Andy Burnham is the wrong man, at the wrong time, leading the wrong political party. And the clock is ticking down.
Andy Burnham’s own adviser is issuing an urgent Budget warning (Image: Getty)
As the Budget looms, a financial expert who just weeks ago was advising Burnham on the economy has publicly warned that the PM is about to make a huge mistake. Burnham’s plans to spend more and expand the state are ill-timed and plain wrong, he says. They risk reducing economic growth rather than increasing it, leaving us more vulnerable to financial chaos. Chancellor John Healey’s Budget is shaping up to be a disaster, at a time when Western governments can’t afford to put a foot wrong.
That’s the verdict of former Bank of England chief economist Andy Haldane, writing in the Financial Times today. Just weeks ago, Haldane warned the nation to brace itself for a “traditional tax-and-spend socialist government”. With debt rising, gilt yields soaring and France burning because the country won’t accept spending cuts, his warning couldn’t be more timely. In Haldane’s words: We’re living on borrowed time.
National debt has reached £3trillion, we’re borrowing another £135billion this year, and 30-year gilt yields are at their highest level this millennium. This is no time for a third Labour Budget tax raid, piling more pressure on consumers and businesses, as Rachel Reeves did, twice. But will Burnham listen? He won’t. His mind is already set.
Haldane says Labour and the Tories now have markedly different economic policies. “Andy Burnham’s conference speech was a homage to 1950s-style state socialism. Kemi Badenoch’s speech was a throwback to the smaller state and lower taxes of the 1980s.” He then examined which offered the likelier path to growth today. And his answer was clear.
With borrowing costs rocketing after years of near-zero interest rates, Haldane said we desperately need to balance the books and work down our debt. That would calm the bond markets and reduce our debt-servicing costs, saving billions. That’s what Badenoch plans to do.
The alternative is to do what Burnham and Healey are plotting: expand the state despite its manifest failings. Public sector productivity has barely improved this century, while private sector productivity has increased by more than 40%. Burnham is backing completely the wrong horse.
Haldane said that expanding our expensive, inefficient state risks crowding out the more the productive private sector, slowing growth and potentially triggering a Liz Truss-style gilt and sterling crisis.
Will the PM listen to his own adviser? Even if he wanted to, he can’t. The Labour Party didn’t elect Burnham to shrink the state. They want him to expand it at speed, regardless of the cost.
Predecessor Keir Starmer went on a tax-and-spend spree, but came unstuck when he tried to cut a measly £5billion from the welfare bill. Labour launched a massive revolt. Burnham has learned from that mistake. He’ll look at his restive backbenchers and the riots in France, and conclude this is no time to cut spending.
So next week, we’ll get exactly the Budget we don’t need. More money taken from the productive private sector, and chucked at the unproductive state. It’s the wrong medicine at the wrong time, and the wrong Prime Minister is about to make the wrong decision, meaning Britain will take yet another wrong turn next week. And become ever more like France, which has made so many wrong turns there’s no going back.