Burnham cited the decision to pause digital ID as an example of the “difficult decisions” he has already made to reprioritise public spending, promising further tough choices to keep the economy on course.
Digital ID is an unusual example. Burnham had abandoned the scheme shortly before becoming prime minister so he could concentrate on measures addressing everyday living costs.
Within days of taking office, the new government redirected the money towards cutting VAT on household electricity bills.
That makes the move a reprioritisation rather than an overall reduction in public spending. At the time, former cabinet minister Darren Jones also argued that the government had not yet committed the funding for digital ID.
Chancellor John Healey’s first major speech last week suggested that he is keen to reassure financial markets, pledging to control public spending and commending Rachel Reeves for beginning to restore Britain’s fiscal discipline.
It would not be unusual for a prime minister and chancellor to adopt different tones and highlight contrasting priorities in public.
Nearly 25 years ago, while serving as a junior Treasury minister, Healey was already examining how to strengthen growth across the country—well before regional development became central to Burnham’s vision for Britain.
Even so, some within government are beginning to question whether their economic approaches are as closely aligned as anticipated. “It’s what everyone is thinking and some of us are vocalising,” one government source said.
Others worry about the political risks of a Labour government going to such lengths to prove its fiscal credibility. The removal of the Winter Fuel Allowance for most pensioners was among Sir Keir Starmer’s first actions and became an early contributor to his political downfall.
For Labour’s opponents, the issue is whether the prime minister is prepared to disappoint his own MPs. However, much of the anger inside Parliament over winter fuel payments was driven by the furious response from Labour MPs’ constituents.
The episode raises a deeper question: can policies designed to reassure financial markets be delivered politically by a Labour government dependent on its electoral coalition and the progressive vote?
With the Budget only six weeks away, it will provide the clearest indication yet of how the new government intends to answer that challenge.
