New prime minister Andy Burnham has dealt an instant blow to taxpayers by announcing he is not making an immediate “commitment” to changing the tax-free personal allowance. The amount people can earn before being taxed has not changed since 2001, meaning that as earnings have gradually increased more and more of the lowest paid people in the country have been dragged into paying income tax, in a phenomenon known as ‘fiscal drag’.
But had the threshold been unfrozen it would be £16,070 today, meaning the average basic-rate taxpayer would have an extra £700 a year in their pockets, according to the think-tank Tax Policy Associates.
Mr Burnham’s decision to make no immediate plans over the threshold seems to jar against what he told The Times over the weekend when he said during his Makerfield by-election campaign there was a “frustration about the personal allowance” from voters on the doorstep.
But despite the feelings of his constituents, Mr Burnham told the BBC on Tuesday that adjusting the frozen limit was not part of his initial plans to tackle the cost of living.
And when he was asked on Wednesday about making a change, the new prime gave a rather cryptic response and blamed the media for “the way people report things” for quoting what he previously said about making no “commitment”.
The prime minister, who previousy raised eyebrows for refusing to speak to the press before entering Downing Street, said: “It’s funny these days you can’t answer a question honestly without people then reading everything else into it.
“I want to answer questions honestly in this job, as I said before. I think that’s all about trust in politics and doing politics differently, and I’m determined to keep keep working in that way.
“It’s just perhaps the way politics is these days and the way people report things, but that was an honest answer.
“There is no commitment at this point to change, but we will look at that at the Budget.”
So far Mr Burnham’s cost-of-living policies have included announced a £2 cap on all bus fares in England outside of London and announcing a VAT cut on household electricity bills from October 1. It’s estimated the cut will save the average household about £45 a year.
The VAT cut is something Mr Burnham would not be able to perform if Britain was still a member of the EU, and is only possible because of Brexit, something Mr Burnham voted against.
Mr Burnham’s bus saving will come into force in January.
