Burnham hints at tax allowance rise as Labour weighs relief

Andy Burnham said there was “some room” for movement on tax in an interview with LBC, while insisting he would stick to Labour’s pledges not to raise income tax, VAT or National Insurance for working people. The Greater Manchester mayor has been linked to easing pressure on lower earners and pensioners through changes to the personal allowance, a signal that comes as Labour tries to keep faith with its tax promises under tight fiscal conditions.

Burnham has hinted the frozen personal allowance of £12,570 could rise to £13,070, although he has also pulled back from a costly increase to the income tax threshold after signalling he was considering it. The personal allowance has been frozen for five years, which has dragged more people into paying tax as wages have risen. Burnham has previously said that freeze was a big issue in the Makerfield by-election, where he returned to Parliament last month.

The numbers show why the idea is politically attractive and financially awkward. The Office for Budget Responsibility says freezes or reductions in personal tax thresholds since April 2021 have generated extra receipts for the Treasury and increased the number of taxpayers. Dan Neidle has argued that a £500 rise in the personal allowance would be a bad tax cut, costing about £5bn while saving a basic-rate taxpayer around £100 a year.

That kind of arithmetic explains the sensitivity around Burnham’s remarks. A modest-looking change on paper would hand some households a small monthly cushion at a time when living costs remain under pressure, but it would also leave the Treasury facing a multibillion-pound bill. In that sense, the debate is less about a single threshold than about how far Labour-aligned figures can go in offering relief without reopening arguments over who pays for it.

Burnham’s position also matters because he is being discussed as a possible future prime minister, which gives every tax signal added weight. A shift in the personal allowance would not just affect lower earners and pensioners; it would test how firmly Labour can hold its line on tax restraint while still finding room for targeted help.