Prime Minister Andy Burnham acknowledged on Thursday that his inaugural budget did not meet the level of radical change he had initially envisioned, citing economic uncertainty and external pressures as limiting factors. Speaking to ITV, Burnham explained that while he would have preferred to implement more substantial measures—such as increased energy support payments—rising borrowing costs driven by global events, including the conflict in Iran, constrained the government’s ability to act more boldly.
Chancellor John Healey’s budget, announced earlier this week, introduced a series of modest initiatives designed to provide some relief amid ongoing economic challenges. Key among these was a £100 payment to assist 20 million households with winter energy expenses. Despite these efforts, the government has faced criticism from various quarters for insufficient action on defence spending and the cost of living.
Burnham described the package as a significant step given current fiscal limits, noting the difficulty in balancing ambition with economic realities. “The room for manoeuvre wasn’t what I would have hoped it to be,” he said. He also defended measures such as requesting banks to repay state support received decades ago, portraying them as part of the incremental progress made.
Looking ahead, Burnham outlined intentions to pursue substantial welfare reform targeted at reducing benefit dependency among young people. He emphasized that proposed changes would avoid harsh cuts leading to severe hardship, but stressed a preference for policies that would limit benefit claims by people in their 20s who are able to work. These plans will be shaped by two forthcoming reviews of the benefits system, led by former health secretary Alan Milburn and Social Security Minister Stephen Timms.
Burnham, who assumed office promising to reverse what he described as “40 years of neoliberalism,” including plans for wealth taxes and utility nationalization, has so far focused on smaller-scale initiatives. These have included energy bill tax cuts, reduced bus fares, and even fines for playing music loudly on mobile phones in public transport, measures designed to provide temporary “breathing space” while more comprehensive reforms are developed.
He acknowledged that Labour’s 2024 manifesto, which contributed to the party’s recent electoral success, restricts certain fiscal options such as raising income tax, national insurance, or VAT rates. Burnham said he would seek a fresh mandate before pursuing major changes: “If I had held the pen on the current Labour manifesto, would I have written it exactly like it is? Well, no is the answer to that question.”
Meanwhile, tensions have emerged within government circles regarding defence spending. Tan Dhesi, Labour chair of the Defence Select Committee, criticized the government for a perceived lack of urgency. Defence Secretary Wes Streeting rebutted the claims, insisting the government is already investing directly in defence and that further announcements are forthcoming as part of the upcoming spending review. Streeting acknowledged that increasing defence expenditure requires difficult trade-offs, including potential departmental budget cuts, but defended the prioritization of defence funding as necessary and appropriate.