The Makerfield by-election on 18 June could set in motion a chain of events that ends with a new prime minister as well as a new approach to some of the most contentious decisions of the current parliament, particularly around tax.
Manchester mayor Andy Burnham is widely regarded as the frontrunner to replace Keir Starmer if the party moves against its leader but would need to be a sitting MP in order to take part in any leadership challenge. Earlier this month, he confirmed that he would challenge Starmer if he wins Thursday’s by- election.
But exactly what he would do in Downing Street remains vague, so Sarah Coles, head of personal finance at AJ Bell, has been picking through the signals.
“Standing in the Makerfield by-election has given Andy Burnham a chance to be grilled on what he might do if he became prime minister,” she said. “Unfortunately he has mastered the art of the non-specific, positive answer, so it's still difficult to tie down what he might do about anything from tax to pensions.”
That said, there are a few points which seem firmer than others: maintaining Rachel Reeves’ fiscal rules and Labour pledges on income tax, National Insurance and VAT. He has also “repeatedly demonstrated an enthusiasm for supporting the underdog and revisiting wealth taxes and taxes on higher earners to help pay for it”.
Beyond that, divining a clear policy stance “requires a fair amount of reading between the lines”, said Coles. Below is what she could gather so far.
Pensions and ISAs
The most immediate question for investors and savers is whether Burnham would appoint a new chancellor. Coles pointed to two policies introduced under Reeves that have drawn “fierce criticism”: the inclusion of pension pots in inheritance tax from 6 April 2027 and the planned cut to the cash ISA allowance on the same date. A new chancellor – with a mandate to revisit contested decisions – could shelve both.
Burnham has also said inheritance tax changes for farmers deserve a second look and that he wants to revisit the income tax personal allowance, currently frozen until April 2031, but stopped short of committing to raising it.
Tax
On one side, Burnham has spoken about cutting business rates for pubs by 20% and lifting the threshold for small businesses. On employers' National Insurance – a rise that has drawn significant pushback from business groups – Coles founds him “sympathetic to reversing it”.
On the other side, he has repeatedly signalled an appetite for taxing wealth and higher earners more heavily. He has described land as undertaxed, called for reform of council tax and stamp duty, and has previously floated reintroducing the 50p income tax rate – though he declined to say whether that remains on the table.
Before this campaign, his position on inheritance tax was scrapping it entirely and replacing it with a care levy to fund an integrated health and social care system. He confirmed during the campaign he would not rule out revisiting the idea.
Gilts, utilities and ‘public control’
“His comments in the past about not wanting to be answerable to the bond market means speculation about a potential leadership bid led to gilt yields rising again,” Coles said. He has since said those remarks were misunderstood, but “whether the bond markets will take him at his word could well become clear by Friday morning”.
More specific concerns have emerged around his calls for stronger public control of key services. He has named energy, transport and water as areas where he wants to extend state involvement. That will matter to holders of shares in companies such as National Grid, Trainline and Severn Trent, said Coles.
He has stopped short of calling for nationalisation – the exception being Thames Water – but investors will be watching closely for any sharper definition of what “public control” means in practice.
On pensions specifically, Burnham's focus has been on low-income pensioners rather than savers. He reopened the debate around compensation for women born in the 1950s affected by state pension age changes, though his team later clarified he had not committed to full financial compensation.