Andy Burnham began his tenure as Prime Minister by focusing his government’s agenda on addressing the ongoing cost of living crisis affecting households across the United Kingdom. At his first full cabinet meeting in Downing Street, Burnham urged ministers to explore all potential measures, both large and small, to alleviate financial pressures on families, pledging to run what he described as a “cost of living government.”

One of Burnham’s initial steps has been to announce a temporary removal of VAT on electricity bills, effective from October 2026 until April 2027. This measure is expected to reduce the average household electricity bill by about £45 annually at an estimated cost of £850 million. Burnham has indicated that this would be funded through savings by scrapping the government’s digital ID program, although critics have questioned whether these savings have been fully identified. The timing and funding of these measures have raised concerns among fiscal experts, with some warning that pursuing all of Burnham’s spending ambitions without additional revenue could lead to increased taxes or cuts elsewhere.

In addition to energy bill relief, Burnham is expected shortly to announce a reduction of the national cap on bus fares from £3 to £2, expanding on his previous work introducing similar caps in Greater Manchester. This move is estimated to cost around £300 million annually and is intended to ease transport costs for households. Alongside these measures, proposals to cut business rates for hospitality sectors are being considered, aiming to reduce financial burdens on pubs, clubs, and small retailers. To fund this, Burnham has suggested increasing levies on large warehouse operators.

Burnham is also accelerating plans for a national social care service, potentially introducing a system modeled on the National Health Service, providing care free at the point of use. The government aims to fast-track the review of social care led by Louise Casey, initially due by 2028, with a view to delivering recommendations as early as next year. This ambitious reform could require additional funding and is likely to generate political debate given its scale and cost.

The new prime minister has signaled a commitment to maintaining fiscal discipline, ruling out increases in borrowing to fund defence spending or other priorities. Although John Healey, Burnham’s chancellor and former defence secretary, had previously resigned over perceived underfunding of the military, Burnham has indicated a willingness to reassess defence budgets, emphasizing the need to finance these within existing budgets. Plans to increase the personal tax allowance—raised by Burnham’s constituents during the Makerfield by-election—have been put on hold amid concerns about affordability.

Burnham’s early cabinet reshuffle, which removed or demoted a significant number of officials loyal to his predecessor Keir Starmer, has drawn criticism for perceived factionalism. Notably, Scottish Labour leader Anas Sarwar, who previously called for Starmer’s resignation, is set to join the Cabinet with a peerage and ministerial role in the Department for Business, Innovation, Science and Trade.

Further signaling a commitment to the north of England, Burnham has begun relocating part of the Prime Minister’s Office to Manchester, branding the new No 10 North not as a symbolic gesture but a substantive step in promoting devolution and regional representation. This move is reportedly being handled within existing Cabinet Office budgets.

Households, particularly pensioners and public transport users, appear set to benefit from Burnham’s initial policies, while businesses in hospitality may see relief through proposed business rate reforms. However, the challenge of financing these commitments without breaching fiscal rules remains a central tension in Burnham’s government, with observers watching closely to see how pledges translate into policy amid budgetary constraints.