The Prime Minister has conceded that the cost-of-living measures announced in his first three weeks in office will not resolve the pressure on households and businesses, signalling that further support — chiefly on business rates — will come at the Budget on 28 October.
Andy Burnham, who became Prime Minister on 20 July, made the comments in an interview with BBC Radio 5 Live's Wake Up to Money broadcast on Wednesday. The BBC characterised his remarks as an admission that the help so far is not enough; the direct quotations carried by the Press Association and Reuters are more hedged, with the Prime Minister stressing both the limits of the public finances and his intention to go further where he can.
"I know the cost of doing business is too high, particularly for smaller businesses. I wouldn't want to promise the earth and say all can be solved because I think people can see I'm facing a difficult financial outlook and I won't bring forward things that I can't fully fund."
On the high street, he was more explicit about what is coming. "We're going to look at business rates more broadly for high street businesses in the budget, so there's plenty more that we can do," he said, adding: "We've made a move on pubs and business rates. I'm signalling going further on business rates." He also acknowledged that "everyone knows that I'm in a position with limited room for manoeuvre".
The Prime Minister is also examining a remodelling of the rail fares system, including possible expansion of railcard eligibility, having already extended the 16-17 Saver Railcard. He repeated his longer-term ambition of greater state control over water, energy and housing as a route to lower household bills, and framed his approach as an accumulation of smaller measures that together ease pressure on family budgets.
Those measures so far include cutting VAT on household electricity from 5% to zero from 1 October for six months, which the government says will take around £45 off the annual Ofgem price cap; a 20% business rates cut for pubs, social clubs and live music venues in England for 2027/28, worth roughly £1,100 to a typical pub, on top of existing 15% relief; a £2 cap on single bus fares in England outside London from 1 January 2027, backed by £454m, with the current £3 cap running through the rest of this year; and consumer reforms on subscription traps and misleading discounts, some of which have been brought forward to January.
The funding of the package remains contested. Downing Street has put the cost of the VAT cut at about £850m in 2026-27, financed by cancelling the previous government's digital ID programme. The Institute for Fiscal Studies' Helen Miller has said the VAT cut alone requires around £850m in a single year, meaning the government "will therefore still need to make around £850m of as yet unspecified cuts". Stephen Millard of the National Institute of Economic and Social Research said there was "clearly no scope for increasing borrowing, so it is about choices".
The backdrop is an inflation rate that fell to 2.6% in the year to June, down from 2.8% in May, but which the Bank of England expects to rise to a little over 3.25% by the fourth quarter. The Resolution Foundation, which estimates the Chancellor's fiscal headroom has fallen from £23.6bn to around £10bn, this week urged targeted cost-of-living payments of £220, £175 and £85.
Opposition parties dismissed the signals. Reform UK's Robert Jenrick called for green levies to be scrapped and tax rises ruled out in October, while shadow chancellor Sir Mel Stride accused the Prime Minister of "breathtaking hypocrisy". The Budget will be delivered by Chancellor John Healey on 28 October. The next inflation figures are published on 19 August.