History is about to repeat itself. In the most shocking and astonishing way.
Andy Burnham is walking into the same trap that caught Labour 50 years ago (Image: Getty)
It’s now 50 years to the day that Britain was forced to go “cap in hand” to the IMF for a loan to bail us out. This unforgettable moment of national humiliation came on September 28, 1976, and showed just how low the UK had sunk. The pound was in freefall, our foreign currency reserves were draining away, and we had to tap up the IMF for $3.9billion, the biggest sum it had ever agreed for a member country. Its technocrats were smuggled into the UK to force through tough spending decisions that our own politicians were too scared or stupid to make themselves.
The Labour Party was in power then. Remarkably, the chancellor was also called Healey, in this case Denis. In another echo, Britain had just been through a long, hot summer, marked by heatwaves and droughts. Today, we have Chancellor John Healey, and have just endured record summer heat and hosepipe bans too. In 1976, “Sunny Jim” Callaghan was PM, and now we have jolly Andy Burnham. In both cases, Labour inherited a mess from the Tories, and made everything worse. Today, 50 years on, we seem to be heading for the same financial hell.
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The IMF is worried. Last week, IMF head Kristalina Georgieva warned that as global interest rates rise, government debt servicing costs may spiral out of control. She openly named the UK, along with Donald Trump’s even more profligate US, as countries that need to take decisive action now. It was a much-needed wake-up call. And what was the government’s response? To say nothing whatsoever.
Instead, Andy Burnham keeps reeling off new spending commitments. So far we’ve had bus fare caps, electricity bill support, cuts to pub rates and money for rough sleeping and high street regeneration. Now he’s plotting tax rises to sort out social care. Cutting social security spending seems out of the question.
Our plight gets worse by the day. We borrowed another £18.3billion in August, much more than expected. Debt interest hit a record £8.8billion, the highest August figure since records began in 1997.
The Budget is exactly a month away, on October 28, and John Healey’s fiscal headroom is already collapsing. He inherited £24billion and is down to £8.5billion. This morning, 10-year gilt yields climbed to 5.4%, way above Liz Truss levels, squeezing it further. So will we end up back at the IMF?
Some things were madder in 1976. Inflation was running at 21%, Denis Healey had just hiked corporation tax to 52%, roughly double today, and introduced a top marginal rate of 98% on investment income. Even Rachel Reeves wasn’t that unhinged.
But one thing today is much worse. Our national debt is now almost £3trillion, roughly the size of our entire economy. Back then it was below £55billion, just under half of GDP.
Our population is getting older and sicker, North Sea oil is running out, we have Ed Miliband’s net zero charge to fund, and somehow need to find billions to defend ourselves against Vladimir Putin. Maybe AI can save us. I’m not holding my breath. And I’m not holding my breath for Sunny Andy to make the difficult decisions required to bail us out.
Some on the left point out that we didn’t need all that IMF cash in the end. They say Britain technically can’t go bust, because we can always print our own money. As if that’s some kind of solution. Perhaps we need the IMF after all. It’s the only one able to make the tough decisions required to dig us out of the hole we’ve got ourselves into. Again.
Andy Burnham faces his first revolt – Angela Rayner just couldn’t keep her mouth shut
If you thought all was sweetness and light in Andy Burnham’s Labour, you haven’t been watching Angela Rayner.
Angela Rayner has a nerve, going for a fellow cabinet minister (Image: Getty)
The Labour Party conference begins in Liverpool today and on the face of it, it’s going to be very different to the last one. A year ago, Andy Burnham was persona non grata. Ministers took turns sneering at the King of the North’s ambitions to become PM, while pledging their loyalty to Sir Keir Starmer. You won’t find many Starmer loyalists today, although one or two will be drifting about, muttering old mantras about “difficult decisions”. But behind the smiles, frustrations are growing and knives are being sharpened.
No prizes for guessing who’s first to wield hers. It had to be Angela Rayner, didn’t it? Probably the last thing Burnham needed right now was for Red Ange to take on the most toxic subject of the lot: immigration. And use it to shaft a senior member of his cabinet – Home Secretary Shabana Mahmood. Rayner attacked Mahmood’s migrant crackdown right on the eve of conference, despite knowing exactly what a fuss it would cause. She repeated her criticism of plans to make foreign care workers wait 15 years for permanent residence, saying Labour had “changed the goalposts”.
It’s not the first time she’s lunged for Mahmood. Rayner knows she has plenty of support, which only makes it worse. More than 100 Labour MPs have opposed Mahmood’s reforms, while trade unions are also campaigning against them. Unison is holding a migrant care worker rally in Liverpool on Monday. Lucky Mahmood.
I admire Mahmood, a minister who rolls up her sleeves and cracks on, running the hardest Whitehall department of the lot. She’s the only one who stuck to her job in a sea of incompetence that was the Starmer regime. She doesn’t indulge in political posturing, unlike our firebrand Housing Secretary.
Many will sympathise with Rayner’s complaint that it’s unfair to recruit care workers from overseas, then tighten settlement rules later. But this is a tough area, and Mahmood has to make tough decisions. She doesn’t deserve to have Rayner exploit the issue to milk applause from the left.
It’s the last thing Andy Burnham needs as well. He’s shied away from toxic issues like this one, hoping to treat the nation to some feel-good political fun. Then up steps Rayner at the worst possible time.
When it comes to stepping on the toes of other cabinet ministers, Rayner has form. Remember how she handed a list of tax demands to former chancellor Rachel Reeves? While doing incoherent things with her own tax return. Knows no shame, our Ange. And she won’t be the only Labour delegate involved in a bit of red-on-red brutality in Liverpool.
Starmer’s former business secretary Peter Kyle is arguing for a more vigorous approach to wealth creation. That won’t win friends on the backbenches. They only want to tax wealth, not generate it.
Starmer’s former chief secretary Darren Jones, the man who pointed out that Burnham’s plan to cut VAT on electricity bills wasn’t properly funded, may also be willing to speak a bit of truth to the new power.
Business secretary Jonathan Reynolds has even argued that the EU isn’t the answer to all Britain’s problems, which will have delegates blocking their ears. Then there’ll be the usual rabble of leftie activists, ranting on about Gaza, demanding Burnham nationalises the water companies, berating North Sea drilling and, of course, having a pop at Mahmood.
Plus there’ll be some real crackpots who are still furious that Burnham didn’t make Ed Miliband chancellor and destroy British capitalism for good. Instead, they’ve got boring old John Healey, banging on about sticking to fiscal rules. None of the faithful flocking to Liverpool wants to hear that. Meet the new Labour Party, increasingly similar to the old one. Angela Rayner hasn’t changed her spots at all.
Andy Burnham’s new bombshell plan could mark ‘beginning of the end’ for PM
The prime minister has vowed to reform the social care system.
Andy Burnham has vowed to reform the social care system (Image: Getty)
Good Morning Britain presenter Susanna Reid has voiced concerns that if Andy Burnham‘s new plans involve targeting pensioners, then it could mark the “beginning of the end” of his time in office. On Sunday (September 27), the prime minister said he is prepared to make unpopular choices and hike taxes to fund an NHS-style social care system. However, he has been warned against scrapping the triple lock, which ensures the state pension rises each year by whichever is highest of inflation, average earnings growth or 2.5%.
Susanna, 55, highlighted the major problem Keir Starmer faced when he came into office after removing the winter fuel allowance for pensioners, sparking widespread outrage. She argued that while the social care system needs to be reformed, questions remain over how it will be funded. “Unfortunately, there is a massive issue about how we pay for it because it would cost billions,” Susanna said. Of course, that would be a worthwhile investment, but that money has to come from somewhere.”
A Good Morning Britain viewer who got in touch via WhatsApp said: “I hope Burnham doesn’t make the same mistake which Starmer did by targeting pensioners who don’t get much, especially if they only get the state pension.”
Susanna explained: “Because it could be a removal of the triple lock on pensioners. The comparison is being made with Starmer coming in and removing the winter fuel allowance. That was the beginning of the end for that prime minister.”
Ed Balls added: “That is right. Andy Burnham is passionate about this. He says he is going to rip the plaster off. He has been campaigning for a tax rise or more money for social care for the past 15 years.”
Susanna acknowledged: “It’s really honourable and we all want social care fixed.”
Ed pointed out where Starmer went wrong, arguing that he won the election on a manifesto pledge to retain the winter fuel payment, only to go back on his word and scrap it after taking office.
Susanna Reid pointed out that Keir Starmer’s decision to scrap the winter fuel payment marked the “beginning of the end” of his time in office (Image: ITV)
The presenter went on: “Andy Burnham is not going to make that mistake because he is going to announce on Tuesday what will be in the next manifesto for Labour.
“He says the only solution on social care is to break the manifesto from the last time round. That either means a rise in income tax, National Insurance or VAT to pay for it.”
“Or it means something else, and everybody is saying in the papers today that it looks likely that he will drop the triple lock on pensions.
“That therefore means pensioners will end up, in some sense, paying for this. What Andy Burnham did yesterday on the Laura Kuenssberg show was announce the most central, controversial proposal.”
Ed added: “It is absolutely massive.”
Susanna weighed in: “Yes, because there is a huge row about how we pay for our defence. And can you do both of them?”