Andy Burnham has refused to dismiss potential tax increases in the upcoming Budget, stating he “won’t be unrealistic” regarding the state of public finances.
Acknowledging that the UK faces a “challenging position”, the Prime Minister maintained his strategy for the economy would involve a “careful approach”.
Speaking during his initial trip to Ukraine, Mr Burnham stood by promises to cap bus fares at £2 and lower VAT on household electricity bills as “funded commitments”.
However, uncertainty persists regarding how other key promises, including a £5 billion defence commitment made prior to entering No 10 alongside his plans for major reforms to the social care sector, will ultimately be paid for.
Furthermore, proposals to finance the VAT cut by scrapping the former Labour administration’s digital ID scheme have faced scrutiny, after former minister Darren Jones stated that the previous policy had not been properly costed.
Asked whether the public should accept they will have to pay more in tax rises for some policies, the Prime Minister told ITV News: “They don’t necessarily need to accept that.
“What I have put out so far, I wouldn’t say is everything, but they are the first steps and they are significant.”
Pressed on whether he would need to fill in spending gaps with tax hikes, he said: “I will always take a careful approach to things. I ran Greater Manchester for 10 years and we ran a very tight ship with rock solid finances.
“Nothing will change as I come into this role as Prime Minister. I won’t take risks with people’s jobs or their livelihoods or their family finances.
“I will try to help them in whatever way I can, I have already done some things that will help them.”
He added: “I will do what I can but I won’t be unrealistic and people really need to understand that.
“We are in a challenging position, whatever I do will be carefully thought through, it will be funded and there will be more to come as we go into the autumn.”
Asked whether his messaging in the run-up to the autumn statement meant that people should expect to pay more tax following the autumn Budget, Mr Burnham told LBC: “No, it doesn’t mean that.
“We have a manifesto and I will honour that manifesto.”
He suggested it would be possible to improve the cost of living by “changing some of our priorities” and promised to approach the finances “prudently and carefully”.
The fiscal squeeze facing new Chancellor John Healey ahead of his inaugural Budget has been laid bare as official figures showed government borrowing unexpectedly rose to £1.8 billion last month.
The Office for National Statistics (ONS) said government borrowing stood at £1.8 billion in July, £700 million or 68.7% higher than a year ago and confounding expectations.
The hike came despite a record July for income tax receipts.
Inflation also surged to a four-month high of 2.9% in July amid the fallout from the Iran war.
Experts, including the National Institute of Economic and Social Research (Niesr), have warned Mr Healey that he will need to either raise taxes or cut spending elsewhere as pressure on the public finances has left no room for extra borrowing.
The Chancellor has told the Cabinet they must be prepared to make cuts to finance some of the new pledges, and promised his economic plans would be “built on fiscal discipline” and meet the fiscal rules set by his predecessor Rachel Reeves.
Shadow chancellor Sir Mel Stride said Mr Burnham was “staring down the inevitable barrel of tax rises” after announcing pledges “without a plan”.
He said: “It doesn’t matter who is in charge, it is the Labour Party itself that’s the problem.”
