As Andy Burnham steps into the role of the UK's seventh Prime Minister in a decade, his inaugural speech sets the tone for a government focused on addressing the cost of living crisis. Burnham's first official announcement was a £340m fund to tackle rough sleeping, a bold move that signals his commitment to fixing what he believes is a solvable issue.
Winners and Losers Under Burnham's Administration
Households: A Priority
Burnham's administration aims to provide relief to households struggling with the rising cost of living. Potential measures include cutting VAT on energy bills, a move that could save households around £94 annually, and exploring fixed-price contracts for older wind and solar farms to stabilize electricity costs. Additionally, Burnham's team is considering extending the £2 bus fare cap, a successful initiative from his time as Mayor of Greater Manchester, to the entire country, bringing local buses under public control.
High-Street Businesses: A Shift in Focus
Recognizing the challenges faced by small businesses, especially in town centers, Burnham plans to cut business rates for pubs, clubs, and music venues by 20%. He also intends to increase the threshold before small hospitality and retail firms start paying business rates, a move that shifts the tax burden away from struggling businesses.
Pensioners: A Commitment to Support
Burnham has pledged to maintain the state pension triple lock until at least 2029, ensuring that pensioners receive an annual increase based on inflation, wage growth, or a guaranteed 2.5%. He also considers raising the income tax personal allowance to address the growing number of pensioners being taxed due to frozen thresholds.
Wealthy Homeowners and High Earners: Potential Changes
Burnham is considering lowering the threshold for the mansion tax, which could bring more high-value properties into scope, particularly in London and the South East. Additionally, he aims to align capital gains tax with income tax bands, potentially increasing rates for those selling assets. The Prime Minister has also signaled openness to a wealth tax, though no specific details have been confirmed.
Inheritors: A New Approach to Inheritance
Burnham proposes replacing inheritance tax with a "national care levy" to fund a National Care Service. This universal levy would apply a flat rate of around 10% to all estates, replacing the current 40% inheritance tax rate on estates over £325,000. This move aims to address the funding gap in social care while ensuring a fair contribution from all estates.
Deeper Analysis
Burnham's approach reflects a shift towards prioritizing the cost of living and the economy, with a focus on supporting households, small businesses, and pensioners. His commitment to sticking with Labour's 2024 manifesto, while ruling out tax increases, showcases a balanced approach to fiscal policy. However, the potential changes to taxes and levies, particularly for wealthy individuals and estates, indicate a more progressive agenda that could face resistance.
Conclusion
As Burnham takes office, his administration's focus on the cost of living and its commitment to supporting households and small businesses is a welcome change. However, the potential impact on wealthy individuals and the proposed changes to inheritance tax highlight a delicate balance between addressing social and economic challenges and maintaining fiscal responsibility. The coming months will reveal how Burnham navigates these complex issues and delivers on his promises.
