Andy Burnham signals a wealth tax is off the agenda for now

Andy Burnham, who is poised to become the next UK prime minister, has signaled that he will not increase wealth taxes immediately after taking office. This move eases concerns within the business community but narrows his room for economic maneuver.

On Wednesday, Burnham said he did not want to "create new divisions" with his tax policy. Allies interpreted the comments as a sign that he does not intend to raise revenue by taxing wealth.

Meanwhile, those close to Burnham have briefed that Home Secretary Shabana Mahmood is the frontrunner to become chancellor, seen as another blow to Burnham's more left-wing supporters.

Asked about wealth taxes on Wednesday, Burnham told former footballer turned podcaster Gary Lineker: "I don't want to come in and sort of, if you like, create new divisions and pitch people one against another." He added: "I do believe we need a greater sense of fairness and people feeling that things are being done in the right way and a fair way. But at the same time, you know, I don't want to sort of be perceived as somebody who's coming in with grudges and agendas and, you know, going to just immediately find or demonise one group or create a new way of dividing people."

Burnham did not rule out such a move in the future, saying: "At some point that might be having to ask for a little more. But, you know, those decisions are not for now. They're for another day."

The incoming prime minister will inherit several immediate financial challenges, including finding an extra £4.7 billion to fund the government's defence investment plan and funding his plans to bring utilities under public control. He has previously said he intends to stick to the government's borrowing rules and Labour's 2024 manifesto, which ruled out rises to national insurance, income tax, or VAT. However, he told LBC earlier this month that this would still leave room to change some taxes, flagging business rates as one example.

Some prominent supporters have urged him to consider raising wealth taxes to pay for his policy objectives. They include Louise Haigh, one of his closest parliamentary allies, who said last year: "We need real reform: a proper wealth tax that rewards work, closes loopholes and finally gives us the means to invest in the NHS, schools and our communities."

Wes Streeting, the former health secretary who was at one stage tipped as a possible chancellor, has called for capital gains tax to be raised to the level of income tax. Treasury officials have insisted that raising CGT would not generate extra revenue given that wealthy people can move their assets or delay selling them, but some around Burnham wanted him to back the move in a show of fairness.