Fears are growing of potential tax increases under Andy Burnham's leadership, following his remarks indicating 'room' for further fiscal adjustments. Burnham, widely expected to succeed Keir Starmer as Labour leader on July 20 after returning to Parliament, has signaled a potential shift to the left within the party's economic agenda.
While Burnham has pledged to adhere to the 2024 general election manifesto, which excluded rises in income tax, National Insurance, or VAT, he also stated there remains "some room" for "movement on tax." This has sparked concerns that he may pursue changes to council tax, inheritance tax, and stamp duty, and potentially revisit pension policies. These potential changes come as Burnham faces the immediate need to address a reported £4.7 billion deficit in the defense budget.
Tory leader Kemi Badenoch criticized the prospect of further taxation, stating that current tax levels are "already far too high" and are hindering economic growth. She argued that any "room for movement" should be directed towards spending cuts to facilitate tax reductions.
One tax measure Burnham has confirmed is a planned increase in business rates for large online warehouses, such as Amazon. The revenue generated would be used to fund a 20% reduction in business rates for pubs and the complete abolition of business rates for certain high street businesses.
However, the details of other potential tax reforms remain unclear. During his campaign for the Makerfield MP seat in May, Burnham advocated for significant changes to property taxes. He expressed support for a land value tax and a reform of council tax, which he described as "highly regressive." He suggested that changes to land, property, and business taxation are warranted and has previously proposed a land value tax as a replacement for stamp duty. Such a shift could lead to higher taxes in areas with more valuable land, like London and the South East, while potentially lowering them in areas where land is less expensive.
Burnham has also indicated a willingness to re-examine inheritance tax to address social care funding, having previously proposed replacing it with a "care levy" to support a national care service. His assertion about "movement on tax" has also revived speculation about aligning capital gains tax rates with income tax bands. Currently, capital gains tax has a maximum rate of 24%, significantly lower than the 40% higher rate of income tax. Reports suggest Burnham is considering this change to fund the removal of green levies from energy bills, shifting that cost to general taxation. This approach could also be applied to water bills, public transport, or social housing costs as part of a broader effort to make living expenses more affordable.
Despite these potential tax considerations, Burnham has committed to maintaining the triple lock on state pensions, in line with the Labour manifesto. This commitment exists even though two of his economic advisors, Richard Hughes and Jim O'Neill, have previously expressed concerns about the sustainability of the triple lock. Another advisor, Andy Haldane, has suggested that pension tax relief should be contingent on savers investing within Britain.