Prime Minister Andy Burnham has not ruled out the possibility of tax increases in the upcoming autumn budget, stating he must be realistic about the "challenging" state of public finances. Burnham, who took office in July with a pledge to ease the cost of living, indicated he would adopt a "careful approach" to economic management.
Speaking during his first official visit to Ukraine, Burnham defended the cost of living measures already announced, such as capping bus fares at £2 and reducing VAT on household electricity, as funded initiatives. He explained that these were made possible by reprioritizing funds from other areas, citing the decision to de-prioritize a digital ID scheme. "I took the decision early on that digital ID wasn't the top priority for now. And so we've reprioritised funding to other priorities," he told ITV.
When pressed on whether the public should anticipate tax rises to cover spending gaps, Burnham suggested it was not a certainty but emphasized his commitment to fiscal prudence. "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," he stated. "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."
Burnham has previously acknowledged that the initial cost-of-living measures are insufficient and hinted at further support. He reiterated that while he would do what he could, "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."
Official figures released last week showed higher-than-expected government borrowing in July, despite record income tax receipts. Inflation reached a four-month high of 2.9% in July and is predicted to increase further due to the ongoing impact of the Iran war on energy and fuel costs. Experts have warned Burnham and Chancellor John Healey that they face limited financial maneuverability in their first budget on October 28, suggesting a need for either tax increases or spending cuts. Both the prime minister and chancellor have committed to adhering to the fiscal rules established by former chancellor Rachel Reeves, which aim to ensure day-to-day spending is covered by tax revenue by the end of the parliamentary term and to reduce debt relative to GDP.