Burnham rules out tax rises in first budget
Prime Minister Andy Burnham has indicated he will not raise income tax, VAT, or National Insurance in his first budget later this year, telling LBC he intends to "honour that manifesto". Speaking on his first foreign visit to Ukraine, he played down the prospect of major tax hikes, suggesting he has so far been changing priorities and reorganising other budgets to fund his plans.
When asked whether the public should expect more tax rises in his first budget, he replied: "No, it doesn't mean that." He insisted that just because he wants to show people he is bringing hope and change, it does not mean he will have to hike taxes to pay for it.
However, a separate report from AJ Bell notes that Burnham refused to rule out tax rises in the budget, saying he "won't be unrealistic" about the state of the public finances. The Prime Minister said the UK was in a "challenging position" but insisted he would take a "careful approach" to the economy.
Funding cost-of-living measures
Burnham pointed to the £2 bus fare cap and cutting VAT on household energy bills as examples of extra help with the cost of living. He said he has funded these measures by "changing some of our priorities" and finding money within existing budgets, by "reprioritising existing programmes".
He added: "I think the public would expect me to do that. Where I can help, where I can do something to take that little bit of pressure off, that is exactly what I will do."
He also described the £2 bus fare cap and the VAT cut as "funded commitments", according to AJ Bell's report.
Fiscal challenges and spending questions
AJ Bell's report highlights questions over how some promises will be paid for, including £5 billion in defence spending announced before he entered No 10 and his plans for major reforms to the social care system. Doubts have also been cast over his plan to pay for the VAT cut by cancelling the previous Labour administration's digital ID scheme, after former minister Darren Jones said the policy was not costed.
The report also notes that government borrowing in July was £1.8 billion, up 68.7% year-on-year, and that inflation rose to a four-month high of 2.9% in July, with the rise attributed to the effects of the war in Iran. Experts, including the National Institute of Economic and Social Research, have warned that Chancellor John Healey must either raise taxes or cut spending, and the Chancellor has told cabinet ministers they must be prepared to accept spending cuts to fund new pledges.
Asked whether the public should accept they will have to pay more in tax rises for some policies, Burnham told ITV News: "They don't necessarily need to accept that. What I have put out so far, I wouldn't say is everything, but they are the first steps and they are significant."
Pressed on whether he would need to fill spending gaps with tax hikes, he said: "I will always take a careful approach to things. I ran Greater Manchester for 10 years and we ran a very tight ship with rock solid finances. 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."
He added: "I will do what I can but I won't be unrealistic and people really need to understand that. 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."
Looking ahead to the budget
Burnham suggested that it might be tough to make big moves at this stage, saying: "Obviously people can see the challenging nature of the financial outlook and we will approach it prudently and carefully."
He also noted that more would be set out at the budget, and that he could still raise taxes outside the "triple lock" of manifesto promises, such as council tax or capital gains. The AJ Bell report adds that Burnham committed to meeting the fiscal rules set by the previous government.