1. Welfare
Burnham will be in power when the final recommendations of the Timms review into disability benefits land. The interim report recommends radical changes to personal independence payments and a more humane assessment process.
Personal independence payments have surged since 2020 and are forecast to double by 2030. The new PM will face a rightwing opposition who will demand cuts, especially to those with fluctuating mental health conditions such as anxiety. Ministers have already indicated their aim is not to make more savings, but to stop the bill growing even further.
The situation clearly needs overhauling, but to do this without significant harm to those dependent on the payments – and without causing significant ructions with Labour MPs – will be one his trickiest balancing acts.
2. Defence investment
Allies of Burnham say he accepts the defence investment plan – which commits £298bn to buying weapons over four years – as “settled”, even though it requires finding an additional £4.7bn at the next budget.
There are also longer-term questions over how he could find the money to increase Britain’s defence spending to 3.5% of gross domestic product by 2035, as his predecessor promised.
One option considered by Starmer’s officials but ultimately rejected would be to print “defence bonds” – new debt that could only be spent on defence.
3. Taxation
The Makerfield MP has promised to stick to Labour’s 2024 manifesto pledges of not raising income tax, national insurance or VAT. He recently told LBC, however, that there was “some room within that manifesto for movement on tax”, prompting speculation about which taxes he may seek to raise to pay for some of his more expensive policies.
The one tax Burnham has talked about changing is business rates, which he says he wants to refocus so that large companies with out-of-town warehouses such as Amazon pay more, and small high-street businesses pay less.
He may need something more radical to pay for this, however, with allies talking up the possibility of a significant rise in capital gains tax.
4. Immigration
Burnham is planning to proceed with most of Shabana Mahmood’s proposed overhaul of the immigration system. This includes changes to gaining indefinite leave to remain (ILR) from five to 10 years and scrapping permanent refugee status, making people eligible to be removed if their countries are deemed safe.
Mahmood, who is tipped to remain home secretary, may yet soften the ILR changes, with many Labour MPs uncomfortable about them applying retrospectively.
The changes may yet be Burham’s biggest tussle, as well as other controversies over the use of houses of multiple occupancy and military sites as accommodation for asylum seekers, and the continuing numbers of arrivals on small boats.
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