The Joseph Rowntree Foundation estimates that around 14 million people in the UK currently live in poverty. Burnham acknowledged this reality and built his entire pitch around improving lives for ordinary people across the North and Midlands. But he cannot do that while accepting fiscal rules that prevent investment, refusing to raise taxes, and targeting a GDP figure that goes up when people's bills go up. The arithmetic does not work, the logic does not hold, and the speech answered none of the questions a serious alternative economic programme must answer.
The fact is that growth is the wrong target. Wellbeing, full employment, and the elimination of poverty are the right ones, but Burnham is not there yet, and Britain cannot afford a Prime Minister-in-waiting who is still this confused about economics.
This is the audio version:
There is no Debate Ammunition for this video: I ran out of energy. Sorry.
This is the transcript:
So, Andy Burnham has spoken. Our Prime Minister-in-waiting has told us all that we need to know about the economy and what he intends to do about it. Or has he? That is my point.
Andy Burnham did ask some good questions.
He did make some good points.
He said Britain is far too centralised.
He said that Whitehall is blocking progress at local levels right across the UK as a whole.
And he says that local government needs far more power, but he made his argument about England alone and ignored Scotland, Wales and Northern Ireland, which is very odd for a man who wants to be Prime Minister of the UK as a whole.
And he said we need investment, housing and industrial strategy, and I've got nothing to object to in any of that.
But all that being said, I have some fundamental questions for Andy Burnham because this was not a speech that rose to the moment.
Burnham promised to transform Britain.
He promised more council housing.
He promised more devolution.
He promised more investment.
He promised more industrial strategy, but he also promised to keep today's fiscal rules.
In other words, all the constraints that Rachel Reeves has put in place will, apparently, continue.
And he's not going to take any new powers to apparently change the rules with regard to the operation of monetary policy by the Bank of England.
Nor did he say anything about changing taxation of any significance.
So, how is he going to hang all this together? Fiscal rules deliberately exist to limit what governments can spend, and yet Burnham wants the biggest programme of reform in decades, including a devolution of power from Whitehall to a new ‘Number 10 in the North', which is apparently going to rewire Britain, whatever that means.
Well, where is the capacity for this spending within the existing fiscal rules?
Is he going to raise taxes?
Is he, in fact, going to cut instead?
Are the fiscal rules really going to change?
Is he thinking of a wealth tax or something like it?
We just don't know. This speech left more questions than answers. And he didn't even take questions about it.
Burnham, in the meantime, created an enormous paradox. Kept talking about growth. Or rather, he redefined it as ‘good growth.' Good growth is that which improves well-being - I've got nothing against that, by the way; that's okay. I do want people's well-being to grow. I do want people to realise their potential, and I'm glad he used that word.
But what he didn't talk about was what ‘good growth' really was, except that it didn't happen in London and the Southeast. Apparently, good growth is growth that happens everywhere else. But he still, in essence, kept growth at the centre of his economic agenda, and that deeply worries me.
Growth is the wrong target.
Growth should not be our measure of success.
GDP rises when prices rise.
GDP rises when rents rise.
GDP rises when energy bills rise.
None of those things makes us better off. GDP is not a measure of success.
But here's the paradox: Burnham wants cheaper housing.
He wants cheaper utilities.
He wants cheaper transport.
He wants lower living costs.
He wants success that could reduce GDP.
In other words, and at the same time, he is making GDP the epicentre of his goal.
None of this makes any sense at all. It shows that we have a new Prime Minister-in-waiting who quite simply does not understand economics. He believes he wants to increase well-being, but he does so using existing tools and measures, and the outcome is going to be a complete and utter mess. He needs to think again.
The real purpose of the economy, as I keep arguing, is not to deliver growth. Growth almost always provides benefit to those who already have much.
The problem we have in the UK, and I think Andy Burnham knows this, is that we have large numbers of people who are in need. Around 14 million people in the UK live in need, according to the Joseph Rowntree Foundation. They are the people he should be talking about. But the strategy he has put forward is one that will not really affect their well-being at all.
If the purpose of government is to help people realise their potential, and Burnham hinted that he agrees with me on this issue, then what is he talking about? Growth by itself cannot help people who do not have the means to participate in the economy in the way that they wish; that is the problem that we face, and that is the issue he did not talk about.
Burnham has put out a word salad, to be blunt, a word salad on economics. All the right buzzwords were there.
The fiscal rules are going to stay in place.
He's going to deliver growth.
He's going to devolve power.
He's going to build more things that people want.
He's going to reduce the cost of living.
Tick, tick, tick, tick, tick.
It looks as though somebody went down the line and said, yes, we've covered all the angles here.
But, and this is critical, although I do not think that a budget, or an outline of a proposal, which is what he put here, is necessarily one that has to balance in the sense of money in has to equal money out - that's absolutely untrue, as we know - he did not explain what he will be doing, but did put impediments in the path to progress into his programme, including in the commitment to the fiscal rules.
As a start, this was pretty lousy.
He has to work out what he's really doing.
He has to understand economics, and he has to pick up on the difficult questions or else he's going to fail as Prime Minister.
At this moment, he's told me nothing I need to know about what Andy Burnham wants to do.
All I know is he's very confused, and that's not who I want in Downing Street. I don't want a person who's confused about economics there. I want a person who knows about economics there and knows what he's trying to achieve, and I'm sorry to say it, but on this basis, Andy Burnham does none of those things.
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If politicians feel constrained by the fiscal rules, while many on the left question whether those rules make economic sense, perhaps there is scope for a different institutional approach. Instead of relying primarily on either public borrowing or conventional private finance, government could create long-term alliances with private investors based on transparent, incentive-driven partnering principles.
The objective would not be privatisation by another name, nor a return to PFI, but genuine alignment of interests. Government would define the social outcomes required for housing, infrastructure, energy or public services etc, while private capital would provide much of the initial investment under agreed pricing and risk-sharing arrangements. Returns would be reasonable, transparent and linked to successful delivery rather than contractual advantage.
This approach has been shown to work in other sectors through alliancing and partnering methodologies, where collaboration replaces adversarial contracting and all parties benefit from achieving shared objectives. It could attract pension funds and other long-term investors seeking stable returns while enabling government to deliver major investment programmes without relying solely on increased public expenditure.
Whether or not one accepts the current fiscal rules, there may be common ground in designing institutions that better align private incentives with public purposes. That seems to me a debate worth having.
Agreed
I’m not sure Burnham understands GDP growth here. He’s saying, or maybe you are on his behalf, that cheaper energy to take one example reduces GDP, which is to misunderstand what energy does. It opens possibilities. That doesn’t mean more local production and importing less although that’s nice. It means that innovations or existing technology that are loss making can suddenly break even or even turn a profit, which is sometimes called adding value.
We might prefer to live in a country that can’t afford it’s own ammonia fertiliser production because of high energy, that’s a political choice, but high costs reduce GDP if that production loses money or closes down altogether here.
Back to school for Burnham or whoever it was saying cheap reduces value add.
For me, the key part of the speech was the failure to take questions.
But when no elections are involved in gaining power, then questions don’t matter, and can be avoided. The general public will take what they are given.
That was appalling.
No election.
No questions.
Pure contempt.
Will have to disagree with you there RobertJ, I thought it was a smart move not to take questions, given the state of journalism as it is. They will mostly be from right wing media , will deflect from his message, or used against him. I get that PMs need to be comfortable taking questions but that can wait. I thought Alistair Campbell said this well:
If true that @andyburnham not taking media questions after speech today then good move. Speeches matter and when important should speak for themselves. A problem with Keir S communications was that he would make a speech, then take Qs and the broadcast journalists in particular would make it more about them and their “take” than him. If and when he becomes PM Burnham will be answerable to Parliament, not the showbiz style media coverage of politics. The blah factory will go into overdrive today with journalists interviewing each other about how they ought to be allowed to ask Qs. The speech itself is more important than anything they say before during or after. Setting the agenda vital from the off.
Curiously, although he committed to retaining the Fiscal Rules (TM), he did allude to borrowing for “long term capital investment”. So I wonder if he can just smuggle as much as possible in spending under that term, while maintaining the appearance of responsibility that the Labour right and MSM love so much?
I was interested in that too. Perhaps he was alluding to loans to Local Authorities to enable council house building, though hopefully directly from Government rather than the previous, eye wateringly expensive PFI bullshit.
Yes that may be his way he tries to reconcile the apparently irreconcilable<p>
‘Smuggle in’ indeed – but is he getting proper advice from Richard-minded economists?
No
I noticed even (even?) the BBC is carrying economic misinformation this morning. I thought better of the journalist involved. It reported the vile proposal and comments of Shabana Mahmood to charge refugees £10,000.
I hope my analysis is right because I complained about it.
The article claims that ‘around £4bn of tax payers money was spent on the asylum system last year’.
This sounds like it was uncritically taken from a government press release. It is dangerous misinformation because: It accepts the lie that taxes pay directly for services through some great ‘fund’: It accepts the false idea that government finances operate just like a household; It ignores the likelihood that refugees probably ADD to the economy – I think the stats show that they do; It bolsters the assumption that is convenient for the racist right, and those that pander to them, that refugees are a ‘drain’ and are ‘on the take’. Above all it demonstrates complete ignorance of how an economy with its own currency works.
‘Taxpayers money’ is part of a dangerous myth. We have the resources, the government creates money when it spends, taxes rebalance the economy.
If the BBC is going to carry on like this then what’s GB News for?
I hope this isn’t too off topic… any comments would be great
Good comment
You were on tarhet
I hd written too much to do this one as well
The more substantial discussion of the ideas involved in Manchesterism appears in the Mainstream publication.https://www.mainstreamlabour.org/publications/the-productive-state
I’d be interested in Richard’s views on this….
To my mind its partial and doesn’t go nearly far enough.
I have read it
Summary: long on analysis, almost no solutions, and neoloberal at that.
What if he isn’t confused? What if he knows exactly what he is doing by buying the current establishment more time to enrich themselves and perpetuate the current failing economic model? He feels like a neoliberal centrist cosplaying as a focus group interpretation of a progressive candidate.
I’d probably, at the moment, try to give Burnham the benefit of the doubt. Can you imagine the media uproar that would occur if he came out immediately supporting Richard’s proposals and abandon Labour’s current manifesto policies. The press would make Burnham the devil incarnate. I agree with Richard’s ideas but the public have to be re-educated to understand the benefits before it’s implemented. If he went straight into MMT immediately I would bet Labour would lose the next election. I’d like to be proved wrong.
He only has the chance to be radical for about 3 weeks….