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

Incoming prime minister says he doesn’t want to ‘create new divisions’ as Mahmood is tipped to be chancellor

Andy Burnham has signalled that he will not increase wealth taxes immediately after becoming prime minister, easing concerns among the business community but limiting his economic room for manoeuvre.

He said on Wednesday he did not want to “create new divisions” with his tax policy, in comments that allies said were a sign that he did not intend to raise money by taxing wealth.

The comments by the incoming prime minister came as those close to him briefed that Shabana Mahmood, the home secretary, is the frontrunner to become chancellor, in what is being seen as another blow to Burnham’s more leftwing supporters.

Asked about wealth taxes on Wednesday, Burnham told the 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 would not rule out making such a move in the future, though. “At some point that might be having to ask for a little more,” he said. “But, you know, those decisions are not for now. They’re for another day.”

The Makerfield MP is now days away from entering No 10 after securing enough support among Labour colleagues to ensure there will be no rival candidate.

He will inherit several immediate financial challenges, including how to find an extra £4.7bn to fund the government’s defence investment plan, and how to fund his plans to bring utilities under public control.

He has previously said he intended to stick to the government’s borrowing rules and to 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 as one way to pay for his policy objectives, saying this would help generate extra revenue while still sticking to the manifesto promises.

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 in a Burnham government, 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 any 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.