As Andy Burnham prepares to take the reins at Number 10, he faces a daunting array of policy dilemmas that have stymied his predecessors. From soaring welfare costs to a housing crisis, the incoming Prime Minister will need to act decisively to navigate these turbulent waters. Here’s a breakdown of five critical issues Burnham must address head-on.
Welfare Woes: The Rising Cost of Support
One of Burnham’s most pressing challenges is the spiralling £58 billion annual bill for sickness and disability benefits, a figure projected to hit £78 billion by 2030. The surge in claims for Personal Independence Payments (PIP), designed to assist those with disabilities, has been a significant contributor to this increase. Currently, around four million people benefit from PIP, a number expected to rise to five million within the next decade.
The previous Conservative government attempted to reform the welfare system but saw costs continue to escalate. Last year, Sir Keir Starmer’s administration aimed to cut the PIP expenditure by £5 billion annually by tightening eligibility, only to abandon the plan amid backlash from Labour MPs. An interim report by disability minister Sir Stephen Timms has acknowledged that the PIP system is “not fit for purpose,” with the final report expected to propose reforms later this year. Burnham has indicated a desire to address the welfare bill by promoting employment opportunities rather than implementing harsh cuts.
Defence Dilemma: The Push for Increased Spending
Burnham will also grapple with the need to boost defence spending, currently set at 2.7% of GDP, to meet NATO targets of 3% by 2030 and 3.5% by 2035. Achieving this goal will require an additional £9 billion annually, escalating to £24 billion if the longer-term target is pursued. Criticism of the government’s Defence Investment Plan, which was delayed for nearly a year, has only added to the pressure on Burnham to reform defence procurement, an area notorious for inefficiency. With only three out of 47 significant defence projects deemed on track for successful delivery as of 2025, the new Prime Minister will need to implement measures to ensure value for money.
Social Care System: A Broken Model
The social care system in England is widely regarded as underfunded and inequitable, with around two million older individuals facing unmet care needs. Burnham has previously described the system as “broken” and attempted reforms during his tenure as health secretary. The 2011 Dilnot report proposed a state-funded cap on lifetime care costs, which was accepted by Conservative ministers but never enacted.
Burnham’s government could revive this initiative, particularly as Labour’s 2024 manifesto promises the establishment of a national care service. However, Starmer has delayed immediate action, commissioning a review to be completed by 2028. There’s speculation that Burnham might push for a faster timeline, potentially implementing reforms that could demand significant funding—perhaps funded by a revised approach to inheritance tax.
Housing Crisis: Delivering on Promises
The government’s ambitious pledge to deliver 1.5 million new homes in England over the current Parliament is falling drastically short, with only 204,000 constructed last year. Burnham has expressed a commitment to initiating the largest council house building programme since the post-war era, yet concrete plans remain vague. Current state subsidies of £4 billion annually are insufficient to meet the goal of 300,000 homes per year, and achieving significant increases may require an additional £13 billion in funding.
While Burnham may consider borrowing to support public housing, he must ensure such actions align with the fiscal rules he intends to uphold. The stark reality is that English councils built merely 1,970 homes for rent in 2025, a drastic decline from the nearly 200,000 annual builds seen in the 1950s.
Tackling NEETs: A Generation at Risk
Burnham must also confront the pressing issue of youth unemployment, as over one million young people aged 16-24 are currently classified as NEET (Not in Employment, Education, or Training). The UK’s NEET rate has risen alarmingly, positioning it as one of the highest in Europe. A government-commissioned report described this situation as an “urgent national crisis,” with recommendations expected later this year.
To address this, Burnham may need to invest in vocational training and guaranteed work placements, providing more pathways for young people outside the traditional university route. Historically, governments have struggled to balance support for non-graduates with resources for higher education, and the new Prime Minister will need to rectify this imbalance to effectively tackle the NEET crisis.
Why it Matters
The challenges awaiting Andy Burnham as he steps into Downing Street are not merely political hurdles—they are critical issues affecting the lives of millions across the UK. His approach to welfare reform, defence spending, social care, housing, and youth unemployment will shape the future of the nation. As he seeks to implement changes, the success or failure of his policies could redefine Labour’s legacy and influence the socio-economic landscape for generations to come.
