Burnham has no scope to increase borrowing, think tank warns
Summary
Prime Minister Andy Burnham has introduced several cost-of-living measures since taking office, but a major economic think tank warns that he cannot increase government borrowing to fund them. The National Institute of Economic and Social Research (NIESR) says Burnham will need to raise taxes or cut spending to keep his promises.Key Facts
- Burnham announced new policies like cutting electricity bills and reducing bus fares to £2 in much of England.
- NIESR warns that public finances will be tight due to ongoing inflation linked to the Iran war.
- The think tank says there is no room for extra borrowing to pay for these measures.
- Burnham has pledged not to raise taxes on working people, including income tax, VAT, and national insurance.
- NIESR suggests funding cost-of-living help through tax reforms, spending cuts, or changes to welfare and pensions.
- Possible ideas include reforming council tax to a land value tax or removing some VAT exemptions.
- Inflation is expected to rise until early 2027 before gradually falling, and interest rates may stay high until 2028.
- The government says it will maintain fiscal discipline while investing in public services.
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