How Andy Burnham could change your pension, taxes and mortgage

The soon-to-be Prime Minister faces pressure to reassure financial markets as borrowing costs remain elevated

Andy Burnham has now been announced as Labour leader, raising major questions about what his premiership could mean for household finances.

From pensions and taxes to mortgages and property costs, the former Greater Manchester mayor has previously backed policies that could reshape how millions of Britons manage their money.

Mr Burnham has pledged to maintain the state pension triple lock, while also suggesting changes to the personal allowance, council tax, stamp duty and inheritance tax rules affecting farmers.

His approach to government spending and borrowing could also influence mortgage rates, with financial markets already responding to expectations about his economic plans.

For pensioners, homeowners, savers and taxpayers, the coming weeks could prove pivotal.

What could Andy Burnham mean for pensions?

Mr Burnham has pledged to honour Labour's manifesto commitment to the state pension triple lock, which guarantees payments rise each year by inflation, average wage growth or 2.5 per cent, whichever is highest.

However, the Organisation for Economic Co-operation and Development (OECD) has urged the incoming government to reform the guarantee, describing it as "unusually generous" compared with pension arrangements in other countries.

The international economic organisation warned that the triple lock places growing pressure on public spending and leaves the Government exposed to unexpected increases in inflation or wages.

Funding the guarantee while maintaining Labour's promises not to increase income tax, VAT or employee National Insurance could therefore prove challenging.

Sarah Coles, of investment platform AJ Bell, said sticking to the fiscal rules while government costs rise would leave the new administration "in a bit of a bind" and could force it to "tinker around the edges" to raise money.

Mr Burnham also enters Downing Street at a crucial time for workplace pension reform, according to Chris Eastwood, chief executive of pension provider Penfold.

He said: "The priority should be maintaining momentum and giving employers and providers the clarity they need, while ensuring that changes lead to better value, simpler experiences and stronger outcomes for savers.

"Auto-enrolment has brought millions of people into pension saving, but participation alone does not guarantee a comfortable retirement."

Mr Eastwood called for a renewed focus on helping people understand whether they are saving enough, particularly underserved groups such as the self-employed.

How could taxes change under Andy Burnham?

Mr Burnham has pledged not to raise income tax, VAT or employee National Insurance rates, in line with Labour's manifesto.

However, he has suggested changing the £12,570 personal allowance, which has been frozen since April 2021 and is due to remain unchanged until 2031.

Speaking on BBC Question Time in June, he said: "On the personal allowance, I've heard on so many doorsteps, and I've said to my team, let's have a proper look at this and let's develop a policy."

Mr Burnham has also floated a 10p starting rate of income tax and said there was "definitely a case" for restoring the 50 per cent additional rate for the highest earners.

Capital gains tax could also be reviewed, with Burnham ally Wes Streeting previously suggesting its rates should be aligned with income tax.

Inheritance tax may also come under scrutiny. In 2009, while serving as health secretary, Mr Burnham proposed replacing the current system with a flat 10 per cent charge on all estates to fund free social care.

Speaking at his Makerfield campaign launch, he said the proposal was "not about asking people to pay more", but finding "a much better way" to fund care and give families greater peace of mind.

However, Sean Drury, of accountancy firm Blick Rothenberg, warned that Burnham's inheritance tax and stamp duty proposals would not provide quick fixes.

He said: "These sorts of structural tax changes take a long time and are hard to implement. There are also a lot of unintended consequences."

Mr Burnham has also indicated that he could reconsider the controversial inheritance tax rules affecting farms worth more than £2.5million.

What could happen to mortgage rates?

Financial markets have already begun delivering their verdict on the incoming government, with mortgage costs closely linked to investor confidence in its economic plans.

When Mr Burnham announced his intention to stand in the Makerfield by-election, UK government borrowing costs reached an 18-year high and the pound fell 0.3 per cent against the dollar.

Ian Futcher, financial planner at Quilter, said: "A Burnham-led government would be judged quickly by how markets interpret its approach to fiscal discipline, and that will flow directly into mortgage pricing."

He warned that even the perception of higher government spending and borrowing could keep mortgage costs elevated.

However, the pound has strengthened and government borrowing costs have fallen since Shabana Mahmood emerged as the likely chancellor.

Homeowners whose current mortgage deals expire within six months are being advised to consider securing a new rate now instead of relying on borrowing costs falling further.

Could council tax and stamp duty be replaced?

Mr Burnham has long supported reforming stamp duty and council tax, describing council tax as "highly regressive".

Mr Burnham has also previously supported a land value tax, an annual charge based on the value of the land itself. However, neither this nor the Fairer Share proposal has been confirmed as government policy.

One proposal he has previously backed was developed by campaign group Fairer Share. It would replace both taxes with a single annual levy equivalent to 0.48 per cent of a property's value.

Owners of second homes and properties owned by overseas residents would pay double that rate.

Fairer Share claims three quarters of households would save an average of £556 a year under the system.

However, the remaining quarter would pay more, with those households largely concentrated in London and the South East.

Robert Gardner, of Nationwide Building Society, said taxes based on property values could be more efficient and would not discourage people from moving home in the same way as stamp duty.

However, he cautioned that "much depends on the detail of any reform".