1. Welfare
Burnham will be in power when the final recommendations of the Timms review into disability benefits land. The interim report recommends radical changes to personal independence payments and a more humane assessment process.
Personal independence payments have surged since 2020 and are forecast to double by 2030. The new PM will face a rightwing opposition who will demand cuts, especially to those with fluctuating mental health conditions such as anxiety. Ministers have already indicated their aim is not to make more savings, but to stop the bill growing even further.
The situation clearly needs overhauling, but to do this without significant harm to those dependent on the payments – and without causing significant ructions with Labour MPs – will be one his trickiest balancing acts.
2. Defence investment
Allies of Burnham say he accepts the defence investment plan – which commits £298bn to buying weapons over four years – as “settled”, even though it requires finding an additional £4.7bn at the next budget.
There are also longer-term questions over how he could find the money to increase Britain’s defence spending to 3.5% of gross domestic product by 2035, as his predecessor promised.
One option considered by Starmer’s officials but ultimately rejected would be to print “defence bonds” – new debt that could only be spent on defence.
3. Taxation
The Makerfield MP has promised to stick to Labour’s 2024 manifesto pledges of not raising income tax, national insurance or VAT. He recently told LBC, however, that there was “some room within that manifesto for movement on tax”, prompting speculation about which taxes he may seek to raise to pay for some of his more expensive policies.
The one tax Burnham has talked about changing is business rates, which he says he wants to refocus so that large companies with out-of-town warehouses such as Amazon pay more, and small high-street businesses pay less.
He may need something more radical to pay for this, however, with allies talking up the possibility of a significant rise in capital gains tax.
4. Immigration
Burnham is planning to proceed with most of Shabana Mahmood’s proposed overhaul of the immigration system. This includes changes to gaining indefinite leave to remain (ILR) from five to 10 years and scrapping permanent refugee status, making people eligible to be removed if their countries are deemed safe.
Mahmood, who is tipped to remain home secretary, may yet soften the ILR changes, with many Labour MPs uncomfortable about them applying retrospectively.
The changes may yet be Burham’s biggest tussle, as well as other controversies over the use of houses of multiple occupancy and military sites as accommodation for asylum seekers, and the continuing numbers of arrivals on small boats.
5. Jury trials
Burnham has publicly expressed doubts about the plans to limit the number of jury trials. The suspended Labour MP Karl Turner, who opposes the changes, has told colleagues that Burnham has committed privately to scrapping them.
However, if the plans are ditched, Burnham is likely to face a backlash from some female Labour MPs who back the changes on the basis of speeding up criminal cases, particularly those involving violence against women. Two ministers who resigned from Starmer’s government – Jess Phillips and Alex Davies-Jones – have been making the case for pressing ahead with the changes or face the court backlog continuing to rise.
6. White House relations
Donald Trump has blown up even the best laid plans for Starmer – and that was when the pair were on good terms. There is nothing Trump cannot derail and he is prepared to brazenly interfere in UK politics, including ringing Reform UK’s Nigel Farage to congratulate him when Starmer stood down.
As Manchester mayor, Burnham has barely featured on the US president’s radar – unlike London’s Sadiq Khan – and there are not many embarrassing anti-Trump comments in Burnham’s past.
However, it will be a high-stakes meeting when they have their first encounter – which may be at the G20 summit in Miami, Florida, in November. Burnham plans to keep Jonathan Powell as national security adviser, which is likely to provide much-needed continuity of relations.
7. Middle East
Burnham’s first foray into geopolitics was an apology for Labour’s handling of the conflict and suffering in Gaza that alienated so many of the party’s supporters. He has promised to be much tougher on Israel, including further potential sanctions. But it will be the Iran conflict – and its economic fallout – that is likely to be his first big international challenge, especially after the disintegration of the fragile ceasefire.
The UK public is yet to really feel the pain of the energy crisis that could yet come from the blockading of the strait of Hormuz. While no one expects Burnham to commit any British firepower to the US and Israeli-led offensive, he will have a decision to make on how much he contributes to any peacekeeping or clearup operation.
8. Europe
Starmer put closer ties with Europe at the heart of his attempt to stay in power, although the Labour manifesto red lines on customs union and single market have tied the hands of negotiators. Burnham would have been facing a crucial UK-EU summit to sign off a new food and drinks deal just two days after entering No 10, but the meeting has been postponed because of the turmoil that would have irritated Brussels.
Burnham has said before that, at heart, he believes the UK should return to the EU but distanced himself from that aim during the Makerfield byelection. With promise to put more focus on domestic issues, he may not give closer ties with Europe as much focus as Starmer.
9. Devolution
If Burnham has one big change he wants to achieve in office, it will be significant and widespread devolution of powers to local mayors and authorities – from tax to education and transport. This “rewired Britain” was at the heart of the first – and only – policy speech he has given since he became the Makerfield MP and was what he has termed “Manchesterism”.
Labour’s English Devolution and Community Empowerment Act 2026 gives many more powers to mayors already but Burnham has suggested he will go further in Wales and Scotland. But the approach does have its opponents within the Labour party – especially those uncomfortable with handing sweeping powers to Reform UK mayors and those in London and the south of England who already feel uneasy about emphasising the regional divide.
10. Thames Water and public control of utilities
Alongside devolution, possibly Burnham’s biggest domestic policy intervention is likely to be on the ownership of utilities. He has promised to put the “essentials of life” under public control, though what exactly that means remains unclear.
The first test of his radicalism is likely to come with the stricken Thames Water, whose creditors are trying to engineer a buyout. Emma Reynolds, the environment secretary, recently wrote to the water regulator Ofwat spelling out her opposition to the proposed buyout deal.
If an agreement cannot be reached, the most probable outcome for the company is that it enters a special administration. The question for the Burnham government will then be whether to spend public funds buying it out, legislate to nationalise it, or simply allow it to go back into the private sector with stricter regulation.
11. AI
Some senior members of government think advanced technology and AI in particular will be the defining political challenge of the next two years. It is not something Burnham has said much about, although recent reports suggest he is sceptical of some of the more pro-tech positions taken by the Starmer government.
One immediate decision Burnham will have to make is what to do about copyright rules for AI companies that want to use creative content to train their tools. Starmer’s government originally proposed giving a blanket exception to the rules for this purpose, with an option for content creators to opt into such rules if they would like to.
But that position is being reviewed under heavy protest from some of the country’s most high-profile artists, including Elton John and Paul McCartney. The new prime minister will also have to decide how much to invest trying to build Britain’s AI capacity, amid concern that the UK is too dependent on US technology.
12. North Sea oil and gas
Labour went into the last general election promising not to issue any new licences to explore oil or gas in the North Sea, a promise that has caused angst among fossil fuel companies and unions with large representation in the industry. Burnham is unlikely to break that promise, especially if he makes the energy secretary, Ed Miliband, his chancellor.
But his government could choose to approve the new Jackdaw and Rosebank fields, which do not require new licences. A decision on Jackdaw is likely to come as soon as next month.
