Chancellor John Healey has challenged Cabinet ministers to find savings in budgets hours after Andy Burnham was criticised for making an “unfunded” tax cut. 

In the first meeting between Cabinet ministers under Burnham’s government, Healey urged ministers to “look harder” at spending priorities across departments. 

Burnham also urged ministers to consider “how we are going to pay” for policies as he insisted that he would lead a “cost of living government”. 

Healey said: “It’s going to be a task for all of us to recognise that we need to look harder at our own budgets and that reprioritisation does allow us to do more to relieve the cost of making life a little more affordable for people in the future, and to maintain the fiscal discipline.”

He said his top duty was to maintain “fiscal control” while adding that there would be a “reprioritisation” in government efforts to tackle price rises and stagnant income for households. 

Healey also hailed a VAT cut on energy bills as an indication that Burnhan was “offering a bit of help”. 

But the comments made in Cabinet came hours after former chief secretary to the prime minister Darren Jones publicly criticised the government for making an “unfunded” tax cut given the digital ID, which has now been scrapped by Burnham, was not costed. 

Burnham insisted that ministers had to work as a “team” and that, with the cabinet secretary Antonia Romeo, who sat beside him, he would set the tone at the top in relation to our relationship with our colleagues in the civil service”. The comments represented a plea to end briefing wars that tarnished relationships in Sir Keir Starmer’s government. 

Healey promises ‘fiscal control’

The Prime Minister and Chancellor’s focus on the cost of living and internal decisions adds to anticipation around the Budget later this year, which will set financial limits for the government ahead of a Spending Review in mid-2027. 

Burnham is set to announce a number of fiscal policies after announcing the VAT cut on his first full day as Prime Minister, with business rates relief for pubs expected to form one of the announcements. 

A series of policies were floated by Burnham and his advisers during electoral campaigns in Makerfield, although it is unclear which of them will be adopted. Healey, who resigned from his role as defence secretary under Keir Starmer in a spat over investment in the sector, is expected to make defence funding a key pillar of his agenda.