Andy Burnham used his first cabinet meeting to set a clear priority for his new government. Days after becoming prime minister on 20 July without a general election, he told ministers they must make this a cost of living government.
The instruction came with a sharp caveat. Burnham directed his team to examine every possible measure, both big and small, to reduce household costs. Yet he repeatedly stressed the need for fiscal discipline, commitment to the fiscal rules and clear demonstration of how policies would be paid for.
We need to be a cost of living government, getting that cost of living down, looking at all possible ways of doing that.
Burnham added that there are things that can be done, big and small. He warned colleagues they must show fiscal discipline and that their commitment to the fiscal rules is real. Reprioritisation of budgets would be required where necessary.
Early steps have already been announced. From 1 October the government will remove VAT from domestic electricity bills, a move expected to cut the average household bill by £45 a year at a cost of £850 million in the next financial year. Plans are also in place to lower the national bus fare cap from £3 to £2.
Longer-term thinking is already under way. The administration is considering bringing forward the Louise Casey review of social care, originally scheduled for 2028, potentially to next year. Options include a tax-funded national care service or a social insurance model.
Initial funding for these cost of living measures is supposed to come from existing departmental budgets and reprioritisation rather than higher borrowing. The Guardian has reported that critics and sources question how the new administration will sustain these pledges, noting that the VAT change is funded only for the next year and that future costs will demand further reprioritisation or spending cuts.
