Why the Prime Minister says the next Budget will be tough
Prime Minister Andy Burnham said on 16 September 2026 he will take "difficult decisions" on the economy and will not take risks with it.
He spoke to reporters before the Budget on 28 October. The Budget is the government's annual plan for tax and spending. He called it "challenging". He said the "situation in the Middle East" had pushed up inflation. Inflation, the rate at which prices go up, rose to 3.1% because petrol and diesel cost more. BBC
His comments came after criticism from Andy Haldane, the former Bank of England chief economist who has advised Mr Burnham. In an LBC interview, Mr Haldane said Mr Burnham should not raise taxes further. He asked if Mr Burnham would risk upsetting Labour backbenchers, MPs without government jobs, by cutting public spending. BBC
Mr Haldane said Mr Burnham faces a "straight choice" between higher taxes and lower spending. He said financial markets, the people who lend money to the government, now think it is a "traditional tax and spend socialist government with better TikTok videos."
Mr Burnham rejected that idea. He said "That doesn't tell the story. We are not that." He said he would take tough decisions to keep the economy on track. Reuters
He repeated Labour's election promise not to raise the main rates of income tax, VAT or National Insurance. National Insurance is a tax on pay that helps fund public services. He said he would keep the borrowing and spending rules from the last government. He said he inherited £24bn of spare room against those rules from the Starmer government, like a small safety margin in a household budget.
He said he had already made hard choices. He moved money around over the summer to pay for cost of living help and scrapped digital ID. He said he has promised about £1.8bn for cost of living help since taking office. He said money saved from digital ID would pay for lower VAT on home electricity bills. He will decide next year when to spend 3% of national income on the military.
Mr Burnham's finance minister is John Healey. In August Mr Burnham promised help for business though money is tight. Reuters In July he promised to fix adult social care in England. Social care is devolved, so this covers England only. He said hard choices were needed to fix what he called an unfair system. When he became prime minister, he promised steady leadership and quick help with the cost of living.
The broader context here is straightforward. The government has little spare money, has promised not to raise the main taxes, and has already promised extra help. That means it must move money around, use smaller taxes or hold down spending. Tax rises can upset lenders. Spending cuts can upset his own MPs. October is when he must show the full maths.
