Prime Minister Andy Burnham has backed away from increasing the personal income tax allowance, despite raising expectations during the recent Makerfield by-election campaign that he would look at easing the tax burden on working people.
During the campaign and in subsequent interviews, Burnham said that concerns about the frozen tax allowance had been raised repeatedly by voters on the doorstep. He said he had asked his team to develop a policy, describing the issue as one that deserved serious consideration as part of tackling the cost of living.
However, following his first Cabinet meeting in Downing Street, Burnham declined to commit to raising the allowance, with ministers pointing to the significant cost of such a measure and the Government's commitment to maintaining fiscal discipline. Treasury estimates suggest even a modest increase could cost several billion pounds each year.
The decision represents one of the first occasions where the realities of government spending have tempered expectations created during Burnham's leadership campaign. While ministers insist helping working households remains a priority, attention has instead shifted towards other cost-of-living measures, including a proposed nationwide £2 cap on bus fares and the temporary removal of VAT from domestic electricity bills.
Opposition parties have described the move as an early U-turn, while Government supporters argue that difficult decisions are necessary to protect the UK's public finances and avoid unfunded tax commitments.