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Andy Burnham has delayed major tax and spending decisions until the Budget after a row about unfunded commitments.
Following confusion over plans to raise the £12,570 tax-free personal allowance in the Budget, the Prime Minister said he would look at it “at the Budget alongside everything else”.
At the same time, Wes Streeting, the Defence Secretary, refused to commit to the UK increasing its defence spending to 3 per cent of GDP, and stressed that the issue was “a matter for the Chancellor”.
The comments came after accusations that Mr Burnham had unveiled unfunded commitments to cut VAT on energy bills and cut bus fares to a maximum of £2.
Confusion over the personal allowance began at the weekend when Mr Burnham hinted in an interview that he was looking at ending the five-year freeze, saying that “frustration” over the issue came up regularly on the doorstep at the Makerfield by-election.
But on Tuesday, government sources said there were no plans to announce any changes in the short term, after concluding it would cost £3.7bn at a time when the public finances were tight.
Asked whether he was planning to change the allowance during a visit to Bath, Mr Burnham told broadcasters: “Well, it’s funny these days you can’t answer a question honestly without then people reading everything else into it.
“I want to answer questions honestly in this job, as I said before. I think that’s all about trust in politics and doing politics differently, and I’m determined to keep working in that way. It was raised a lot, but I then went on to say, ‘But we’ll have to look at it at the Budget alongside everything else’. So no commitment, no unfunded promise.
“It’s just perhaps the way politics is these days and the way people report things, but that was an honest answer. There is no commitment at this point to change, but we will look at that at the Budget.”
Asked whether tax rises were likely in the Budget to pay for his cost of living policy blitz, Mr Burnham replied: “No, we’ll take decisions on tax at the Budget. This is about reprioritising in this phase. As I say, going to the public’s priorities, the cost of living crisis, the housing crisis.”
Speaking at the Farnborough Airshow in Hampshire, Mr Streeting said Mr Burnham and John Healey, the Chancellor, both “understand defence” and its “immediate pressures and priorities”.
But pressed on whether he supported the ambition of raising defence spending to 3 per cent by 2030, Mr Streeting stressed that fiscal policy was “a matter for the Chancellor”.
Asked whether he was “trying to do defence on the cheap”, Mr Streeting replied: “Absolutely not. I’m trying not to be on the wrong side of the Chancellor on day two in office.
“The Chancellor’s position is on the record. My calls for greater defence investment are also on the record.”
Earlier, Mr Burnham’s announcement of a £2 bus cap descended into farce after it emerged it had not been properly worked out how it would be paid for.
The Prime Minister announced on Wednesday morning that he would cap single bus tickets at £2 from January 1 until the end of 2027.
The Government claimed the measure would cost more than £500m, with about £454m coming from a range of net-zero projects and climate finance, including turning overseas climate grants to developing nations into loans that those countries would repay.
The remaining sum of about £50m would come from Department for Transport funding already set to be spent on buses.
However, Heidi Alexander, the Transport Secretary, failed five times during an interview to say whether interest would be due on those loans, saying: “The detail will need to be worked out. We wanted to make the announcement today.”
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Sir Mel Stride, the shadow chancellor, accused Mr Burnham and his top team of “not actually specifying where the money is going to come from”.
He said: “That is a worrying sign. We need to have a Government which is on top of the public finances, not one that is making lots of spending commitments without explaining where the money is going to come from.”
The day before, one of Sir Keir Starmer’s closest allies said Mr Burnham was unveiling an unfunded plan to cut VAT on electricity bills.
Mr Burnham had revealed plans to cut VAT on electricity bills worth £850m, which he said would use cash from his predecessor’s abandoned digital ID scheme. The digital cards would have been used to verify people’s right to live and work in the UK.
However, the tax cut soon descended into farce when Darren Jones, a close ally of Sir Keir who oversaw the digital ID programme, said the proposal was unfunded.
Addressing his first Cabinet on Tuesday, Mr Burnham was keen to emphasise that the Government had to “show fiscal discipline”.
“We’ve got to show that our commitment to the fiscal rules is real and we’re prepared to make the difficult decisions in relation to that,” he said.
