Prime Minister Andy Burnham has indicated he may not rule out tax increases in the forthcoming Budget, emphasizing he “won’t be unrealistic” regarding the current state of public finances, reports BritPanorama.
During his inaugural visit to Ukraine, Burnham acknowledged the UK’s “challenging position” but asserted he would adopt a “careful approach” to economic management. He defended key policy pledges, including a reduction of VAT on household electricity bills and capping bus fares at £2, describing them as “funded commitments.”
However, uncertainty surrounds the financing of several promises, notably £5 billion earmarked for defence spending prior to his arrival at No 10 and plans for comprehensive social care reforms. Doubts have also emerged regarding his proposal to fund the VAT reduction by scrapping the previous Labour government’s digital ID scheme, with former minister Darren Jones stating the policy lacks proper cost evaluation.
When asked if the public should prepare for higher taxes to support some policies, Burnham responded to ITV News, stating, “They don’t necessarily need to accept that.” He noted that the measures laid out so far were significant but only initial steps. Pressed on whether he would require tax hikes to cover spending gaps, he remarked, “I will always take a careful approach to things.”
Burnham added, “Nothing will change as I come into this role as Prime Minister. I won’t take risks with people’s jobs or their livelihoods or their family finances. I will try to help them in whatever way I can, I have already done some things that will help them.”
He underscored the necessity of a realistic understanding of the fiscal landscape, stating, “We are in a challenging position, whatever I do will be carefully thought through, it will be funded and there will be more to come as we go into the autumn.”
The fiscal pressures facing new Chancellor John Healey ahead of his first Budget have become evident, with official figures revealing that government borrowing unexpectedly rose to £1.8 billion last month. The Office for National Statistics (ONS) reported that borrowing in July was £700 million, or 68.7%, higher than the same month last year, defying expectations.
This occurred despite record income tax receipts for July. Meanwhile, inflation surged to a four-month high of 2.9%, influenced by the ongoing fallout from the Iran war. Experts, including those from the National Institute of Economic and Social Research (NIESR), have cautioned Healey that he will need to consider either increasing taxes or cutting spending to accommodate new commitments, as the public finances have left little room for additional borrowing.
Healey has advised the Cabinet to prepare for potential cuts to finance some of the new pledges, assuring that his economic strategy would be anchored in fiscal discipline and adhere to the fiscal rules established by his predecessor, Rachel Reeves.
Full list of Burnham’s policy pledges since becoming Prime Minister
- Energy bill VAT cut
- A plan to end rough sleeping
- Number 10 North
- Business rates rebalanced
- Tax sharing for mayors
- Education overhaul
- Social care reforms
- Tackling small boat crossings
- Nuclear renewal
Full analysis here.
