What could Andy Burnham as prime minister mean for your money? | Money News

Sir Keir Starmer has announced his resignation as prime minister, and while he will stay in post for now, all eyes are already turning to his potential successor.

The frontrunner to replace him is Andy Burnham.

The Makerfield MP only earned a parliamentary seat a week ago, but he is the only person running to be the next leader of the Labour Party at present.

He is set to make a major speech next week to set out key aspects of his economic policy, including confirmation that he will stick to Rachel Reeves’s rules for managing the public finances.

But during his very recent by-election campaign, he set out a number of policy ideas.

So what could Burnham as prime minister mean for the money in your pocket?

Council tax changes?

Burnham has long been an advocate of council tax reform.

During his recent campaign, the 56-year-old called it “highly regressive” and said its 1991-based valuations were “not justifiable”.

Burnham is listed as a supporter of a proposal put forward by the campaign group Fairer Share, which wants to replace council tax and stamp duty with an annual property tax that’s equivalent to 0.48% of a home’s value.

If this were to go ahead, it would mean property tax of £1,440 would be payable on a house valued at £300,000.

Martin Rayner, financial adviser at Compton Financial Services, told Money: “The council tax debate is particularly worrying. Council tax was designed to fund local services, with bands based on relative property values within a local area.

“It was never intended to mean that two homes worth the same amount in different parts of the country should automatically pay the same tax.”

A land value tax?

Burnham has also expressed support for land value tax – an annual tax based solely on the value of the land itself.

This would replace stamp duty, which is paid when you buy a new property or land.

In 2022, he described the measure as a “very productive form of taxation because you make sure land is used for good, productive purposes, and if people are sitting on it and hoarding it, they get taxed and that money can come back and be redistributed”.

He also spoke about it in an opinion piece in The Guardian in 2010, saying: “The LVT, an annual tax on the market rental value of land, would allow for the abolition of stamp duty – a tax on the aspirations of young people to put down roots and get on in life.”

Tracey Dixon, a buy-to-let mortgage specialist, told Money: “Any changes to stamp duty, council tax or landlord taxation would also be watched closely by homeowners and property investors.

“With many households still adjusting to higher mortgage costs, what borrowers need most is stability, predictability and policies that support long-term housing affordability.”

Watch: The postcode lottery behind council tax rises

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The government has changed the grant it gives councils to prioritise the ones it considers more deprived areas.

Cutting business taxes ?

Burnham said this month that Labour had “got it wrong on small businesses” after it increased employers’ national insurance contributions.

“I have said that I thought the weight of the burden on employers’ national insurance wasn’t the right decision,” he said.

In an interview with the BBC’s Newsnight, Burnham said he wanted to reconsider the increase.

In a separate policy statement, he said pubs, clubs and music venues get a 20% business rate cut next year under his plans, while smaller, independent hospitality, leisure and retail companies would have the threshold for paying the tax raised.

The cuts would be paid for, according to the proposal, by higher levies on giant warehouses operated by online firms such as Amazon.

After he won his seat, he also said he wanted to “reindustrialise” the UK.

Read more:
How will a new PM be selected?
All the business costs introduced this year
Why are there two state pensions?

Scrapping inheritance tax?

Inheritance tax is often called the country’s most hated and Burnham has pledged to scrap it.

He argued in favour of replacing IHT by charging a flat 10% levy on all estates on death to pay for free social care while health secretary from 2009 to 2010.

He mentioned the idea again in 2023, saying: “I would abolish inheritance tax in its current form, but replace it with a care levy which everybody would pay – but obviously the wealthiest would pay the most.”

If this were implemented, it would mean a £500,000 estate would be subject to paying £50,000, regardless of how it was passed on.

Under today’s system, if you were not leaving your home to your direct descendants there would be no inheritance tax on the first £325,000 of your estate, and inheritance tax at 40% on the remaining £175,000. On an estate worth £500,000, this would result in an inheritance tax bill of £70,000.

However, if you leave a qualifying home to your direct descendants, your estate may also benefit from the £175,000 residence nil-rate band. This could increase your total inheritance tax allowance to £500,000, meaning a £500,000 estate may have no inheritance tax to pay.

Income tax

Burnham’s team has confirmed he will stick to Labour’s manifesto commitments not to raise income tax, national insurance or VAT.

He previously told The Telegraph there was “definitely a case” to reintroduce a 50% additional rate of income tax, up from the current 45%.

But he seems to have distanced himself from the idea since then.

He has also suggested he is a fan of changing the personal income tax thresholds, meaning people could earn more before they have to start paying tax.

At the moment, you need to earn more than £12,570 a year to start paying income tax at the basic rate of 20%.

He told BBC Question Time: “On the personal allowance, I’ve heard on so many doorsteps, and I’ve said to my team, ‘let’s have a proper look at this and let’s develop a policy’.”

Pensions

Burnham has recently reaffirmed the government’s commitment to the pension triple lock, which means the state pension rises each year by whichever is highest out of wage growth, inflation or 2.5%.

It has been a controversial policy since it was implemented in 2011.

Angeline Ong, senior investment analyst at IG, said: “Burnham has boxed himself in on the triple lock. That promise looks locked in for this parliament.

“He also appears to back Rachel Reeves’s plan to keep pensioners off income tax once their state pension rises above the frozen personal allowance of £12,570. In practice, that means millions of older people could be shielded from being quietly pulled into the tax system as their pension creeps up.”

Burnham has also promised to “stick by” Waspi women and has been a long-time backer of a campaign to compensate them.

Watch: WASPI women have compensation claim rejected

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The government has restated its rejection of the campaign from women who claimed they were owed billions after their state pensions age was changed.

Mortgages

Burnham’s credibility in the markets will matter most for our borrowing costs.

So far, the market impact has been very limited. Gilt yields were little changed, and the weakness of UK stocks and the pound could be put down to factors other than the political turmoil.

But if Burnham starts setting out policies that spook market confidence, one thing we could see is higher mortgage rates.

“For mortgages and pensions, credibility matters most. If he is disciplined on borrowing, markets may stay calm,” Nouran Moustafa, an award-winning financial adviser, told Money.

“If he reaches for unfunded promises, gilt yields, mortgage rates and confidence could all move the wrong way.”