Burnham's first budget defers big changes as Brexit and pensions rows grow

A budget built on temporary fixes

Chancellor John Healey unveiled 98 changes on Wednesday, 28 October, in a 150-page document titled "breathing space for today, fresh hope for the future". Burnham, who became prime minister about 100 days earlier, had pledged to bring 40 years of neoliberalism to an end, but the budget postpones most of that agenda. A new bank tax will run for only 15 months and would bring in under £1 billion at its peak. Fuel duty cuts, a household energy bill tax cut and a £2 cap on bus fares were extended, but only until 2027. Support for most households' energy bills is aimed at winter price rises linked to Donald Trump's war with Iran. Other measures include a £10 billion defence package for Ukraine and an 8% cut to tariffs on soy milk.

Reaction from Labour and the opposition

Labour backbenchers welcomed measures affecting their areas, and Darren Jones, who worked in the Treasury until Burnham took office in July, said the budget was what people had expected. Industry lobby groups also found items they could champion. Joe Shalam of the Centre for Social Justice, a Conservative-aligned think tank, called it a "fudge-it budget". Conservative leader Kemi Badenoch asked: "Is that it?" The sharpest response came from Mainstream, the left-wing campaign group that helped push Burnham to the Labour leadership this year. Its interim council said that ending 40 years of neoliberalism would require radical action.

Brexit: a reset without rejoining

On Wednesday Burnham told cabinet that the Brexit deal negotiated by the last Conservative government had been bad for Britain. In a letter to ministers he warned them not to advocate specific EU options or predict outcomes while a review of longer-term choices is under way. Home Secretary Shabana Mahmood has reportedly worried that a revised deal could bring back free movement, an idea Burnham has discussed. The letter set out a two-stage plan: first, changes that stay within Labour's 2024 manifesto, which rules out rejoining the customs union or single market and restoring free movement, with the formal process starting at a European summit next month. Anything more substantial would wait until after the next election. Two days earlier, on Monday, 26 October, Burnham told ITV there would be no shift within this Parliament and answered "no" when asked whether free movement could return without a referendum. Downing Street later said he was "not leaning either way".

“I am clear in my conviction that the Brexit deal negotiated by the Conservative government was not good enough for Britain.”

Badenoch accused him of failing to respect the 2016 vote, and Burnham responded: "There is no confusion at all" over his position.

Early election question

Burnham ruled out calling a general election in the next 12 months, after opposition parties suggested one was coming. The next general election must be held by August 2029.

“I can rule out calling a general election in the next 12 months.”

Badenoch had said earlier this month that he would go to the country early, and Nigel Farage said in September that he expected a poll "next spring". Burnham entered the Commons in June after the Makerfield by-election and became prime minister after Keir Starmer lost the support of Labour MPs and quit Downing Street. Burnham said he was focused on the public rather than on his party's prospects.

Pensions row with Scotland

Under Burnham's plan the triple lock would end from 2030, with the savings used to fund social care in England. Pensions would still rise by at least 2.5% or by CPI inflation. John Swinney has said pensioners in Scotland would "lose out" and warned of a "real loss of around £2,000 per person per year". Pensions minister Torsten Bell accused him of lying and said he was trying for cheap political points to scare pensioners. Bell added:

“The pension will rise every single year under our plans, rising every single year even after we adjust the triple lock.”

Scottish Deputy First Minister Jenny Gilruth said the First Minister stands by his comments, while Labour and Scottish Tory MSPs accused him of misleading Parliament.