Healey as Chancellor a ‘surprise’ but seen as a ‘safe pair of hands’

The wealth management and advice industry has voiced its surprise at John Healey’s appointment as Chancellor, but described the former Defence Secretary as a “safe pair of hands”.

Healey has previous Treasury experience but was seen as an outside pick, with Shabana Mahmood, who remains as Home Secretary, and Ed Miliband, who has been named Foreign Secretary, viewed as the favourites to become Chancellor.

“Following his coronation as Labour leader, and now in the hot seat as Prime Minister, Andy Burnham has opted for what is arguably a safe pair of hands for Chancellor in John Healey,” said Quilter Cheviot head of fixed interest research, Richard Carter.

“Healey brings Treasury experience and is a sign that Burnham will respect the bond markets as a check on his radicalism, rather than plough ahead with significant changes that could unsettle the fiscal position.

“This is important after his comments on the flexibility available within the fiscal rules.”

Carter stated that Burnham would need a ‘pliant’ Chancellor if he is to push through the economic reform agenda voters want, but it remained to be seen whether Healey would meet this description.

“Healey’s previous Treasury experience should keep bond markets calm for now, while the spectre of Liz Truss and the lettuce continue to play in the minds of politicians terrified of a repeat,” he added.

“Keeping up appearances between the two will be crucial if Labour is to stand any chance of recovering in the polls.”

Hymans Robertson Investment Services chief investment officer, William Marshall, added that Healey’s appointment was a "surprise".

He noted that while gilt yields started to fall slightly on Tuesday morning, the reaction overall had been fairly muted.

“Healey had previously pushed for extra defence spending in his previous role in cabinet as Defence Secretary,” Marshall continued.

“Investors will be eager to hear from him to understand what kind of Chancellor he will be.

“Investors will now be looking ahead to the Budget this autumn. While a date has yet to be confirmed, it’s likely to become the next major focus for investors as the new government begins setting out its policy agenda.

“Burnham has discussed trying to end the ‘briefing wars’ in politics. If he can manage to contain the damaging speculation leading up to the previous Budget that would be welcome.”

Quilter tax and financial planning expert, Shaun Moore, said that while the appointment was a surprise, the challenge remained the same, with the UK tax system becoming increasingly complex and subject to persistent speculation.

“John Healey’s challenge is not just balancing the books, but creating a stable environment where people can plan for the long term without worrying that the rules will change again tomorrow,” he added.

"For savers and investors, the real test will not be the appointment itself but the policies that follow.

“One of the more encouraging developments in recent years has been the growing recognition within government that the UK needs a stronger investment culture.

“Too much wealth sits in cash when it could be helping individuals build long-term financial resilience while supporting economic growth.

“While we have not agreed with every proposal designed to achieve that goal, the broader ambition of encouraging more people to invest for the long term is absolutely the right one.

"With speculation over tax changes, including a wealth tax, already high in advance of the Chancellor even being appointed, his priority should be to restore confidence among savers and investors.”

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