Andy Burnham should cap bus fares, offer more free childcare, control rising rents and scrap the benefits cap to improve the cost of living for Brits, experts say. In his first speech outside Downing Street, Mr Burnham promised to provide "breathing space" for households struggling with the cost of living, vowed to end rough sleeping and set out his ambition to "reindustrialise Britain". His first major policy announcement on Tuesday (July 21) is an £850million tax cut on electricity bills, leading some to say the measure will help those with larger properties and energy bills more than people struggling to pay cheaper bills.
Childcare and transport caps
Patrick Diamond, Professor of Public Policy at Queen Mary, University of London, said there are two big measures the Government could carry out to cut the cost of living. He said the first is subsidising childcare, which the expert described as a rising cost for working parents. Professor Diamond said full-time nursery care can cost more than £350 a week per child so more free childcare hours would be a major boost for households with parents in paid employment. The academic said expanding childcare provision could be funded through greater efforts to tackle corporate tax avoidance.
His second suggestion was capping bus and rail fares to reduce costs for consumers and encourage a move away from car use. He said: "This could be funded by expanding the windfall tax on oil and gas companies which is already in place."
Benefits and wages
Gary Christie, Policy and Campaigns Manager at Poverty Alliance, said Mr Burnham could help the four in 10 people on Universal Credit in work whose incomes need topping up by making sure employers pay the real living wage "at the very least". He said the PM could also scrap the "unjust" lower minimum wage rates for under-21s; ditch the "unfair" five-week wait for new claims and end the benefits cap. The cap was introduced during austerity and limits the total income a household can receive in social security benefits.
Mr Christie agreed with Professor Diamond's public transport cap, adding: "The Prime Minister can help by making sure every area of the UK can benefit from the reduced fares and more joined-up bus transport that he introduced as Manchester Mayor."
Rent control and tax reforms
Chris Belfield, Chief Economist at the Joseph Rowntree Foundation, said Britain faces a tough living standards outlook, with the lowest-income households facing the biggest squeeze. He said: "Any action to help with that is to be welcomed. But there is still so much to do. The new Government has an opportunity to meet this crisis head-on, with bold policy that fundamentally rethinks how we build household economic security."
Mr Belfield suggested measures include controlling the growth of private rents, making basic energy use more affordable and improving the adequacy of Universal Credit and in-work safety nets. The costs could be covered by a range of revenue-raising efforts, including equalising Capital Gains Tax and Income Tax rates as well as closing loopholes which let people avoid CGT altogether by holding onto an asset until they die or emigrate from Britain. JRF research shows such reforms would raise an estimated £10.7billion in 2026/27 prices, taking behaviour changes into account. Another £7.7bn would be raised in tax by equalising the tax rate on rents, savings and dividends with the effective tax rate on work, according to JRF.
Energy bill reaction
On his first full day in office, Mr Burnham announced from October 1 electricity bills will be VAT free, saving households around £45 per year as part of the Prime Minister’s pledge to ease cost-of-living pressures. The VAT reduction will be paid for by scrapping former prime minister Sir Keir Starmer's digital ID card scheme. Former minister Darren Jones said that project was unfunded.
Mr Burnham's energy bill announcement received a mixed reaction. Christian Against Poverty’s Chief Mission Officer, Graeme McMeekin, said it will be welcome news for many squeezed households, but to truly tackle the cost of living, the PM needs to focus on targeted support for the lowest-income households. Mr Christie said Poverty Alliance welcomed the new PM’s recognition people need help with unaffordable energy bills, but cutting VAT for all households amounts to a bigger subsidy for people with the biggest homes and bills. He added: "It’s of less help to people with smaller electricity bills, who still struggle to pay because of lack of income."
National Energy Action's Head of Policy, Matt Copeland, said taking action on energy bills on day one shows a willingness to move quickly and gives households some much needed breathing space. He said this should be part of a wider programme of action for fuel poor households, adding: "That should include deeper support with energy bills, meaningful action to tackle record energy debt and making urgent progress on a Warm Homes Plan that has promised to take a million households out of fuel poverty. If today's announcement is the beginning rather than the end of that journey, it will be warmly welcomed by the households we support."
Targeted support needed
Helen Barnard, Director of Policy and Research at Trussell, said the "unacceptable reality" is that last year 2.6 million emergency food parcels were distributed to people facing hunger and severe hardship in the UK - one every 12 seconds. She said: "We need to see more targeted support for people at the sharpest end of the cost-of-living crisis. Right now, too many families who are being forced to make impossible decisions between paying the bills and putting food on the table. That's why we need the UK Government to lift the freeze on Local Housing Allowance, so more people are protected from rising rent costs, and take steps towards an Essentials Guarantee. This would ensure the basic rate of Universal Credit at least covers the cost of essentials – like food and toiletries."
