Burnham admits first Budget was less radical than he wanted as he defends £100 energy payment
Prime Minister Andy Burnham has admitted his first Budget was not as radical as he would have liked, blaming global economic turmoil and the Iran war's effect on borrowing costs, as he defended the £100 energy payment for 20 million households.
Prime Minister Andy Burnham has admitted that his first Budget was not as radical as he would have liked, saying the room for manoeuvre "wasn't what I would have hoped it to be" after global economic turmoil and the war involving Iran pushed up Britain's borrowing costs.
In an ITV interview published on Friday, Burnham acknowledged that the statement his chancellor delivered fell short of the transformation he had promised. He had reportedly wanted the energy support at the heart of the package to be higher than the £100 payment that was eventually announced.
Even so, he mounted a public defence of the measure. Speaking at Rolls-Royce in Derby on Thursday, he described the cash payment as "giving families as much breathing space as we possibly can" and "quite a significant step" for the 20 million households that will receive it. The government had also asked banks to "repay the help they had off people 20 or so years ago," he said, pointing to the doubling of the bank surcharge as part of the funding.
The package itself, announced this week, centres on a £100 payment to households in council tax bands A to D — around 20 million of them — at a cost of about £2.6 billion, with the money expected to land from January. Chancellor Rachel Reeves' successor at the Treasury, John Healey, insisted the payment would provide families with "a bit of breathing space."
The energy payment sits inside a wider cost-of-living package: the zero rate of VAT on domestic electricity extended until 1 July 2027, worth around £50 off the price cap from April 2027; the £2 cap on bus fares extended into next year; a move to shift gas standing charges onto unit rates; and the banking surcharge rising from 3 percent to 6 percent from 1 January 2027 for 15 months to help pay for it all.
The pressure on bills explains both the package and its limits. Ofgem's price cap rose 3.6 percent to £1,723 on 1 October, and a further rise of around 22 percent is forecast in January as energy markets react to the regional conflict — a backdrop that makes £100 look modest to critics even as ministers call it significant.
Opposition to the Budget has come from several directions at once: the Institute for Fiscal Studies has warned of difficult public-finance trade-offs ahead, opposition parties have attacked the government over defence spending and the cost of living, and even sympathetic analysts note that a one-off payment does little against bills that are forecast to keep climbing into next year.
Burnham used the interview to look beyond the immediate statement. He promised a 10-year plan by the end of 2026 involving reindustrialisation and greater public control of essential parts of the economy, and said welfare reform plans would come forward in the coming months following the Milburn and Timms reviews — while insisting, after the controversy over previous cut proposals, that his government would not impose "brutal cuts" and instead aimed to prevent most young people from needing to claim benefits at all.
The gap between promise and product is the political story. Burnham came to office pledging to end "40 years of neoliberalism," with wealth taxes and nationalisation on the agenda, and his own acknowledgment that the first Budget could not match that ambition is an unusually candid admission of how tightly events — war, energy prices and borrowing costs — have bound his government's hands.
The near-term tests are already dated: the £100 payments land from January, and the April price-cap changes follow. If bills fall and growth holds up, the Budget may be remembered as a cautious first step; if energy costs surge again, the prime minister's admission that he wanted to do more may come back to define it.
