Andy Burnham refused to rule out further borrowing or tax rises at his first PMQs as Prime Minister, blaming the UK’s exposure to rising gilt yields on Conservative economic management over the previous 14 years. The Burnham first PMQs borrowing exchange came as UK government borrowing costs hit levels not seen in nearly two decades, setting an uncomfortable backdrop for a new administration still to deliver its first Budget.
Challenged by Tory leader Kemi Badenoch on where additional spending would come from, Burnham declined to commit to any specific path. ‘I’m not going to do what any prime minister has done and write the Budget here,’ he said. He pointed instead to early moves already taken, including a cut in business rates for certain sectors and the removal of VAT from household energy bills, and said he had ‘taken a deliberate decision to set an early date for the Budget so that we reduce the period for prolonged speculation.’
Budget date set as gilt pressure mounts
Chancellor John Healey’s first Budget will be held on 28 October, according to BBC News. That timetable matters. Economists have warned that Healey is more likely to announce tax hikes at the Budget as a result of higher gilt yields, which could halve the government’s fiscal headroom depending on judgments taken by the Office for Budget Responsibility in October. Burnham said Healey would stick to the fiscal rules and that his government would be ‘grounded in fiscal responsibility.’
Badenoch accused Burnham of being a ‘spendthrift people-pleaser’ who ‘wants to say yes to everyone but cannot tell us where the money is coming from.’ Burnham hit back, accusing the Tories of presiding over ’14 years of stagnant growth’ and ’14 years of debt rising.’ He also turned on shadow chancellor Andrew Griffith for his role as a Treasury minister during the Liz Truss and Kwasi Kwarteng mini-budget.
Burnham first PMQs borrowing debate: what the early tax moves involved
The early measures Burnham referenced carry real costs. According to CNBC, Burnham and Healey announced they would cut sales tax on household electricity bills from 5% to 0% from October, a move that will cost £850 million in 2026-27. Separately, the BBC reports that Burnham announced a reduction in business rates for pubs and a cap on bus fares in England.
The electricity VAT cut is being funded, at least in part, by scrapping the Digital ID programme put in place under the previous Starmer administration, which was expected to cost £1.8 billion over three years, according to CNBC. That decision gives Burnham a ready answer to questions about fiscal discipline: the VAT reduction is offset by a spending cut elsewhere, rather than added to the borrowing pile. Whether that framing holds once the OBR publishes its October assessment is another matter.
Critics will note the tension in Burnham’s position. His spokesman acknowledged that the Prime Minister would point out ‘where they disagree’ with the opposition on policy, even as Burnham has stated an ambition to end political ‘point scoring.’ The spokesman added that Burnham remained willing to work with Badenoch on welfare reform for young people out of work and on social care.
Defence spending drawn into the session
The session also surfaced a pressure point on defence. Tan Dhesi, chair of the defence committee, told Burnham that ‘vibes alone are not going to be good enough’ for protecting the country, and asked the Prime Minister to commit urgently to a pathway to spending three per cent of GDP on defence by 2030. Dhesi noted that Healey himself had described that level as ‘critical to keep our country safe.’
Burnham said he had ‘made that commitment’ and indicated that a full plan for raising defence expenditure would come in the middle of next year. That leaves the detail at least six months away, and the commitment verbal rather than costed. For a Prime Minister who spent his first session insisting he was taking fiscal responsibility seriously, the defence question added another unresolved line item to a Budget that will be closely watched when Healey rises on 28 October.
