Andy Burnham has confirmed he will maintain three key policies for state pensioners inherited from former Chancellor Rachel Reeves, as he takes over as Prime Minister. The Makerfield MP replaced Sir Keir Starmer, with John Healey appointed as the new Chancellor of the Exchequer.
Continuity in Pension Policy
Before leaving Number 11, Ms Reeves told Laura Kuenssberg that "it is important that when Andy walks through that door he has a worked-through plan, because governing is hard in Britain, and lots of challenges and shocks will come his way." She emphasised that Mr Burnham's team must be "really clear about what they want to achieve" and that "he needs to stay laser-focused on those things that have always motivated him, have always driven him."
Asked why Sir Keir Starmer's time in office was ending, she said: "People are impatient for change - I'm impatient for change and I totally get that people want to see their lives changed faster."
Cash ISA Allowance Reduction
Despite not being Mr Burnham's first choice for Chancellor, he has vowed to persevere with three of her changes. The first is the reduction of the annual tax-free cash ISA allowance from £20,000 to £12,000 for people under 65, effective from April 2027. State pensioners will retain the full £20,000 allowance.
Rob Morgan, chief investment analyst at Charles Stanley Direct, said: "From April 2027, the annual cash ISA allowance will be cut from £20,000 to £12,000 for those under 65, while the overall ISA allowance will remain at £20,000. Older savers will retain the full £20,000 cash allowance."
Money Saving Expert explained: "Savers who hold cash inside stocks and shares ISAs will be charged 22 per cent on any interest earned on that cash from 6 April 2027, the Government has confirmed. The charge is designed to stop people using investment ISAs as a workaround to hold cash when the cash ISA limit is cut from £20,000 to £12,000 a year for under-65s from the same date."
Tax on State Pensions
The Treasury told The i Paper that Chancellor John Healey will stick to Ms Reeves' promise that income tax will not be levied on people whose only income is their State Pension. A spokesperson said: "Anyone whose only income is the full new or basic state pension without any increments will not pay income tax and we are committed to that over this Parliament. By keeping the triple lock, 12 million pensioners will see their income rise by up to £470 this year, and they continue to benefit from the highest personal allowance in the G7."
The Treasury added that it is already working on how to exclude those solely dependent on the State Pension from the Simple Assessment tax process, with details to be outlined in "due course".
Triple Lock Commitment
In 2024, then-Chancellor Ms Reeves said she was committed to the state pension triple lock, which guarantees pensions rise by whichever is the highest of inflation, average wage growth, or 2.5%. Mr Burnham has also pledged to keep this policy, ensuring pensioners' incomes continue to grow in line with these measures.
