Burnham prepares breathing space Budget with bank tax and rough sleeping funds

Prime Minister Andy Burnham has said his first Budget will offer 'breathing space' to households and businesses and 'a bit of hope for the future', as he and Chancellor John Healey set out pre-Budget plans in London.

Speaking in his first live TV interview, 99 days after entering Downing Street, Burnham said the economy's fundamentals were improving. He cited the IMF's recent assessment that Britain was the fastest-growing G7 economy, joint, and a standout for deficit reduction. But he also faces a difficult backdrop, with government borrowing costs up sharply this year.

At a homeless shelter in London, Burnham and Healey pledged to double funding to try to get all rough sleepers off the streets by Christmas. More detail is expected in Wednesday's Budget. A new tax on bank profits is also expected. The Chancellor has described the package as a 'breathing space' Budget, with the message 'breathing space for tomorrow and fresh hope for the future'.

The Budget is being billed as 'steady as she goes' rather than radical. Ministers are expected to focus on everyday costs. Expected measures include:

• A new tax on bank profits, with the proceeds targeted at people on lower incomes with energy bills.
• Removal of standing charges from gas bills.
• Doubling of funding to try to get all rough sleepers off the streets by Christmas.
• A possible faster path to spending 3% of GDP on defence by 2030 through public financial institutions.

Defence remains a top priority. There are signals of a faster than expected pathway to 3% of GDP by 2030, using public financial institutions such as the National Wealth Fund and the British Business Bank to borrow for investment without hitting the main fiscal headroom.

Burnham also said he wants the UK to rejoin the EU in his lifetime, though not through a referendum in this Parliament. He has opened the door to a return to freedom of movement, but Downing Street later clarified he was not proposing specific options. Reform and the Conservatives said a return to freedom of movement would be a mistake.

The Budget is Burnham's first big political moment after taking office. Supporters say he needs to protect stability and avoid the mistakes of previous fiscal events, with a spending review next year and a ten-year plan due in November. Critics and business figures say the government still needs a stronger growth policy, welfare reform, NHS efficiency and a clearer AI and defence strategy.