Prime Minister Andy Burnham has admitted that his first budget was not as radical as he would have preferred, attributing the decision to significant economic uncertainty facing the nation. Speaking to ITV, Burnham explained that while he desired to implement further measures, such as higher energy support payments, external events like the war in Iran had pushed up borrowing costs and restricted the government's room for manoeuvre.
Chancellor John Healey announced a series of relatively modest measures on Wednesday, including a £100 payment for most households to assist with winter energy bills. The announcement has drawn criticism regarding insufficient action on defence spending, welfare cuts, and broader cost-of-living support. Burnham defended the decision as a significant step, noting that asking banks to repay aid received two decades ago and providing payments to 20 million households represented substantial progress within the available constraints.
Burnham emphasized that the current volatility of global events makes it impossible to deliver an ideal budget. He stated that no prime minister or chancellor would claim their budget was perfect, given the inherent difficulties of fiscal planning in turbulent times. Looking ahead, he outlined plans for major reforms to the benefits system aimed at preventing young people from needing to claim welfare unless they are unable to work due to disability or other specific reasons.
These welfare reforms will be detailed in the coming months following two major reports by former minister Alan Milburn and current minister Stephen Timms. Burnham assured that these changes would not involve "brutal cuts" leading to absolute crisis, though he reiterated his stance that individuals in their 20s should not be reliant on benefits if they are capable of working.
Upon taking office this year, Burnham promised an end to 40 years of neoliberalism with sweeping economic changes, including higher taxes on wealth and the nationalisation of major utilities. However, the government has so far focused on smaller announcements intended to provide voters with "breathing space" while more radical plans are developed. These measures have included tax cuts on energy bills, reduced bus fares, and fines for playing music loudly on public transport.
Conservative leader Kemi Badenoch questioned the scale of the budget, suggesting many citizens would feel it was insufficient. Burnham noted that his options were further limited by Labour's 2024 manifesto, which secured a landslide victory but ruled out raising income tax, national insurance, or VAT. He admitted that if he had written the manifesto himself, it would have been different, though he indicated he would seek his own mandate in the future.
The government also faces pressure regarding defence spending. Tan Dhesi, Labour chair of the defence select committee, accused the administration of inaction this week. Defence Secretary Wes Streeting rejected these claims, stating that immediate investments are already underway and more will be announced during the spending review. Streeting acknowledged that trade-offs are necessary, hinting at potential cuts to other departments next year to prioritise defence funding.
Sources: The Guardian Business.