Andy Burnham’s tax plans drew their clearest shape yet in a Monday night interview with LBC’s Andrew Marr, with the prime-minister-in-waiting suggesting he could raise business rates on large warehouses to fund relief for pubs, music venues and high-street independents, while holding firm on the income tax, VAT and national insurance commitments made in Labour’s 2024 manifesto.
‘I stick by the manifesto and the promises that it made,’ Burnham told Marr. ‘So, let me be absolutely clear about that, but there is some room within that manifesto for movement on tax.’
Burnham is the sole candidate to succeed Sir Keir Starmer as Labour leader and is expected to become prime minister on 20 July.
What Andy Burnham’s Tax Plans Mean for Business
The specific proposals Burnham floated are not new to him. During his successful by-election campaign for the Makerfield seat last month, he pledged a 20% cut to business rates for pubs, clubs and music venues. Smaller independent hospitality, leisure and retail firms would see the threshold above which they pay business rates raised for the first time since 2017.
The money would come from higher levies on the giant warehouse operations of online retailers such as Amazon, and from targeting the owners of empty high-street properties.
The constraint he chose to emphasise matters. The Labour manifesto commits explicitly to not increasing ‘National Insurance, the basic, higher, or additional rates of Income Tax, or VAT’, and to capping corporation tax at 25%, the lowest in the G7, for the entire parliament. Burnham presented business rates reform as movement within that frame, not around it.
That framing has its own complications. The Institute for Government has documented how Rachel Reeves avoided technically breaking the income tax pledge by raising employer Class 1 national insurance contributions from 13.8% to 15% while cutting the threshold at which they become payable. The distinction between keeping to the letter and the spirit of a manifesto pledge is now well established territory in Labour’s short time in government. Burnham’s insistence that business rates reform counts as staying within the manifesto will face similar scrutiny.
The Defence Gap That Awaits Whoever Gets the Treasury Brief
The larger fiscal problem for any incoming prime minister is the one Starmer left partly unsolved. Sir Keir announced a £15bn increase in defence spending this week, according to the BBC, a figure above the £13.5bn secured by former Defence Secretary John Healey, who resigned in protest at the plans, but well short of the £28bn defence chiefs had sought. The overall defence budget would rise to £80bn a year by 2029, with some road and energy projects cancelled to help fund the increase and other departments’ long-term investment budgets cut by 1%.
The total planned spend, according to Al Jazeera, amounts to almost £300bn over four years, with more than £5bn allocated to drones and autonomous systems alone. Starmer ruled out further borrowing to fund any of it.
The consequence, as The Guardian reports, is that the plan followed an 11-month internal government row and that Starmer urged his successor to find more money for defence at the next spending review, while explicitly warning against borrowing to pay for it. Whoever Burnham appoints as chancellor will need to find at least £4.7bn in savings from other departments when the autumn Budget arrives.
Burnham told Marr he was not part of all the discussions around the defence plan, but was direct about accepting the obligation: ‘I will take my responsibilities fully to fund the defence investment plan, if I am in the position to do so, I will take those responsibilities extremely seriously.’
Conservative leader Kemi Badenoch accused Starmer of ‘leaving this mess to his successor.’ Burnham’s answer amounted to an acceptance of the inheritance, without yet specifying how he would fund it.
On welfare, he ruled out ‘crude cuts to benefit levels that just put people who are struggling in even worse poverty’, saying he would instead reduce the benefits bill by reforming the education system, expanding support for technical qualifications and creating work placements for 16-year-olds.
He has not yet named his chancellor, with speculation continuing around Ed Miliband. The autumn Budget, when the true scale of the fiscal arithmetic becomes unavoidable, is the first test that name will face.
