Life after Starmer: What could a new Labour prime minister mean for your money?
It could soon be time to face the music for Keir Starmer after dozens of MPs called for the Prime Minister to throw in the towel, which could unleash months of speculation and uncertainty.
Leading frontrunners for the top job include the Manchester mayor Andy Burnham, former deputy PM Angela Rayner and health secretary Wes Streeting, with markets expecting all three to likely hike government spending.
But what would one of these three leadership campaigners entering No 10 mean for your personal finances?
Andy Burnham
The Manchester mayor, who has previously made two unsuccessful runs for the Labour leadership, has long been a favourite to take Starmer’s job and a darling of the left, having supported taxes aimed at the wealthy.
Last year Burham proposed the reintroduction of the 50 per cent rate of income tax, as well as backing the so-called mansion tax which Rachel Reeves introduced in the Autumn Budget and is set to take effect from April 2028.
The so-called ‘King of the North’ has supported reforming the council tax system to target wealthier home owners, as a long-time critic of the current system which has not been overhauled since 1991, charging those with expensive properties higher taxes.
In an interview with The Telegraph he said: “If you look at London, I think there are people in homes that are even in double-figure millions paying less council tax than people [in Manchester]. It’s just not justifiable … where something is like that, it needs fixing.”
He also proposed cutting income tax for lower earners, bringing back the 10 per cent rate.
But Burham has also rattled the bond market, with the likelihood of increased fiscal spending piling pressure on the UK’s already stretched public finances.
On Tuesday, ten year gilt yields jumped 11 basis points, while 30 year yields jumped ten basis points, amid the calls for Starmer’s resignation.
Burnham argued last year that the UK was too “in hock to the bond markets”, arguing the country is too focused on short-term points over long-term growth but has since subdued his stance in a bid to soothe traders.
The mayor has also called for the banking surcharge tax, which applies to profits over £100m, to be increased from three per cent to five per cent, creating fears within the sector of a potential tax raid.
Angela Rayner
The former deputy Prime Minister is a key frontrunner, who has fronted some of Labour’s most dramatic domestic reforms since the party swept into power in 2024.
Last year, the Ashton-under-Lyne MP, who left government over discrepancies in her tax affairs, sent an eight point plan to Reeves. She outlined a raid on wealthy households, including reinstating the pensions lifetime allowance which puts a cap on how much savers could put into their pension before higher tax is applied.
Rayner also urged the chancellor to extend the threshold at which the 45 per cent tax rate is paid to include more people in the higher bracket, scrap the tax-free allowance on dividends and remove inheritance tax relief for certain shareholders.
She has also recently argued that wealth is “concentrated in too few hands”, and following Thursday’s local elections, laid out a detailed proposal for how her party should respond, which included “immediate action to cut costs for households” and a windfall tax on energy firms.
Similar to Burnham, she has also sent the bond markets scrambling, with both bond investors and analysts warning this response could trigger a sell-off.
But several fixed income experts told CityAM that the platform proposed by the Labour leadership contender would constitute a “toxic mix” that a gilt market already under pressure from the Iran war would struggle to afford.
Rayner also called for the banking surcharge tax to be hiked prior to last year’s Autumn Budget.
Wes Streeting
The health secretary has caused a stir and looks to be the cabinet minister most imminently poised to challenge Starmer.
While he has been less vocal than Burnham or Rayner over the state of taxation and government spending, he has previously expressed his concern about the overall burden on individuals and businesses.
Speaking to The Observer at the end of last year he noted that he “was really uncomfortable with the level of taxation in this country”.
He said: “We’re asking a lot of individual taxpayers, we’re asking a lot of businesses. We’ve got a level of indebtedness that we need to take very seriously.”
But his sympathies did not extend to the country’s wealthiest, having called on high-net-worth individuals to stop using “clever wheezes and accounting tricks” to reduce their tax bills, however this was in 2023 before he entered cabinet.
Meanwhile the Labour Growth Group, to which Streeting has ties, recently proposed raising capital gains tax in a bid to fund a two pence cut National Insurance.
However, the health secretary has taken a firm stance against the British Medical Association (BMA) over its long-standing refusal to accept government proposals resident doctor wages, which have precipitated multiple rounds of strikes.
Streeting told the BBC last month that resident doctors “had a 28.9 per cent pay rise within the first weeks of this Labour government”.
“There’s a deal on the table that would have given them an average 4.9 per cent more for this year, 7.1 per cent for some of the lowest-paid doctors.”
Despite receiving pay rises worth 33 per cent over the past four years, the BMA argues that doctors are still being paid a fifth less than they were in 2008 once inflation is taken into account.