Birmingham MP Shabana Mahmood is tipped to become the next Chancellor under new Prime Minister Andy Burnham. The current Home Secretary would be tasked with making major economic decisions if she secures the second most powerful job in Government. While Burnham is promising change, he and his Chancellor will face the same difficulties as Keir Starmer and Rachel Reeves and will come under pressure to show they can improve the lives of Brits.
Tax
Arguably the biggest decision for any Chancellor is how much to tax the public. Many voters complain taxes are too high, while businesses have been critical of Labour for hiking National Insurance rates, claiming it has impacted their ability to hire staff and forced them to hike prices. But with Burnham plotting a radical strategy to change Britain, Mahmood will be tasked with deciding how to pay for it and how much to tax households.
PIP
Another major decision facing the new Government is the future of disability benefits. It's an issue which caused severe damage for Keir Starmer and put him in conflict with his backbenchers. Personal Independence Payments (PIP), the main disability benefit, is currently under review and is set for an overhaul. The review has already concluded the benefit is "not working". This could include restricting payment for some conditions like anxiety and depression following a surge in claims in recent years. Mahmood and the DWP would have to decide how to address the welfare bill.
Pension triple lock
There are growing calls for the state pension triple lock to be scrapped because of how much it costs the nation. The policy, originally introduced by the Conservatives, guarantees an annual increase to payments to match whatever is highest out of inflation, wage growth and 2.5%. Burnham has already ruled out any changes to the triple lock. But pressure may grow on Mahmood to take action, particularly if Labour wins the next election.
Benefits
The benefits bill is an issue for the Government, with ministers keen to get more people off benefits into work. Efforts to achieve this are likely to ramp up if Mahmood becomes Chancellor. Benefits generally rise in line with inflation each year. While there has been no suggestion this will change it could potentially be an area to look at.
Tax bands
A controversial policy in Britain is frozen tax bands, resulting in more people being dragged into paying more tax. Bands were originally frozen in 2021 by the Conservatives and Rachel Reeves extended the freeze. This means people move into higher tax bands as their earnings increase, something known as fiscal drag. More pensioners are also being affected by this every year. Bands are set to stay frozen until 2031 though Mahmood may come under pressure to change course.
