Just days before becoming prime minister, Andy Burnham has refused to rule out a wealth tax – while also vowing to overhaul the House of Lords. The incoming Labour leader is walking a tightrope between his party's left wing and a public wary of more tax rises, all against a backdrop of sluggish economic growth.
The basics are straightforward. On Monday, Burnham will take over from Sir Keir Starmer, having won the Makerfield by-election last month. In an interview with Gary Lineker, he said he would not rule out a wealth tax and that “decisions to be taken in time” would be “difficult”. He has already pledged to stick to Labour’s 2024 manifesto commitments not to raise VAT, income tax or national insurance – but that leaves wealth as a potential target. Meanwhile, he has backed replacing the unelected House of Lords with a “senate of the nations and regions” made up of elected representatives.
“Andy Burnham's plans for a wealth tax and Lords reform explained for UK readers.”
Why is this happening now? Burnham is inheriting a fragile economy. Official figures show the UK economy grew just 0.1% in May, after a 0.1% fall in April, though the service sector expanded by 0.3%. Experts warn he faces “tough choices” on tax. With options limited by his manifesto pledges, some Labour MPs, economists and campaigners want a wealth tax – for example, a 2% levy on assets over £10m, backed by Oxfam and Tax Justice UK. The Green Party supports a 1% annual tax on assets over £10m and 2% over £1bn. The Lords reform push follows Starmer’s move to abolish hereditary peers; Burnham called the current upper chamber “quite scandalous”.
For UK readers, the implications are direct. A wealth tax could affect anyone with assets above £10m – but the wider debate is about fairness and public finances. Burnham hinted he may “ask for a little more” tax, but hasn’t said when. House of Lords reform would change how laws are scrutinised; the Lord Speaker, Lord Forsyth, warns that an elected second chamber could cause “gridlock” like the US Congress, and that regional representatives might prioritise local interests over national ones.
Key questions answered: Q: What is a wealth tax? A wealth tax is an annual levy on an individual's net assets – such as property, shares, and cash – above a certain threshold. The proposals being discussed would tax assets over £10m at 1-2% each year.
Q: Why does Burnham want to reform the House of Lords? Burnham believes an unelected second chamber is undemocratic. He backs a “senate of the nations and regions” with elected members, arguing that the current Lords is too London-centric and doesn't understand issues affecting the rest of the country.
Q: Will Burnham actually introduce a wealth tax? He hasn't ruled it out, but he has said decisions are “for another day”. He first wants to review the public finances. The final decision will depend on economic conditions and political pressure.
What happens next? Burnham becomes PM on Monday and will appoint a cabinet – Shabana Mahmood is tipped as chancellor. The Bank of England decides on interest rates on July 30, with some economists saying a rate hike is more likely than a cut. Burnham has promised an “early change” to the Lords, but the Lord Speaker will warn against “blowing a constitutional fuse” in a speech on Thursday. On wealth tax, Burnham will need to balance his party's left flank against public opinion and economic reality. The coming weeks will reveal which way he leans.