Why Andy Burnham will regret it if he veers off towards the hard-left
Andy Burnham should focus less on a ‘new economic model’ and more on relatively small ways to boost the economy
In his unscripted speech in Downing Street – a slightly faltering attempt to be ‘real’ with the public – Andy Burnham claimed his government would usher in “the biggest changes in the last 40 years, a new political model and a new economic model”. “In the 1980s, Britain took some wrong turns. Political power was centralised, economic power privatised, large parts of the country de-industrialised – and they still haven't recovered,” he said.
Given such rhetoric, there will be those who fear our new Prime Minister is preparing the ground for something akin to a socialist revolution and now plans to sweep away the reforms undertaken by Margaret Thatcher’s government. Is he the new Jeremy Corbyn?
However, the same Andy Burnham also insists he will stick to the government’s “fiscal rules” and the centrist Labour election manifesto drawn up by Keir Starmer and co – as well he should, given these are the policies that the government has a mandate to enact. Burnham can argue that he does not need to call a fresh election, but only if he stays reasonably close to Starmer’s programme.
Go small or go home
Burnham is clearly under considerable pressure to deliver – from his party’s troublesome left-wing and also because of Reform UK’s dramatic rise in popularity since the 2024 general election. He may therefore feel he has no choice but to ‘go big’.
However, a significant, radical departure, introducing major policy changes that few people support would be a recipe for disaster – for Labour’s standing in the polls and the country. If he is truly going to abide by the fiscal rules, while finding the necessary extra money for defence, he has fairly limited room for manoeuvre.
As he cannot impose massive tax increases or big spending cuts, or borrow beyond the country’s means, ‘going small’ really is his only option. That, however, is no bad thing.
Starmer made far too many mistakes, introducing policies that did not have sufficient support, either in the Commons or the country, and then being forced to back down. He also imposed burdens on business that were simply too heavy.
But, as we said recently, the UK economy has proved surprisingly resilient and, if Burnham can find relatively small ways to reduce or share that load, the results could be dramatic. He is a new, fairly popular leader and if it starts to feel like the economy is improving as a result of the change of leadership, the feel-good factor – missing for so long in the UK – could start to return.
UK’s vast national debt
One sector where he could make an almost immediate difference is oil and gas, with the Energy Profits Levy, imposed as a temporary measure in 2022 following Russia’s full-scale invasion of Ukraine, having a significant negative effect. Lifting this tax or replacing it with a less onerous version should be high on his agenda, given the potential economic benefits.
If he intends to move much bigger levers of government and ends up spending large amounts of public money on expensive, complicated and ineffective left-wing projects designed to bring about the “biggest changes in the last 40 years”, then he may find that the markets have different ideas about what counts as ‘sticking to the fiscal rules’, with very real effects on Britain’s already vast national debt repayments.
The financial troubles of the Labour governments of the 1970s helped pave the way for Margaret Thatcher, a left-wing bete noire. If Burnham ushers in a similarly well-meaning but economically inept administration, the party in poll position to profit today is Nigel Farage’s Reform UK.
As our new Prime Minister puts it, this really is Labour’s “last chance” – and they must not blow it.
Comments
Want to join the conversation? Please or to comment on this article.