Andy Burnham pledges more than £1.5bn in spending during first week
The new Prime Minister has been in Bath, two days after taking over from Sir Keir Starmer
Andy Burnham swept into No 10 this week and charged his new Cabinet with “getting that cost of living down”.
Making his debut speech in Downing Street, the new Prime Minister promised to “put the care of people at the heart of everything” he does in Government.
But his pledges are set to come with a price tag stretching into the billions of pounds.
– Ending rough sleeping
To mark the first day of his premiership, the former Greater Manchester mayor promised to “end rough sleeping”.
The policy is being backed by £340 million, designed to support at least 3,000 rough sleepers over five years.
It is thought the cash will come from uncommitted budgets in the Ministry of Housing, Communities and Local Government.
It is additional money, on top of £3.6 billion for the National Plan to End Homelessness, unveiled in December when Sir Keir Starmer was prime minister, taking the total to more than £3.9 billion.
Mr Burnham did not say when he would meet the pledge, but promised to bring rough sleeping to an end “at the earliest opportunity”.
– Zero VAT on electricity bills
Mr Burnham also announced VAT for electricity billpayers in England, Scotland and Wales would fall from 5% to nil, starting on October 1.
As a result of the Brexit agreement and European Union VAT rules, the Northern Ireland Executive will receive funding for cost-of-living support.
“I said I wanted to give people breathing space, and that’s what I’m announcing on my second day as Prime Minister,” Mr Burnham said.
The Government has estimated the move will cost around £850 million in 2026-27.
It would be paid for by cancelling the digital ID programme, which was expected to cost £1.8 billion over three years.
Sir Keir’s former chief secretary Darren Jones cast doubt over the new administration’s costings in a post on X.
“The digital ID programme was unfunded,” he wrote.
“The Government will have to set out how it will pay for its new policies at the budget.”
– £2 bus fares
On his third day in office, Mr Burnham announced the return of the £2 bus fare cap, which was previously in place between January 2023 and December 2024.
The cap was raised during Sir Keir’s premiership to £3.
But the top rate ticket price will fall to £2 in January, with the cap in place throughout 2027.
Reinstating the previous price will be funded by shifting investment in international climate finance to loans, raising around £400 million.
A further £54 million will come from savings in the Department for Energy Security and Net Zero budget.
– Defence
Mr Burnham has signalled he will tread a path to spending 3.5% of the UK’s GDP on defence spending by 2035.
The Prime Minister told reporters on Wednesday that he and Chancellor John Healey wanted to “honour the commitments” the UK had made to Nato on defence.
Mr Healey, who quit as Sir Keir’s defence secretary last month, wrote in his resignation letter he was “certain” the UK must get defence spending to 3% of its GDP on defence by 2030.
The defence investment plan (Dip), published after his resignation, promised a £15 billion uplift in spending – so the plan will be backed by a total of £298 billion investment over four years, according to the Government.
As a result, ministers believe defence spending is expected to reach 2.7% of GDP in 2027/28.
Much of the uplift will come from cuts to Government departments’ budgets, including from roads funding, but the Treasury did not say how a third of the new money – around £4.7 billion – would be found.
Conservative leader Kemi Badenoch warned at the time that “there are only three ways to find the missing £5 billion – increase borrowing, increase taxes, or cut welfare”.
Speaking in Bath, Mr Burnham defended his spending plans.
Asked whether he would “be honest with the public” that some of his pledges might come with more borrowing or tax rises, the Prime Minister told broadcasters: “I will always be honest with the public – that’s my style.
“This week, the three policies I’ve announced – ending rough sleeping, the bus cap we’re announcing today, and the removal of VAT off electricity bills – are all fully funded, and that’s the way I will go.
“And people will say: ‘Well, how?’
“I’ve reprioritised. The public’s priority is reducing cost-of-living pressures and that’s what I’m doing.
“I’m taking a difficult look at some of the things that the Government was committed to, digital ID being one example, and reprioritising.
“And I think that’s what people would expect me to do coming into this job.”