Prime Minister Andy Burnham has refused to rule out tax rises at the upcoming Autumn Budget, warning that the government faces a challenging financial position.
With the Budget scheduled for 28 October, attention is increasingly turning to how the new government will balance pressure on the public finances with its commitments to support households and encourage economic growth.
Mr Burnham said he would not be “unrealistic” about the state of the country’s finances and stressed that the public needs to understand the difficult economic circumstances facing the government.
Economists have previously warned that the Chancellor could have limited room for manoeuvre when setting out the government’s tax and spending plans in October, raising questions over whether additional revenue-raising measures could be announced.
The Prime Minister has said the government will take a careful approach to managing the economy and will avoid measures that could unnecessarily put jobs, livelihoods or household finances at risk.
Since taking office, the government has already announced measures intended to ease the cost of living, including a cap on bus fares and a reduction in VAT on household electricity bills.
Mr Burnham pointed to his ten years leading Greater Manchester as evidence of his approach to managing public finances, saying his administration had maintained tight control over its finances throughout that period.
He added that the same approach would continue in government, while stressing that he would look for opportunities to provide further support to households where possible.
The refusal to rule out tax increases is likely to increase speculation in the run-up to the Autumn Budget, particularly over which taxes could potentially be targeted.
For individuals and businesses, the next two months will therefore be an important period for financial and tax planning. Until the Chancellor delivers the Budget on 28 October, however, the precise direction of any tax changes remains uncertain.
