Prime Minister Andy Burnham has indicated he will not exclude the possibility of tax rises when the government presents its first Budget on 28 October, while emphasizing the need for a cautious approach to economic management. Speaking during an official visit to Ukraine, Burnham stated he would not be “unrealistic” about the state of public finances and promised that any decisions would be “carefully thought through” and fully funded.
Burnham assumed office in July with pledges to provide relief on the cost of living, including capping bus fares at £2 and reducing VAT on household electricity bills. He characterized these measures as initial steps made possible through reallocation of existing funds, noting that he had deprioritized digital identification projects to redirect resources. When pressed on whether the public should anticipate tax increases, the prime minister suggested this would not necessarily be the case, but acknowledged the challenging fiscal environment.
Financial experts have cautioned that Burnham and Chancellor John Healey face limited options in their first Budget, with pressure mounting from various economic headwinds. Recent data showed government borrowing exceeded expectations in July despite strong income tax receipts, while inflation climbed to a four-month high of 2.9% in the same month and faces further upward pressure from geopolitical factors affecting energy and fuel costs.
Both Burnham and Healey have committed to maintaining fiscal rules established by former chancellor Rachel Reeves, which require day-to-day spending to be funded through tax revenue and mandate debt reduction as a percentage of GDP. Business leaders have expressed concerns about rising employment costs, with the Confederation of British Industry chief executive calling for targeted support to encourage job creation and economic growth.
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