Prime Minister Andy Burnham has refused to rule out tax rises in the upcoming Budget, saying the UK is in a 'challenging position' but vowing to take a 'careful approach' to the country's economy.
The Labour leader was speaking to the press during his visit to Ukraine, where he defended the government's recent pledges to cut VAT on household electricity bills and cap bus fares at £2 across the nation.
Funded commitments under scrutiny
Describing the policies as 'funded commitments', the Prime Minister spoke as doubts remain about how he intends to fund his plans for a £5 billion defence spend, which he announced before his tenure began, and a social care system reform.
Critics have voiced concerns over his plans to pay for the VAT cut by cancelling the previous Labour administration's digital ID scheme, after former minister Darren Jones said the policy was not costed.
Prime Minister's careful approach
Asked whether the public should accept they will have to pay more in tax rises for some policies, the Prime Minister told ITV News: “They don’t necessarily need to accept that.
“What I have put out so far, I wouldn’t say is everything, but they are the first steps and they are significant.”
Pressed on whether he would need to fill in spending gaps with tax hikes, he said: “I will always take a careful approach to things. I ran Greater Manchester for 10 years and we ran a very tight ship with rock solid finances.
“Nothing will change as I come into this role as Prime Minister. I won’t take risks with people’s jobs or their livelihoods or their family finances.
“I will try to help them in whatever way I can, I have already done some things that will help them.”
He added: “I will do what I can, but I won’t be unrealistic and people really need to understand that.
“We are in a challenging position, whatever I do will be carefully thought through, it will be funded and there will be more to come as we go into the autumn.”
Borrowing and inflation pressures
The fiscal squeeze facing new Chancellor John Healey ahead of his inaugural Budget has been laid bare as official figures showed government borrowing unexpectedly rose to £1.8 billion last month.
The Office for National Statistics (ONS) said government borrowing stood at £1.8 billion in July, £700 million or 68.7% higher than a year ago and confounding expectations. The hike came despite a record July for income tax receipts.
Inflation also surged to a four-month high of 2.9% in July amid the fallout from the Iran war.
Experts, including the National Institute of Economic and Social Research (Niesr), have warned Mr Healey that he will need to either raise taxes or cut spending elsewhere as pressure on the public finances has left no room for extra borrowing.
The Chancellor has told the Cabinet they must be prepared to make cuts to finance some of the new pledges, and promised his economic plans would be “built on fiscal discipline” and meet the fiscal rules set by his predecessor Rachel Reeves.
