The main question going into John Healey and Andy Burnham’s first Budget was not so much what they wanted to do, but what they could actually do.
Andy Burnham may have stood outside Downing Street promising real change, but he has inherited both a manifesto, and an economy that leave very little room to manoeuvre. The combination of commitments not to raise income tax, National Insurance or VAT, and a group of backbenchers unlikely to welcome significant cuts to the ballooning benefits bill, has meant that the Chancellor is having to play chess with half his pieces missing.
What this has resulted in is a Budget of relatively small measures. You could actually be forgiven for wondering whether the Chancellor had misplaced half of his speech. Much of the reaction from journalists and political commentators confirmed this, with one of the key reactions being: ‘Is that it?’
The announcement that will grab the headlines is a £100 Household Energy Payment for homes in council tax bands A to D, reaching up to 20 million households in England. The announcement fits in nicely with the message Burnham has pushed since becoming Prime Minister of giving people some ‘breathing space’, but it’s a fairly modest answer to a much bigger cost-of-living question. That said, not many people are going to turn down an extra £100 if it is put in front of them.
There was some positive news for our high streets, with changes to business rates meaning half of retail, hospitality and leisure properties will pay no rates from April 2027. And the changes to business rates don’t stop there. Perhaps the most interesting announcement was on devolution, with elected mayors being able to receive a share of business rates income from their areas from next year and a share of income tax from their areas in 2028. Going further, the Government has committed to scaling up the retention of business rates by mayors to 100% by the end of the decade.
Now, as anyone who has worked in politics will tell you, the Treasury normally dislikes giving up control of the purse strings. This change is a testament to the principles of Andy Burnham, who, having spent years as Mayor of Greater Manchester, clearly sees things differently. Getting the Treasury to loosen its grip on the way money is spent might be one of the bigger achievements hidden in an otherwise quiet Budget.
For the property industry, there were a few nuggets of news. The Government has announced a £4.7 billion Your First Home scheme to offer equity loans to first-time buyers, and a further £1.5 billion to build 10,000 social and affordable homes. Biodiversity Net Gain requirements will also be removed from smaller residential brownfield sites – a move that I know will be welcomed by developers.
One of the things that was noticeable about this Budget wasn’t necessarily what was in it, but what wasn’t. Many of the difficult choices around spending, such as defence, were largely left untouched. Defence is a hot topic right now and one Healey is well versed in, having resigned from Keir Starmer’s Government over its defence investment plan. Welfare reform is another issue that was briefly mentioned, but detail on how the welfare bill will come down was light. Starmer and Reeves found out how difficult it is to persuade Labour MPs to support benefit cuts, and it is likely that Burnham has not forgotten this in a hurry. So, through this prism, perhaps the Budget is best viewed as reassuring the left-wing of the British electorate who were, until recently, abandoning Labour in increasing numbers to back the Greens, Lib Dems and, in some cases, Reform UK. However, they are doing this whilst not doing anything that scares the bond markets, and by this measure, it seems to have succeeded. However, this leads to questions about the Prime Minister’s and Chancellor’s medium-term game plan.
Just today, Burnham ruled out calling a general election in the next 12 months, but the Starmer/Reeves manifesto commitments limit his options, and he has insisted he will stick by them until the next election. I would have thought a new manifesto would give Burnham a fresh mandate, remove some of the financial shackles and give him the room to make the decisions he cannot easily make today. A general election would also enable him to have a different kind of conversation with the electorate, one that considers not only what the Government can do to help its citizens, but also the wider possibilities for the country through the devolution of fiscal powers to regions, electoral reform and a solution to the nationwide challenge of social care.
The run-up to the Budget has seen much speculation and suggestion from across the political spectrum about answers to the nation’s challenges. Burnham clearly has a new way of doing things through the devolution agenda. The current economic conditions have limited the wiggle room for the current Government, so Burnham may need an election to kickstart his plan.
Blog by Greg Ford
Andy Burnham – Andy Burnham ©House of Commons
