Burnham’s Britain: who wins, who loses and who pays?

New Prime Minister Andy Burnham has hit the ground running, Paul Montague-Smith, senior counsel – public affairs at MRM writes. But hard choices are still to come, he says.

In the end the ‘King of the North’ conquered Westminster without a fight. Keir Starmer did his final U-turn, resigning rather than facing down any leadership challenge as he had said he would.

Wes Streeting, who claimed to have the support of enough MPs to force a contest, realised he’d probably flop in a vote. Discretion being the better part of valour, he no doubt thought it best to step aside and try and hold on to a decent Cabinet job under the new Prime Minister.

Put aside the depressing thought that, such was the quality of candidates in the Parliamentary Labour Party that it felt only Andy Burnham – who had twice failed to be elected leader in the past – had the best chance to save it from electoral disaster.

There’s no doubt that the new Prime Minister has hit the ground running, with a clutch of early announcements to indicate his priorities and the kind of administration he wants to run: ending homelessness; easing cost of living pressures (with reductions on VAT for electricity and capping bus fares); creating Number 10 North in Manchester to push devolution and regional growth forward, with cities being given a share of income tax and business rates to spend on their own priorities; building a proper technical education pathway for young people; help for pubs, clubs and music venues via reduced business rates; using government procurement to prioritise British manufacturing; and finally tackling long overdue reform of our social care system, probably through the creation of a National Care Service more integrated with the NHS.

On taking office he made over 80 ministerial appointments (representing two-thirds of paid ministerial posts), keeping over 40 ministers in their current roles and sending 35 to the backbenches, where he hopes they won’t cause trouble.

The appointment of John Healey as Chancellor was a clever move to neutralise growing warfare between the various factions wanting their heroes to have the job. Healey is a level-headed, pragmatic and experienced operator. His first challenge will be to find the money he said was needed to properly defend the UK and was the reason for his resigning as Defence Secretary, helping seal Starmer’s fate.

Early impressions of the new administration are rather good. First impressions as we all know are important. Burnham comes across as genuine, relaxed, approachable, optimistic, self-effacing and humorous. He appears in control – something that has evaded most of our recent Prime Ministers.

He has managed to generate a decent bounce in the most recent polls, in one leading Reform UK for the first time in 16 months, no doubt helped by investigations into Nigel Farage’s personal and political finances and his ultimately comical and ineffective decision to force a by-election in protest.

But this is the honeymoon – and Andy Burnham knows it. The announcements so far are relatively small beer money-wise. Big, tough, expensive decisions have yet to be made. Parliament is also in recess, so he has a reasonably free hand for now, not needing to be tested in the crucible of the Commons.

So far there have been only winners. But in the not-too-distant future we will have to find out Burnham’s answer to the age-old political questions – who wins, who loses and who pays.

He, like his predecessors, doesn’t have much room for manoeuvre. He has said he will stick to the tax commitments in the last manifesto. He’s said he won’t remove the unsustainable pensions triple lock, at least in this parliament. He’s thought to want to increase the personal allowance to take more workers out of tax but can’t pay for it by raising the top rate of income tax to 50% which he is thought to favour.

John Healey will need to find around £15bn of extra defence spending to deliver what he said is needed. While Rachel Reeves increased the headroom in the public finances from around £10bn to £22bn at the last budget, a recent report by the respected National Institute for Economic and Social Research (NIESR) suggests the Government is again facing a £24 billion hole in its spending plans because of inflation.

It found that the UK is paying the highest borrowing costs in the G7 and annual GDP growth is set to slow to 1.1% this year and next, below the long-run average of 1.25%, largely because of the rise in global energy prices. 

Burnham has big plans, including more public ownership of key utilities, which could have big spending implications. His plans for social care – a personal priority which he has said he’s willing to spend a lot of political capital on – will probably include better pay for care workers and more people not having to sell their homes to fund care, which would be expensive too.

At some point soon then, he’ll have to decide who’s going to pay and how. Equalising capital gains and income tax seems will probably be attractive to him. Reforming council tax, stamp duty and business rates are all complicated, politically difficult and time-consuming, but could be a way of raising more from the asset rich (including through a land value tax which Burnham is thought to favour).

Business has already been leaned on since the election to the extent that it has probably held back growth and impacted jobs, particularly for young people. A wealth tax, while it sounds attractive to those on the left, is a far from straightforward money raising solution. So the landscape of no easy answers remains firmly in place.

We’ll get a better idea of how he plans to navigate it at the Labour Party conference in September. But it will be the Autumn Budget which he’ll need to make the most of. He has a maximum of three years before voters must cast their verdict.

While he’s started with energy and pace and has a good narrative that’s easy to buy into, he and his ministers will need to keep it up and, most importantly, get the administrative machine firing on all cylinders to drive the changes he wants voters to see and feel.