In his first speech as prime minister, Andy Burnham promised to give people more "breathing space" to help with the cost of living — but immediately acknowledged that one of his key proposals, raising the tax-free personal allowance, would be "difficult" in the current economic climate.
Policies will be announced on Tuesday, his first full day in the job, though the new prime minister confirmed he will be "looking at" the personal allowance ahead of his first Budget in the autumn. The cost of living has dominated people's lives in recent years, Burnham has previously said, with many unable to "go out for a pint on a Friday, can't take the kids out and can't go on holiday owing to the pressure on their finances."
“Burnham promises to ease cost of living, looking at tax-free allowance but admits change is difficult.”
Yet easing that pressure has not been easy. His predecessor, Sir Keir Starmer, and former chancellor Rachel Reeves removed £150 from a typical annual domestic energy bill in April by cutting some levies and moving others onto taxation. But those bills soon went up again, as did the cost of food and mortgages, because of the impact of US-Israeli strikes on Iran. "A more volatile world is a more expensive world," said Adam French of the financial information service Moneyfacts.
Burnham's new chancellor, John Healey, will be the one who has to deliver any changes and outline how to pay for them. Under existing policy, income tax and National Insurance thresholds have been frozen until April 2031 in England, Wales and Northern Ireland — a significant revenue raiser. Partially reversing that freeze would mean money must be found elsewhere or borrowed. Burnham has also hinted at "asking for a little bit more" in tax from some people.
Speaking on his first day as PM, Burnham admitted that changing the personal allowance would be "difficult" in the current economic circumstances. The new prime minister faces tough choices on funding any support for energy bills, transport costs, care, and housing — and managing the trade-offs that come with them. For the moment, he has promised a first full day of announcements on Tuesday, followed by a Budget in the autumn that will reveal how he intends to deliver on his promise of "breathing space" for struggling households.