As Andy Burnham prepares to step into the role of Prime Minister, he faces a daunting array of challenges that have long plagued his predecessors. From soaring welfare costs to a beleaguered housing market, the issues at hand are both complex and pressing. Here’s a breakdown of the five critical areas that will demand his immediate attention.
Welfare Woes: Tackling a £58 Billion Bill
The welfare system is at a tipping point, as the cost of sickness and disability benefits has skyrocketed to a staggering £58 billion annually—an amount projected to leap to £78 billion by 2030. The primary contributor to this surge is the rising number of individuals claiming Personal Independence Payments (PIP), a benefit aimed at assisting those with disabilities. Current estimates suggest that claims will jump from four million to five million over the next seven years, with younger claimants increasingly citing mental health issues and neurodevelopmental disorders.
The previous Conservative government attempted reforms but saw costs continue to swell. Labour’s recent efforts to cut £5 billion from the PIP bill faced backlash from within its ranks, forcing a retreat. An interim report by disability minister Sir Stephen Timms, which acknowledges PIP’s inadequacies, hints at potential reforms. These could include providing therapeutic support rather than financial aid, though such moves might provoke significant resistance from disability advocates and some Labour MPs.
Burnham has publicly stated his intent to reduce welfare expenditures, focusing on facilitating employment opportunities instead of implementing “crude cuts.”
Defence Dilemmas: The £9 Billion Question
In June, Labour’s Defence Investment Plan revealed a troubling reality: proposed defence spending will only reach 2.7% of GDP by 2030, and it remains unfunded, necessitating cuts from other departments. Burnham will need to respond to mounting pressure to elevate defence expenditure to 3% of GDP, which would require an additional £9 billion annually.
Moreover, with NATO’s new target calling for 3.5% by 2035, the financial implications could soar to an extra £24 billion each year. Some analysts have suggested the introduction of “war bonds” to alleviate the fiscal burden without raising taxes. However, should Burnham choose to increase defence spending, he will also face the challenge of overhauling a notoriously inefficient procurement system, where only three out of 47 major projects are deemed likely to succeed on time and within budget.
Social Care Crisis: The Unmet Needs of Two Million
The social care sector is in dire need of reform, with many labelling it a “broken” system. An estimated two million elderly individuals in England are living with unmet care needs, and around 10% of those aged 65 and over could face lifetime costs exceeding £100,000 for necessary care.
Burnham previously attempted reform during his time as health secretary but saw his plans abandoned after Labour’s 2010 electoral defeat. A 2011 report recommended a cap on lifetime care costs, a proposal that garnered initial support from Conservative ministers but was ultimately sidelined.
In 2024, Labour’s manifesto promised the establishment of a new “national care service,” yet under Starmer, the issue has been deferred until at least 2028. Burnham is expected to push for a faster review from Baroness Casey, aiming for recommendations by the end of 2026. However, any substantial reform will likely incur significant costs. In the past, Burnham has floated the idea of a 10% inheritance tax levy to fund these changes, but polling indicates that inheritance tax is deeply unpopular. More recently, he has suggested a complete overhaul of the tax system for the wealthy.
Housing Shortage: The Delivery of New Homes
Promises of 1.5 million new homes over the parliamentary term are falling short, with only 204,000 constructed in the past year—far below the target of 300,000 annually. Burnham has pledged to initiate the largest council house building programme since the post-war era, yet specifics remain vague.
The stark statistics reveal that English councils built merely 1,970 homes for rent in 2025—a significant dip from the near 200,000 constructed annually during the 1950s. The current government has allocated around £4 billion annually to support the construction of 30,000 “social and affordable” homes; however, experts estimate an additional £13 billion is required to achieve meaningful progress.
Burnham could explore borrowing options to finance more public housing, but he must tread carefully to align with the fiscal rules he has vowed to uphold.
Youth Employment: A Million Young People Left Behind
Youth unemployment is an alarming issue, with over one million individuals aged 16-24 currently classified as NEET (Not in Employment, Education, or Training)—making up about one in seven of this demographic. The UK’s NEET rate, once average among EU nations, has surged to the second highest in Europe, trailing only Romania.
Contributing factors include a 20% decline in apprenticeship starts among 19- to 24-year-olds since the prior government’s reforms in 2016. A recent report from former Labour minister Alan Milburn labelled the NEET crisis an “urgent national issue” and will present recommendations later this year.
Burnham may seize upon these proposals, albeit with potential upfront costs for expanded training and guaranteed work placements. He has expressed a desire for a more robust focus on vocational training, recognising that successive governments have tended to prioritise university pathways over practical qualifications.
Why it Matters
The challenges awaiting Andy Burnham as Prime Minister are monumental, each intertwined with the lives of millions across the nation. Successfully navigating these issues will not only define his leadership but also shape the future of public services and social equity in the UK. As he embarks on this journey, Burnham’s approach to reform and investment will be scrutinised, and the stakes have never been higher for a country yearning for change.
