Burnham’s Tax Plans Could Lead to £38bn Increase
Incoming chancellor Andy Burnham is expected to propose adding up to £38 billion to the UK’s already high tax burden, a move that has raised eyebrows among critics, including those from Nigel Farage’s Reform Britain party.
With the former Manchester mayor likely to become Labor’s new leader later this week following Prime Minister Keir Starmer’s departure, there is concern that Burnham will continue the party’s trend of high taxation without addressing underlying economic challenges.
Starmer’s government faced backlash due to its inability to drive economic growth, a critical issue for voters ahead of the 2024 general election. Many believe that after initially promoting a pro-business stance, he shifted to imposing record tax levels. Although the next prime minister has significant authority over key policies, Burnham seems to think that boosting government revenue from private sources might somehow spark the economic growth that has so far proven elusive.
According to Reform UK, if Burnham goes ahead with his plans, the tax increases would push the overall labor tax hike to around £104 billion ($139 billion), following the £66 billion ($88 billion) already implemented under Starmer.
Robert Jenrick, Shadow Chancellor of the Exchequer at Reform UK, criticized Burnham, accusing him of having spent years siphoning off public funds in various forms, including a proposed death tax on housing and a new graduate tax for young earners. Jenrick also pointed out that, combined with Rachel Reeves’ agenda, Labor could potentially amass over £100 billion in new taxes annually.
Although not yet finalized, potential areas for further taxation under Burnham’s leadership might include altering rates on inheritance and capital gains taxes, as well as imposing national insurance taxes on rental income from landlords.
These proposed tax hikes could worsen issues like capital flight, a significant concern for the UK’s economy, especially as projections suggest that around 16,500 high-net-worth individuals could be leaving the country in 2025, taking with them approximately £69 billion ($92 billion).
Burnham seems determined to replicate the policies he enforced as mayor in Manchester, which often relied on taxpayer funding from other regions to finance public infrastructure projects. He’s indicated a commitment to redistributing wealth from London to less economically robust areas in northern England.
However, to achieve this redistribution, he may ultimately need to raise taxes—something that hasn’t been fully discussed in Labor’s election manifesto for 2024. If Burnham indeed supports increasing the top income tax rate to 50%, it would contradict Labor’s earlier commitments made during the election campaign not to hike income taxes.
This situation has led to renewed demands for a general election from Reform Britain, which argues that Burnham does not have a clear electoral mandate, considering he could become prime minister through a mere 25,000 votes in a recent by-election in the traditionally safe Labor constituency of Makerfield.
