Burnham has no scope to increase borrowing, think tank warns

Burnham has no scope to increase borrowing, think tank warnsImage source, TOBY MELVILLE / Getty ImagesImage caption, Prime Minister Andy Burnham has announced a rake of cost-of-living measures since taking office last weekByEmer MoreauBusiness reporterPublishedJust nowPrime Minister Andy Burnham will have to raise taxes or cut spending to meet his pledges on defence and the cost of living, a major think tank has said.Burnham has announced a series of new measures since assuming office last week, including cuts to electricity bills and bringing the bus fare cap in most parts of England back down to £2.But the National Institute of Economic and Social Research (Niesr) warned the public finances will continue to be squeezed by more persistent inflation as a result of the Iran war.It questioned whether Burnham had "fully thought through" how his promises would be paid for, but said the prime minister will have to raise taxes or cut spending elsewhere.Stephen Millard, Niesr's deputy director for macroeconomics, said: "There's clearly no scope for increasing borrowing, so it is about choices."Labour's manifesto pledge was to not increase taxes for working people - including income tax, VAT and national insurance contributions - which Burnham has said he will uphold.Millard said Niesr was advocating for cost-of-living measures to be funded through higher taxes – "which could involve tax reform rather than higher marginal rates" – or spending cuts.He said: "People have talked a lot about the welfare bill – that is an obvious place to look."The triple lock on pensions, that is very, very expensive, and will get more expensive as we age."He also pointed to potentially reforming council tax to move towards a land value tax system, or scrapping some VAT exemptions."Once you've done all of that, then I'm afraid I would break the manifesto promise and would be looking at the income tax rate."Niesr als...