Burnham weighs bigger budget as experts lobby on economy

Andy Burnham, the U.K.’s presumptive next prime minister, is considering unveiling a bolstered budget later this year as allies and experts seek to persuade him to pursue a land tax, public control of utilities and a more ambitious devolution strategy.

Burnham is on course to take over from Keir Starmer on July 20, with little known of the policies he plans to enact. That has led would-be advisers and ministers to jockey for jobs in his government and policy ideas as he itches to deliver rapid change while planning for his first months leading Britain.

One idea Treasury officials are exploring, after preliminary talks with Burnham’s team, is to merge the annual budget — usually held in October or November — and the spending review set for departments, the Financial Times reported Sunday. They are typically held separately, though in her first budget in 2024 Chancellor Rachel Reeves also chose to set departmental budgets the year ahead in a bid to particularly boost education and health funding.

Fast-tracking departmental spending decisions could allow Burnham to set his priorities going into a general election due in 2029 and set out a clearer path to channeling 3.5% of economic output to defense spending — something he’s promised to increase. But it would also pile pressure on his would-be Chancellor to produce an expanded document in mere months, when spending pressures in the years ahead remain uncertain.

The Treasury and Burnham’s spokesperson didn’t respond to requests for comment. One Treasury official said the idea of a bigger budget was likely to have been mooted, but that plans weren’t yet being worked up.

Reeves, who is expected to depart the role when Burnham enters Number 10, defended her two-year tenure in a BBC interview over the weekend by arguing the former Greater Manchester mayor will inherit a stronger economy than she did. Still, she urged him to ensure he has a “worked-through plan” and is clear about what he wants to achieve when he takes over.

“Governing is hard in Britain, and lots of challenges and shocks will come his way,” Reeves said. “He needs to stay laser-focused on things that have always motivated him.”

Burnham’s close ally Louise Haigh, who’s expected to be given a senior role in his cabinet, assured voters this week that Burnham has a detailed plan that he’s been working on for a long time.

So far, Burnham has said he wants to hand considerably more power to local authorities and launch a Number 10 in the north of England, with his most thought-out policies so far surrounding devolution. But he’s wavered and then committed to maintaining the Reeves fiscal rules and rowed back on plans being considered to split the Treasury.

He’s also suggested he wants to extend public ownership of utilities and has said there is “some room” for movement on tax while vowing to stick to his Labour Party’s manifesto promises not to raise income, national insurance or value-added tax. He suggested to LBC last week that increased business rates on warehouses could be used to fund tax cuts for small hospitality businesses.

His close ally Miatta Fahnbulleh, who has been helping him draw up policy ideas alongside Haigh and Josh Simons, also told the BBC on Sunday that the government needs to “do more” to help small and medium-sized businesses, give local authorities more “power, resources, tools” and invest more in order to help raise living standards.

“That means dealing with the cost of living in the short-term to give people some respite,” she said. “But also fundamental reform to the essentials that people need to live well: housing, energy, water, transport are all far too expensive and we’ve got to reform them to make them more affordable through public control.”

In a paper on regional growth for Harvard and King’s College London, former Labour shadow Chancellor Ed Balls, who worked for the Treasury under Gordon Brown, and his team argue that Burnham should establish a prime minister-chaired Regional Growth Delivery Unit to drive a faster, more ambitious devolution policy after it stagnated under Starmer.

A U.K. Growth and Productivity Strategy between ministers and mayors should also be agreed by the end of the year “to iron out inconsistencies in existing plans and to sign-off a shared plan for action,” the report recommended.

That includes a region-by-region investment plan in the spending review and for mayoral elections to be held throughout the country by 2029. “The test for the rest of this parliament is whether the new center now gives it the powers, money and direction to match and can credibly make the argument that this strategy will boost regional growth and living standards over time – or whether national inertia once again outlasts local ambition,” according to the report.

Meanwhile, tax expert Dan Neidle endorsed an idea Burnham has previously advocated to introduce a land value tax. The next government should consider scrapping council tax, business rates and stamp duty and to replace them with a new tax of around 1.3% on the value of land, raising the same £100 billion, he said.

He cautioned that Treasury would have to work out the complicated method of valuing tax and be careful to avoid shocking property owners with sudden bills.

“I would love Andy Burnham to be the implausible politician who does this,” said Neidle, while expressing doubt that he would pursue such a complicated tax policy with just two to three years left before a election must be held.