From welfare to prisons: the challenges for Burnham when MPs return to Commons

The budget

John Healey gives his first budget as chancellor on 28 October penned in by the same constraints that faced his predecessor, Rachel Reeves.

Burnham and Healey have promised to stick to the fiscal rules set by Reeves, which means the government’s day-to-day budget must be forecast to be balanced in three years’ time.

They have also promised not to raise income tax, national insurance or VAT, which gives the chancellor little room for manoeuvre if he wants to raise money for potentially expensive policies such as bringing utilities under public control.

Many Labour MPs want Healey to raise wealth or business taxes to help pay for the government’s promises, but Treasury officials say such a move will not raise large amounts of money.

The economists Jim O’Neill and Andy Haldane, both of whom have advised Burnham in the past, have recently warned against raising taxes on the private sector. O’Neill said this weekend: “We need more genuine risk-taking and more entrepreneurs, and we need to boost these sort of green shoots of growth that are there.”

Welfare spending

Over the next few weeks, the prime minister will be presented with two significant reports into how the welfare system is working: one on disability benefits by the minister Stephen Timms, and another on youth employment by the former minister Alan Milburn.

In his interim report, Timms said the current system of personal independence payments (Pip) was not working, but admitted that there would have to be some “challenging discussions” on how to fix it.

Keir Starmer’s attempts to cut £5bn from the Pip system backfired when Labour MPs rebelled en masse, forcing the government to drop the plans altogether, in what was arguably the beginning of the end of Starmer’s premiership.

Charities are already gearing up to resist any attempt by Milburn and the government to cut benefits or place sanctions on young people who fail to find work.

Migration

Shabana Mahmood, the home secretary, wants to make migrants wait longer before they are eligible for settled status, which allows them to claim benefits and access NHS services.

Controversially among Labour MPs, she wants to apply these changes to people who are already in the country, alongside a series of other changes to the migration system, including forcibly deporting families who refuse to comply with removal orders.

Mahmood has been consulting on some of her proposals, and has suggested that some people could be given shorter waiting times than others before qualifying for settled status. It will soon be up to Burnham whether to allow her proposals to remain largely intact or to demand exemptions for some workers such as those in the care system.

Asked by the Sunday Times whether he had made a decision on that package, he replied: “Not yet, no.”

Prisoner release

Next month, 5,000 prisoners are due to be released early in an attempt to ease the pressure on overcrowded prisons in England and Wales.

The plans have already been watered down after a public outcry prompted Burnham to exclude those convicted of rape, serious child sexual offences and grooming from the scheme. That decision cut the number due to be released early by 1,000, with the prison population projected to reach more than 100,000 by 2030.

Burnham has promised to make further changes to the scheme, to make sure that prisoners such as Jessie Cole and Albert Bowers, who were jailed for 13 years over the killing of PC Andrew Harper, would also be ineligible for early release.

Further changes, however, could put the prison estate under serious pressure, with the justice secretary, Alex Norris, having recently warned about the risk that the prison system could “break down”.