On the eve of becoming Prime Minister, Andy Burnham raised the possibility of an increase in the £12,570 personal allowance on income tax. Shortly after taking over in No10, he doubled down on the idea, saying it would be considered in the Budget, expected in the autumn. He was then accused of his first U-turn in Government after it was briefed that any changes on income tax would not be part of the initial moves to ease the cost of living, such as the £2 cap on bus fares outside of London.
Times interview
As he was set to take over in No10, after Sir Keir Starmer was forced to resign by a huge Labour revolt, Mr Burnham did an interview with The Times. He told the newspaper that the fact the tax-free personal allowance has been frozen at £12,570 for five years was “the thing I heard the most on the doorsteps” during the Makerfield by-election. He stressed that the issue was “lodged in my mind”. He added: “So when people, they’re just characterising me as a tax raiser, well again it’s never that simplistic is it? The breathing space point is a really serious one. How do we just make people feel better?”
After becoming PM
Within hours of entering No10, Mr Burnham was asked about his comments on income tax and whether the personal allowance may go up. Mr Burnham replied: “Certainly, I heard issues related to the personal allowance more than anything on doorsteps in Makerfield. I think it's been frozen now, hasn't it for a number of years, so it has dragged more people in - pensioners, I think - and that particularly I think has become a growing issue.” He added: “So all of this will be looked at though at the Budget, and obviously it's difficult given the financial circumstances in which we find ourselves. But I wanted to recognise the point because it's challenging for people and it's people on the lowest incomes perhaps who've most been affected by that.” He explained further: “So it's an issue that I'm just kind of showing I have a visibility of the issue and the impact it's had on the different groups that I've mentioned, but it's difficult because changing the threshold is not without significant consequences. But I'm looking at it.”
Policy confusion
However, Mr Burnham’s stance was plunged into confusion with reports on Wednesday morning that played down the prospect of changes to the threshold for paying the 20p starting rate of income tax. The BBC was among media outlets briefed that any income tax shake-up would not be part of the new Government’s first phase of policies to tackle the cost-of-living crisis still being suffered by so many households. Freezes on the thresholds for paying income tax have raked in tens of billions of pounds for the Treasury. Hundreds of thousands of people have been dragged into paying the 20p basic or 40p higher rate on income tax by the “stealth” levy, first introduced by Rishi Sunak in 2022 and which Chancellor Rachel Reeves extended by a further three years until 2031.
PM clarifies
Amid the confusion and growing questions, Mr Burnham laid out later on Wednesday exactly where he stood on income tax. On a visit to Bath, he was asked by broadcasters whether he was planning to change the personal allowance. He said: “Well, it’s funny these days you can’t answer a question honestly without then people reading everything else into it.” The former Greater Manchester Mayor added: “I want to answer questions honestly in this job, as I said before. I think that’s all about trust in politics and doing politics differently, and I’m determined to keep working in that way. It was raised a lot, but I then went on to say, ‘But we’ll have to look at it at the Budget alongside everything else’. So no commitment, no unfunded promise.” Mr Burnham reiterated: “It’s just perhaps the way politics is these days and the way people report things, but that was an honest answer. There is no commitment at this point to change, but we will look at that at the Budget.” He denied that new policies such as VAT off electricity bill would be paid for by tax increases later this year, insisting funding was being reallocated.
