Prime Minister Andy Burnham has begun implementing his agenda, starting with the removal of VAT from domestic electricity bills from October 1, a move expected to reduce the annual Ofgem price cap by around £45. Chancellor John Healey stated, “For too long, too many people have struggled with the cost of living. Today’s energy tax cut will give families some breathing room on bills.” The measure is reportedly funded by cancelling the Digital ID programme.
Tax Changes and Property Levies
Burnham has signalled potential increases to the income tax personal allowance from £12,570 to ease living costs, while hinting at higher taxes for wealthier households. He remarked that the government “might be having to ask for a little more” to fund regional investment. Previously, he supported replacing council tax and stamp duty with a property value-based levy, which could add £7.5 billion to London’s bill. Other options include lowering the mansion tax threshold from £2 million to £1.5 million, reducing the 45p top rate threshold, increasing bank levies, or introducing a wealth tax. He did not rule out restoring the 50p top rate.
House Prices and Market Impact
A new property tax could potentially knock 20% off house prices, according to some reports. London prices have already been falling for months, alarming homeowners with large mortgages. However, Burnham argues his levelling-up plans will benefit London by preventing “overheating,” reducing migration from regions, and easing housing cost pressures and transport overcrowding.
Job Cuts and Whitehall Devolution
Burnham’s devolution ambitions could see tens of thousands of Whitehall jobs relocated. Peckham MP Miatta Fahnbulleh, former head of the New Economics Foundation, suggested central government will become “far smaller” and more “strategic.” The impact on private sector jobs remains unclear, with business leaders nervous after Chancellor Rachel Reeves’ £20 billion hike in employer National Insurance contributions.
Inequality and London’s Disparities
Burnham has vowed to govern with a focus on left-behind communities, guided by his “Makerfield test.” London has the highest unemployment in the country at 6.6% (ONS), compared to 5% in the North West and 2.9% in the Wigan area. The capital also exhibits “grotesque” inequality, and it is unclear how levelling up London’s deprived areas will feature in his plans.
Rough Sleeping and Housing
In his first commitment as PM, Burnham pledged to end rough sleeping in London and nationwide, announcing £340 million as an initial step. Regarding housing, London Mayor Sir Sadiq Khan is set to gain more powers over housing and education under devolution. Burnham, as mayor of Manchester, previously called for a freeze on private sector rents and has kept the option open, stating, “We are looking at measures that could make a difference this year.”
Transport and Infrastructure
Sir Sadiq Khan has urged Burnham not to cut London investment, stressing, “It’s crucial that the new Labour leader invests in every part of the country. This includes London, which is central to delivering for the rest of the country.” Business leaders have called for support for expansions at Heathrow, Gatwick, and Luton airports, as well as Bakerloo Line and DLR extensions. Burnham previously warned that Heathrow expansion could “suck more activity and investment into the capital and leave the North waiting even longer.” Former Transport Secretary Louise Haigh and Net Zero Secretary Ed Miliband have emphasised that a bigger Heathrow must meet climate and air pollution tests.
Thames Water Crisis
Burnham faces pressure to nationalise Thames Water, which has hiked bills, accumulated huge debts, and paid large executive bonuses. Nationalisation could cost taxpayers £20 billion, while a Special Administration Regime might cost £2 billion to keep supplies flowing while a buyer is sought.
