Labour unrest over John Healey's failure to brace Brits for tax hikes ahead of nightmare pre-Halloween Budget

Published: 05:49 EDT, 2 October 2026 | Updated: 05:51 EDT, 2 October 2026 John Healey is facing signs of Labour unrest as he braces for a brutal Budget in just a few weeks' time.Nerves are jangling in the party over the Chancellor's refusal to give a clear sense of his intentions for the crucial package on October 28.There are fears that markets could react badly if Mr Healey decides not to rebuild 'headroom' against the fiscal rules. The £24billion margin built up by Rachel Reeves through a series of eye-watering tax hikes is believed to have been slashed at least in half by surging borrowing costs. Mr Healey must also find money for Andy Burnham's spending promises, as well as filling a shortfall of around £5billion in the defence investment plan and potentially offering help for Brits struggling with fuel costs.However, the Chancellor's speech to Labour conference this week merely warned there could not be a repeat of Tony Blair's spending spree, and committed to sticking to fiscal rules. John Healey (pictured with Andy Burnham this week) is facing signs of Labour unrest as he braces for a brutal Budget in just a few weeks' timeOne Labour MP told the Guardian they had hoped for more guidance on what might happen on tax and spending. 'It was Rachel's speech delivered by John,' they said. There was also sniping at Mr Healey from within the Treasury, amid concerns that the Budget process is behind schedule.An insider complained: 'He's slow to get through his boxes and it's hard to get meetings in the diary because he needs time to prepare before each one. It all feels a bit underpowered.' Sources close to Mr Healey rejected the criticism, stressing that he would lay out plans in full in the Commons.Mr Healey has summoned banking bosses for a summit next week as they urge him not to hit the industry with more tax - as demanded by unions and many Labour MPs. Meanwhile, Lord O'Neill - a former minister and Goldman Sachs economist who has advised Mr Burnham - has urged Mr Healey not to increase taxes again.Instead he suggested that the headroom should be allowed to reduce, with hope that the situation would improve in the coming months. 'Rather than risking some tax increases in a way previous Governments have... in this instance I personally expect it might be the wisest thing to do,' he told BBC Radio 4's Today programme. Lord O'Neill pointed to better-than expected growth figures, and suggested ministers should be looking to build on activity rather than squeeze it.