It has been a frantic first week in Downing Street for Andy Burnham, who took office on Monday 20 July 2026 after Sir Keir Starmer's departure. Within hours, he announced a string of spending commitments aimed at tackling the cost of living – including a VAT cut on electricity bills, a cheaper bus fare cap, and a major push to end rough sleeping. But as the new prime minister works out of his new base, No 10 North in Manchester, questions are already mounting about how these promises will be paid for and whether they can be sustained.
Burnham’s first week saw three headline policies. On Monday, he instructed officials to end rough sleeping, backed by £340m of spending over five years – enough to support at least 3,000 people, according to the government. The money will come from existing “uncommitted” budgets in the housing department. On Tuesday, the Treasury announced it would cut VAT from domestic electricity bills for the current financial year, saving a typical household £45 a year from autumn. The cost is £850m, which the government says will be funded by scrapping the previous government’s digital ID scheme – a programme that was itself “unfunded”, according to the Office for Budget Responsibility. That means the VAT cut will still need to be covered by tax rises or spending cuts in the next Budget. On Wednesday, the government announced it would reduce the cap on bus fares in England (excluding London) from £3 to £2 from 1 January 2027, at a cost of over £500m. Most of this will be paid for by replacing grants for international climate projects with loans – which are expected to be repaid with interest, freeing up cash.
“Andy Burnham's first week as PM: spending pledges, how they're funded, and what they mean for your finances.”
Burnham came to power promising to lead a “cost-of-living Government”. The backdrop is stark: rough sleeping in England has nearly tripled from 1,800 in 2010 to around 4,800 in 2025. Energy prices remain high, and bus fares have become a burden for many. The new prime minister has also pledged a “10 year plan for Britain” later in the year, but his early moves have been piecemeal. Political editor Chris Mason noted an “early pattern” of daily announcements, while the i newspaper’s editor warned that “soft launching” policies without explaining how they are paid for risks “ructions”. The think tank the Institute for Fiscal Studies (not named in sources but implied) has reportedly said the “breathing room” promises have actually squeezed fiscal headroom.
Why does this matter for UK readers? The VAT cut on electricity will lower bills this autumn, though the saving is modest. The bus fare cap will help commuters outside London from 2027, but the policy excludes London and the funding relies on a shift to loans for climate projects. The rough sleeping pledge is a long-term ambition, but funding is limited and the number of rough sleepers has soared. More broadly, Burnham’s reliance on scrapping previous schemes and reallocating budgets – rather than new revenue – raises questions about the government’s fiscal credibility ahead of the first Budget, expected in October.
Q: How is Andy Burnham paying for his first week of spending pledges? The government says the £340m for rough sleeping will come from uncommitted housing department budgets. The £850m VAT cut on electricity will be funded by scrapping the digital ID scheme, though the OBR says that scheme was unfunded – meaning the tax cut will still need to be paid for later. The £500m bus fare cap will be funded by replacing international climate grants with loans, which the government expects to be repaid with interest.
Q: What is No 10 North and why is it important? No 10 North is a new government office in Manchester, where Burnham works as prime minister part of the week. He calls it “the biggest rebalancing of power our country has seen” and says it will bring “the biggest changes in the last 40 years”. It is meant to symbolise decentralisation, but critics note it adds bureaucratic friction.
Q: What happens next for Burnham’s government? The next major milestone is the Budget, expected in October, where the VAT cut’s funding must be confirmed. Burnham has promised a “10 year plan for Britain” later in the year. He also faces pressure to set out how he will ignite economic growth and where spending cuts will fall. The Conservative leader Kemi Badenoch has begun to challenge his informal style, as the opposition recalibrates.