How will he pay for it? Burnham tells cabinet to tackle cost-of-living crisis as record numbers unable to afford essentials
The Prime Minister has announced plans worth more than £1 billion in his first 72 hours in office
Andy Burnham has told his Cabinet ministers to take a “hard look” at their departmental budgets as questions mount over how he will fund a string of major spending commitments.
Listen to this article
The Prime Minister has announced plans worth more than £1 billion in his first 72 hours in office, including £340 million to tackle rough sleeping and an £850 million package aimed at cutting energy bills.
He is also expected to restore the £2 cap on bus fares, a move experts estimate could cost around £300 million a year.
Speaking at his first Cabinet meeting in Downing Street, Mr Burnham said ministers must find ways, both “big and small”, to ease pressure on household budgets.
“We need to be a cost-of-living Government,” he told his Cabinet. “Getting that cost of living down, looking at all possible ways of doing that.”
Read more: Burnham announces slate of new ministers - with former defence secretary Dan Jarvis demoted
Read more: Young people are owed £1.6b in savings - this is Andy Burnham’s chance to make it right
The cost-of-living measures come as new research shows that the number of households unable to afford basic essentials such as food and heating is at a record high.
An estimated 7.4 million low-income UK households were not able to afford at least one essential item in the last six months, anti-poverty organisation the Joseph Rowntree Foundation (JRF) said.
This is the highest number since it began running its cost-of-living tracker survey in 2021 and is an increase from 7.1 million a year ago.
The figures, which involved a survey of 4,121 households in the bottom 40% of incomes between May 7 and June 5, mean Andy Burnham begins his premiership in Downing Street “at a time when the cost-of-living crisis has never been more widely felt”, JRF said.
Their analysis suggests more than half of households not on means-tested benefits such as universal credit (UC) are struggling (53%), up from 47% two years ago.
The JRF report, published on Wednesday, said: “The increase in the number of households that are going without essentials has mainly been driven by those who are typically less likely to suffer from material deprivation.
“The number of households going without essentials has increased fastest over the last two years for those not on means-tested benefits, those who own their property outright without a mortgage, families without any disabilities or health conditions, childless households, and households that are headed up by someone over the age of 65.”
The Prime Minister announced on Tuesday that he would scrap VAT on electricity bills in a bid to give people more “breathing space”.
The government said the move would save households an average of £45 and would be funded using savings from the scrapped plans for digital IDs.
However, Darren Jones, who Mr Burnham sacked as chief secretary on Monday, has pointed out that the savings for digital ID had not been identified, rendering it an unfunded pledge.
Kemi Badenoch echoed the sentiments, saying that "unfunded spending giveaways or tax cuts" would "never be the answer".
In a speech at Hampshire’s Farnborough International Airshow, Mrs Badenoch urged new Chancellor John Healey to “find the funding” for defence spending to reach 3% of GDP by the end of this Parliament.
She said: “I have offered to work with (Prime Minister) Andy Burnham in the national interest to cut the benefits bill.
“Unfunded spending giveaways or tax cuts without a plan to pay for them will never be the answer to Britain’s problems.”
Former Chancellor Kwasi Kwarteng later accused Andy Burnham of wanting Britain to return to the 1970s after announcing the 'socialist' cost-of-living measures.
Mr Kwarteng, whose short spell in Number 11 Downing Street serving in Liz Truss' government coincided with an economic crash and raised interest rates which hit mortgage holders, said of the move: "If that suggestion is that they're going to intervene and keep prices down, that seems to me like a socialist measure.
"You're just going to try and suppress prices; you're giving away money. But then the question is, who's going to be taxed to pay for all of those giveaways?"
On the reasoning for the policy, the former Conservative Business Secretary told Tom Swarbrick: "I get Andy Burnham. He wants to be popular. Keir Starmer was very unpopular.
"And he feels that he's got to address people's concerns. But the answer can't be just, you know, taxing people and spending indefinitely.
"You've got to grow the economy."
As part of his priority to tackle the affordability crisis, Mr Burnham has also set out wider ambitions, including a major council house-building programme, free social care at the point of use and greater public control of utility companies.
He has signalled potential intervention at Thames Water, while also considering whether to raise the £12,570 income-tax personal allowance - a move which could cost the Treasury billions.