Andy Burnham has opened the door to reviving the 50p top tax rate – as he pledged a tax shake-up to help the low-paid.

The new Prime Minister has talked in the past about reinstating the 50p rate, saying there is ‘definitely a case’ for it.

Speaking to journalists just hours after entering No 10, he refused to rule out the idea, despite the fact Labour has a manifesto commitment not to raise the current top rate from 45p.

Asked directly if the 50p rate could be revived, he said the question was ‘premature’, adding: ‘I’ve barely got my feet under the table.’

Mr Burnham pledged to review the controversial freeze in tax thresholds, which has been in place since 2021 – and which is due to run until the end of the decade.

He said he was particularly concerned about the impact on low income pensioners. Next year the basic state pension is expected to exceed the current £12,570 starting rate for tax.

‘I heard issues related to the personal allowance more than anything on doorsteps in Makerfield,’ he said. ‘I think it's been frozen now, hasn't it for a number of years, so it has dragged more people in - pensioners, I think - and that particularly I think has become a growing issue.

‘So all of this will be looked at through the Budget, and obviously it's difficult given the financial circumstances in which we find ourselves.

Andy Burnham said it would be 'premature' to rule out raising the top tax rate

‘But I wanted to recognise the point because it's challenging for people and it's people on the lowest incomes perhaps who've most been affected by that.

‘So it's an issue that I'm just kind of showing I have a visibility of the issue and the impact it's had on the different groups that I've mentioned, but it's difficult because changing the threshold is not without significant consequences. But I'm looking at it.’

Labour has imposed tax rises totalling almost £70 billion since taking office two years ago, taking the UK’s tax burden to the highest level in history.

Mr Burnham has raised fears of a fresh tax raid, saying he believes there is ‘room for movement’ on tax.

But yesterday he insisted that he recognised the impact of rising taxes on the low paid.

‘They’re just characterising me as a tax raiser,’ he said. ‘Well, again, it’s never that simplistic, is it?’

All income tax allowances were frozen in 2021 to help pay for the £400 billion cost of dealing with Covid. Rachel Reeves extended the freeze to end of the decade.

High inflation has turned the tax into the biggest stealth raid in history, generating a staggering £120 billion a year.

It has seen millions of people dragged into higher tax bands, with many low income families now paying tax for the first time.

Easing the freeze would allow workers to keep more of their earnings before they start paying tax. But it would cost billions of pounds.

Reinstating the 50p top tax rate is likely to raise relatively modest sums, potentially as little as £1 billion a year.

It would also be a clear breach of Labour’s 2024 manifesto which promised not to increase any of the main tax rates.

Mr Burnham repeated that he will ‘stick to the manifesto’. But Left-wing MPs are already urging him to take the symbolic move of raising the top rate, which is paid by people earning more than £125,140.

Mr Burnham said that all his plans to ease the cost of living would be fully funded, adding: 'We will show how it will be funded.'

The new PM also signalled he will borrow as much money as he can without breaking Labour’s fiscal rules.

Mr Burnham said he would stick to the rules but said he would ‘use, obviously, any flexibility within them’. He added: ‘None of this is about taking risks with the economy. I've never done that in any role that I've had. I've always taken a very prudent approach,’

Shadow Chancellor Sir Mel Stride said: ‘If Andy Burnham wants to cut a particular tax then he needs to show how it can be funded.

‘This should be by controlling public spending especially the welfare bill and not by hiking taxes elsewhere or leaning into yet more borrowing. Spending control is key if we are to get our economy moving.’