Andy Burnham’s arrival in No. 10 generated considerable excitement among Labour supporters. The new Prime Minister promised to deliver the “most significant change moment in our politics for 40 years”. His government’s first Budget falls well short of this ambition, offering “breathing room” for a few, tax increases for the many and nowhere near the level of relief and support businesses were hoping for.
To be fair, there are measures that deserve recognition. Targeted tax changes, small-business rates relief and a new 10% Founders’ Relief (warning: read the small print) will bring benefits to some workers and businesses. The extension of energy support and fuel-duty relief will also provide temporary assistance to households facing higher costs. These changes are welcome, but they are not a comprehensive growth strategy.
This framing makes the defining feature of this Budget is not what it does, but what it postpones.
Defence spending is promised to reach 3% of GDP by 2030, but the detailed route to achieving that commitment will not emerge until the 2027 Spending Review. Welfare costs are widely acknowledged as unsustainable, but the structural reforms required to control them remain unclear. The wider transformation of the state, “reversing 40 years of neoliberalism”, supposedly central to Burnham’s political project, has similarly been deferred to a forthcoming ten-year plan.
For a Government promising historic change, this is a remarkably cautious beginning.
The Chancellor faces an unenviable economic backdrop. International instability, particularly the conflict in the Middle East, has driven up energy prices and borrowing costs. Inflation has remained stubborn, businesses are struggling with operating costs, and the public finances have little room to absorb further shocks.
The Office for Budget Responsibility forecasts growth of 1.2% in 2026, dropping to 1% in 2027 with higher borrowing costs that are expected to add an average £14 billion annually to debt-interest expenditure compared with its spring forecast. These are genuine constraints; any Chancellor would have had to confront them.
However, difficult circumstances make big, bold change more necessary, not less. A serious programme for economic renewal must address the cumulative cost of employing people, the complexity of the tax system, planning delays, building national resilience, tackling high energy prices, access to finance and the regulatory burden facing growing companies.
For the cynical, this budget did it exactly what the PM wanted it to – ruffle few feathers, while keeping markets onside and preparing the ground for the 10-year plan and a 2027/28 General Election.
Burnham may yet deliver the most significant political change in forty years. His ten-year plan and the 2027 Spending Review will provide opportunities to demonstrate how. But yesterday’s Budget did not help him roll the pitch.
For a Prime Minister promising historic change, the clock is ticking.
