Andy Burnham’s government has set a date for a late October budget to “spread money and power” out of Westminster as the new prime minister pushes forward his tax and spending plans.
Announcing an autumn budget for 28 October, the chancellor, John Healey, said Labour would stick to its fiscal rules with its agenda to give businesses and households stability for the future.
Burnham has used his first two weeks in power to make a blitz of policy announcements, including a VAT cut on energy bills, slashing business rates for pubs, clubs and live music venues, capping bus fares, and promising to give England’s regional mayors a share of income tax.
Pushing to turn around Labour’s faltering performance in opinion polls under Keir Starmer, the prime minister will however need to spell out how his change in direction is funded in a tricky autumn budget.
The UK government has faced a sharp rise in borrowing costs on global financial markets in recent weeks as the economic fallout from the Iran war hits activity, stokes inflation and adds to the financial pressures for countries around the world.
With elevated levels of annual borrowing and the UK national debt at the highest point since the 1960s, City investors warn that Burnham has limited room for manoeuvre in the public finances. The prime minister has also committed to stick to Labour’s manifesto promises, including ruling out an increase in income tax, national insurance or VAT.
City traders had expressed unease over the potential appointment of Ed Miliband as chancellor and Burnham taking a looser approach to the public finances. While picking Healey for chancellor and pledging to retain Rachel Reeves’s fiscal rules – which require spending to be balanced by receipts – has eased concerns, investors still warn the government faces a delicate balancing act that may lead Burnham to consider tax rises.
In his first weeks in office Burnham had initially suggested he could look at “any flexibility” in the fiscal rules. He has also faced calls to consider a wealth tax and to overhaul property taxes, and has not ruled out tax rises to fund social care.
Approaching the budget, Labour has a raft of policy measures that will require funding details to be spelt out, including Burnham’s cost of living support, devolution plan and billions of pounds of cuts pencilled in by Starmer and Reeves to support a £15bn increase in defence spending over five years.
Healey said Labour was “working fast to restore hope” with the government’s announcements and that he was pushing to “get on with the job” in his first budget as chancellor.
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“This will be a budget that moves money and power out of Westminster and into every postcode around Britain.
“It will be built on fiscal discipline. It will meet our fiscal rules. It’ll give businesses and families some of the stability they need to plan for the future.”
