I gave an online talk on this theme last night. These were my speaking notes:
- Andy Burnham has correctly diagnosed many of Britain's problems. He understands that:
- the UK is far too centralised,
- that regional inequality is real,
- that public services are failing, and that
- we need a new industrial strategy.
- He understands that markets alone have not delivered. His support for council housing, public transport, regional investment and strategic intervention marks a break from forty years of market fundamentalism.
- But diagnosis is not enough. The real questions are:
- Whether he understands why Britain cannot currently solve these problems.
- Whether as a long-term mayor he can adapt his thinking to realise he no longer has to work within the rules, because he now makes them.
- His biggest weakness is fiscal policy. Burnham still appears to accept Treasury fiscal rules and the economic orthodoxy that government spending is constrained by tax receipts and borrowing. If you accept those rules, you immediately limit your own ambitions.
- The real constraint is not money. Britain's constraint is people, skills, energy, technology, land and natural resources. A currency-issuing government can always finance what the economy has the capacity to do.
- Devolution alone will not solve the problem. Giving mayors more powers is welcome, but if Whitehall still controls the money and imposes fiscal constraints, local government remains dependent on the centre.
- Growth is the wrong objective. The purpose of government is not simply to maximise GDP. It is to:
- improve wellbeing,
- reduce insecurity,
- tackle inequality,
- restore the environment and
- enable people to live good lives.
- Health illustrates the problem perfectly.
- We should not ask only how to fund the NHS.
- We should ask how to create a healthier society by tackling
- poor housing,
- bad food,
- pollution,
- insecure work and
- Money is rarely the binding constraint; policy choices are.
- Politics requires a new economic story. Reform UK has succeeded because it offers a simple narrative, however flawed. Unless progressives explain how public money actually works, they will always appear to promise more than they can supposedly afford.
- So can Andy Burnham deliver? Yes, but only if he is willing to challenge the economic framework that currently constrains British politics. If he keeps the existing fiscal rules and orthodox Treasury thinking, he will end up managing decline more competently rather than creating genuine renewal.
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Some good points but I do not think he can deliver. Anyone who has Jim O’Neil as an economic advisor is not going to get very far.
Thank you.
And, unfortunately, Andy Haldane, who wants the top job at Threadneedle and feels he has to play that neoliBS game.
I worked with Haldane a fair bit from 2008 – 14. He was quite reasonable then.
Not now
I was looking at YouTube yesterday, and up popped a piece fronted by Martin Lewis, about a charity that works on mental health and debt. They understand the link, but stated that people who had not experienced it did not understand it. I think you and many who follow your work do understand this, without maybe having come that close. It is possible to understand and imagine, even if that is nothing like experiencing it. However, the new government line-up seems unable to imagine or grasp such things, and as you point out, dreams of reducing social security payments while creating more jobs while the Bank of England, as you put it, has its foot on the brake.
Much to agree with
Point one is a case of judging people by what they say and not what they do. Burnham says he wants to decentralise, that power in the UK is far too centralised. One of his first actions is to centralise the setting of the bus fare cap. No powers have yet gone in the reverse direction.
Frances Ryan in the Guardian suggested Burnham has at least conveyed that he thinks government can indeed do things- even though he seems to have also ruled that out by staying wihtin reeves’ rules<p>
But as Richard says in an earlier post today – the fossil fuel industry has its jaws and slaws sunk deep into the UK body politic – and will insist he does nothing significant to change the way things are going, – no getting millions out of poverty, no Green New Deal, etc etc- .<p>
His closest managers and advisors in Downing Street seem to be corporate and Israeli lobbyists. Bringing corporate vested interests into the heart of government<p>
So he’s setting himself either to ditch the rules , which his funders have installed him in office not to do, or be seen to disappoint expectations he has raised during his first week<p>
Will his funders relent – when they see the Burnham bounce in the polls faltering?<p>
Seems unlikely
Thanks for this. I recognise a lot of my own thoughts about Burnham in these very words. I think at the moment he is on a path heading towards failure and that in 2 years from now we will be saying what he should have done instead. Though that could change, i feel not as hopeful as i once did.
Less oversight of how local mayors spend money could be a problem though. Here in Teesside I think the opposite is required, forensic auditors pouring over every pound our mayor has got hold of. Since our mayor is the only one with a regular Private Eye page devoted to him perhaps the rest are perfect but increased financial oversight will still be required.
Identifying the key problems is a better starting point than most Prime Ministers in living memory.
It’s not surprising that the first step would be to try to see what’s possible within the framework. It will likely become obvious that the framework is the main constraint to further improvements, but hopefully the smaller changes will demonstrate something important to facilitate the change.
Specifically, more than a decade of austerity and fiscal rules has failed to get growth, and the promise of greater strength in 3-5 years time has proved illusory. Some households are under such pressure that any small improvements to their cost of living (including VAT on electricity and capped bus fares) will immediately feed into spending elsewhere. It should provide the evidence that moving in an anti-austerity direction helps spending, helps growth, helps employment, and helps polling figures for the Government.
That last is important, because parties in power want to retain power, and have seen a long period of the Government being increasingly unpopular as they fail the public. Showing that improving the cost of living for the majority wins support will push all the parties to reconsider what policies they need.
This may mean small measures now to keep people onside, and larger measures when there is a competitive market for people’s votes.
But if he had not go the gumption to realise the system was broken when seeking office, why will he do so now?
I’m an optimistic cynic. I think Burnham has realised various things are broken. But I also think he wants to be Prime Minister after the next General Election.
I wouldn’t be surprised if he’s playing towards that end, which might offer modest improvements for now and save any bigger giveaways for closer to the General Election.
Alternatively he may keep giving out small improvements and set out a manifesto that would adopt some bigger policy changes, excusing a lack of action now on the basis of having to follow the manifesto Labour won on.
Either option would naturally mean few big moves now. The former might do little at the next Budget but might outline more in the 2027 Budget with some of the coming into place in 2028 to give a year for the impact to be felt before a General Election.
Of course, he may just feel entirely constrained by the fiscal rules. I hope not. If he doesn’t feel he can change or break the fiscal rules (when he absolutely should change them), he needs to figure out how to get more classified as borrowing for investment to add necessary spending within the rules.
That could reasonably include spending on hospitals, roads, schools, energy security and more. Reeves created an avenue within the rules for significant changes in spending but didn’t use it. Maybe Burnham should hire a tax advisor who’s used to thinking how to bend rules…
I attended this online talk. There was much to agree with. It’s such a pity that so many of the general public and politicians agree with the household analogy and we need to change this as it is utter nonsense. The government can and does create the money it spends so we can have better public services. Thank you so much for agreeing to speak with us.
Thank you
I think we all know what Burnham means by this:
He added that any reform to social care will “require difficult decisions” and the Labour government would be “honest with people about those”.
The richest in the UK can breathe a sigh of relief.
Agreed.
Those in need should worry.
The British people have been bought by the markets that pretend to meet their needs. The market has invested heavily to extract and place themselves in key positions in peoples lives.
If the the State wants people to buy into change, the State will have to purchase the people by providing better services and addressing everything from pot holes to adult social care.
In short this means wholesale investment by the State – protected by a healthy tax system and long term planning.
That’s as quick as I can sum up the answer. Burnt Ham has to use the latent power he is actually in charge of. Give the people back their services and their money.
Andy Burnham may well sense that the UK is far too centralised and that regional inequality is real, but he has yet to clarify how these views will be applied in relation to the devolved nations. His only statement on this so far was to dismiss without discussion any prospect of a Scottish referendum on independence. This is a topic which is never going to go away; his lack of knowledge in the matter and his abrupt refusal to discuss it have only strengthened the resolve of the Scottish people. Watch the polls: the current majority in favour is more likely than not to increase. Indeed his knowledge of devolution appears restricted to the mayors of English cities and regions.
Fiscal policy is another blank canvas. He came into office vowing to scrap neo-liberalism, yet he has done nothing to suggest he has any understanding, never mind intention, of how to do so. This too will push the pro-independence pendulum further towards secession from the UK.
The situation in re N Ireland will interesting if the swing towards pro-unification continues. Under the Belfast Agreement for a referendum to be approved requires the approval of the UK Home Secretary. Will Burnham allow that to happen? There’s been not a cheep so far, but if UKHS approval is denied it could have very dire results. I know he’s only been in office for a week, but his lack of engagement with the devolved nations has won him no friends.
Much to agree with
‘Difficult decisions’ and ‘tough choices’ are all signals to the electorate that more austerity is on the way. What those so called tough decisions should actually be is 1. Bringing back the BoE under direct government democratic control so that monetary and fiscal can be synchronised, and 2. A clear statement by the government explaining to voters the simple fundamentals of the deficit myth. That would probably mean sacking everyone in the treasury along with his newly appointed chancellor though! They would definitely be difficult decisions
I don’t think that Burnham will deliver. If he were going to do so he wouldn’t have been given the job. The Parliamentary Labour Party is a neoliberal party; the myth of taxpayers money and jars of pennies is orthodoxy. Burnham got the job because he’s orthodox but viewed as slightly more exciting than the previous incumbent. Oh dear
I’m not sure you are correct in your criticism of Burnham saying he is going to stick with the fiscal rules with the implication they are something he believes in. I think he understands he does not have his own mandate and he has repeatedly said he will stick with the manifesto on which this government was elected, and that manifesto included a commitment to adhere to the Tory fiscal rules. He should be applauded for that democratic integrity. I think if he stands as leader in the next election his manifesto will abandon the current fiscal rules in favour of borrowing for major capital investment.
Oh please…..
The public hated what Starmer and Reeves did and you say we should applaud Burnham for aiming to be as incompetent? Why?