Burnham's economic guru warns against tax rises at Budget as Resolution Foundation demands £2bn housing benefit hike

From the Newshound archive · first published 19 September 2026.

Jim O'Neill, the former Goldman Sachs chief economist who informally advised Andy Burnham before he entered Downing Street, has told the Chancellor to rule out further tax increases, warning they will choke economic growth. O'Neill specifically cautioned John Healey against raising capital gains tax, saying it is "very misunderstood" and would deter investment. The warning lands on the same morning Labour's favoured think-tank, the Resolution Foundation, urged Burnham to add another £2billion a year to the already £39billion housing benefit bill. The October 28 Budget is shaping up as the moment Burnham must choose between spending demands from his own side and the growth warnings of his closest economic allies.

The Resolution Foundation wants Local Housing Allowance relinked to rents — including in pricey central London.

O'Neill told Bloomberg raising business taxes is 'the last thing' the Government should be doing to sustain growth.

Housing benefit costs have already surged by over a million claimants since 2020, with the bill forecast to hit £39bn this year.