Overview
- The prime minister declined to rule out tax increases on Monday while defending some cost‑of‑living pledges as funded and saying he will take a careful approach to public finances.
- Official data show government borrowing rose to £1.8 billion in July, a £700 million increase on the year that analysts say has sharply reduced the Treasury’s room to borrow.
- Burnham repeated he will not raise income tax, VAT or employees’ national insurance because of Labour’s 2024 manifesto commitment, but he left open other tax options such as capital gains, property or wealth measures.
- Key spending gaps remain unresolved, notably a pre-announced £5 billion defence uplift and broad social care reforms, and ministers have been warned that Healey will need either new revenues or spending cuts before the autumn Budget.
- What to watch next: the Treasury’s published costings, any request to the independent Office for Budget Responsibility for formal scoring, and how proposed measures would affect households and businesses ahead of the October 28 statement.