrowing costs. Mr Healey is now hoping to use the change to help fulfil Prime Minister Andy Burnham's pledge of growth 'in every postcode', according to reports. It could raise significant sums for infrastructure, housing and support for business, while also being channelled to regional mayors under Mr Burnham's devolution drive. But the Tories issued a stark warning about adding to Britain's debt mountain and increasing the country's debt interest payments. Analysts have said extra borrowing could ​be funnelled through agencies such as the British Business Bank, the ​National Wealth Fund and the National Housing Bank. The Resolution ​Foundation think tank ​estimated the Government ⁠could invest an extra £9billion a year by 2031 by boosting the scale of the National Wealth Fund.  Chancellor John Healey could get an extra £9billion a year to spend under Labour plans to pile on more Government borrowing, it has emerged When he became PM last month, Mr Burnham said he would be looking for 'any flexibility' in the fiscal rules, while he claimed last year that Britain should not be 'in hock' to the bond markets. Mr Healey, who will unveil his first Budget on 28 October after replacing Ms Reeves in the Treasury, told The Times there was 'scope for more and more rapid investment'. Jim O'Neill, a former Treasury minister who has advised Mr Burnham, has previously said more could be done to 'explore' the fiscal rules set by Ms Reeves. He recently called on the Government to be 'bolder about borrowing to invest' and argued it could be done without sparking fresh jitters on financial markets. The Government is said to keen be keen to find extra funding to raise direct investment in British businesses to stop start-ups moving to the US, while also boosting efforts to meet Labour's manifesto pledge to build 1.5million new homes. Elliott Christensen, a senior economist at the Resolution Foundation, argued that exploiting the fiscal rules could help offset a lack of long-term investment since Britain was forced to pull out of the European Investment Bank after Brexit. He said: 'Rachel Reeves' changes to the fiscal rules mean that the Government now has greater scope to address that challenge by making productive investments in the economy that in the long run will pay for themselves 'The new Chancellor should start by boosting the scale of the National Wealth Fund [which] would mean an additional £9billion annual investment by 2031 in real terms.' The Government borrowed £132billion in 2025/26, while the UK's public sector net debt stands at nearly £3trillion. Debt interest costs rose to £97.6billion in 2025/26, which was the second highest annual level on record. Responding to reports of Mr Healey's plans to exploit the fiscal rules to boost spening, Tory shadow chancellor Mel Stride said: 'Don't let them pull the wool over your eyes. 'This is just more borrowing, which means more debt, and more interest payments.  'Labour can't be trusted with the economy or the public finances, because they don't understand either.' A Treasury spokesman said: 'The Chancellor is fully focused on his priorities, to boost business, help with the cost of living and support people in every postcode. 'As has always been the case, the Chancellor will set out decisions at fiscal events, rather than routinely commenting on rumour, speculation or proposals.'