What is Andy Burnham’s economic and political blueprint for Britain?

Andy Burnham’s speech at the People’s History Museum in Manchester was the first time we saw the man likely to be Britain’s next prime minister set out his vision for power.

He promised “good growth in every postcode” in a speech that focused on a significant transfer of power out of Whitehall to local communities and a new economic vision. But what might this mean in practice?

Devolution

It will be about offering new opportunities to extend devolution in Scotland, Wales and Northern Ireland by taking power deeper down.

What else would be at the heart of Burnham’s plans other than devolution? Burnham leant on his experience as one of the most powerful regional mayors to say devolved power was nowhere near adequate.

Britain is the most centralised G7 country for tax and spending policy, and is among the most economically unequal in the developed world.

Key to changing this will be a new hub for No 10 in the north – based in Manchester, but with the remit to redistribute power across the regions. Rather than local areas applying to Whitehall to extend powers, sweeping new powers, including on tax, skills and industry, would be devolved by default.

There was a nod to an idea, too, that Burnham has mooted in his book Head North: a German-style Basic Law – essentially a statutory right to equal living standards.

Reform of Westminster and Whitehall

They require radical change if the country is to get back on track.

Burnham, who has spent less than three days in Westminster since he was re-elected, said he was very concerned by the atmosphere he experienced as he met groups of MPs – “a more fragmented, disjointed place than the one I left, and, frankly, unhappier,” he said.

His intention appears to be the opposite approach to Keir Starmer, whose strategists banned MPs from tabling amendments or voicing any public dissent. That handling of the parliamentary party is widely seen as one of the No 10 operation’s gravest errors, because of how much resentment it created.

Burnham said he would do things differently. Backbenchers should be empowered to act to change things in their local areas, he said, promising he would not be “using the whip system to create fear or close down debate”, though he stopped short of promising to abolish it.

That greater sense of unity in parliament would be a useful directive to Whitehall, he said, suggesting that he wanted to end the adversarial system in the civil service, especially departments versus the Treasury. Burnham and his ally Louise Haigh have expressed interest in the past about the prospect of splitting up the Treasury.

Burnham’s critique of Whitehall as a drag on growth has a long history in British politics, from Harold Wilson’s attempt to weaken and split the Treasury in 1964 to Dominic Cummings’s war on “the blob”, Liz Truss’s demonisation of the “deep state” and Keir Starmer’s criticism that too many civil servants were comfortable in the “tepid bath of managed decline”.

End of trickle-down economics

All parts of the UK should now be given the chance to develop … focusing on the things that most matter to them.

Burnham said his vision for growth was founded on a “rejection of the old trickle-down model” of the economy, pursued since the 1980s in the hope that minimal state intervention would allow for the spread of prosperity created by businesses and individuals.

This analysis is far from radical: for several years the tide has been turning on this approach across western economies, given the sluggish growth that followed the 2008 financial crisis. His comments differ little in tone to Rachel Reeves, who argued in her first party conference speech as chancellor that the era of “trickle-down, trickle-out economics is over”.

Where Burnham may diverge from the chancellor is in the breadth and execution of this vision, with promises to expand the role of the state in the running of essential services, housing, and in industrial strategy.

Utilities

We will ensure all parts of the UK are able to take greater public control of essential services like water, housing, energy and transport …

Greater public control over key utilities including water, energy and transport have been consistent Burnham campaign pledges, so it was no surprise these featured prominently in his speech.

Burnham said he would be informed by the transformation of the Greater Manchester bus network during his time as mayor, which included bringing the system back under public control from private operators.

The future of Thames Water is seen as an early test case, with ministers set to decide if the company should collapse into a special administration regime (SAR), or to allow its bondholders to take it over.

Social housing

Britain has lost almost 1.5m council homes since the 1980s and around the same number of people are now on housing waiting lists and have been there for a very long time.

Burnham promised to oversee the “biggest council house building programme since the postwar period” as he linked the loss of almost 1.5m council homes since the 1980s to a rise in the number of families on social housing waiting lists to similar levels.

Guiding his approach is the idea that affordable housing is important for both individuals and the economy at large, by enabling people to contribute to their full potential. He also said high costs were having a “ruinous impact” on the government finances amid record levels of taxpayer support allocated to housing, much of which flows to private landlords.

Under Starmer, Labour had already pledged £39bn to social and affordable homes and a target to build 1.5m new homes in total, but the government could struggle to hit this.

High streets

Shouldn’t we make our high streets the symbols of Britain’s renaissance?

Britain’s run-down high streets have become a key political battleground, with Reform UK highlighting boarded-up shops as a symbol of the economic mismanagement of Labour and the Tories. Burnham said he would “reform business rates” to support pubs and other high street businesses that bring social benefits to communities.

The detail will be critical, after Labour made similar promises before the 2024 general election, only to face a severe backlash from the hospitality industry and retailers over business rates and other tax changes.

But there was no mention of the role of technology and online shopping in reshaping the economy. Nor was there any reference to one of the biggest forces affecting economies and jobs: artificial intelligence.

Reindustrialisation

We will support every region to set clear and credible industrial ambitions – and provide the support to achieve them.

Burnham said he would “safeguard sovereign manufacturing and production capability across the country in critical sectors like steel, defence, energy, food and farming”. Across rich countries, there is a growing focus on domestic manufacturing amid mounting geopolitical tensions.

Industrial decline is another issue seized on by Nigel Farage, the Reform leader, as a sign of Britain’s economic underperformance. Farage was the first party leader to call for the nationalisation of the steel industry. But this agenda has been held back in Reform by new economic influences, particularly those with a more free-market approach, such as the Tory defector Robert Jenrick, so it is a fruitful area for Burnham to seize back the agenda.

Education and employment

We need a complete rethink of how we support the next generation to succeed, and it has to start with the education system.

The days of a school system configured entirely around the university route will be brought to an end.

Politicians have called for many years for greater parity between technical and academic education, and Burnham said “that is what we will build” as the bedrock of a more balanced economy.

Highlighting the recent report by Alan Milburn on the rise of young people not in education, employment or training to more than a million, he said a “complete rethink” was required. This would include mental health support being provided in work, and giving mayors more devolved powers over employment support.

Cost of living

We will set out 10-year plans to bring down the cost of … essentials to individuals, families and businesses.

Burnham knows how constrained the fiscal circumstances are, but there will need to be a cost of living intervention that feels significant before the next election.

It is unclear what form that will take, though Burnham has hinted in the past that he would look at tax cuts. There is also the distinct possibility that an energy intervention will be needed come the autumn, depending on the fallout from the Iran war, though the Treasury will strain to avoid this.

But Labour strategists are acutely aware of the need to offer some good news on the cost of living in the run-up to the next election. Burnham suggests he wants it sooner. In the speech, he said he “will seek to give Britain some breathing space as soon as I can”.

Fiscal rules

All of it backed by the stability that comes from sound public finances, as I said before, and the discipline of our current fiscal rules.

The biggest challenge for Burnham, as for successive prime ministers, will be how to pay for his plans. The role of his chancellor – still undecided – will be crucial here.

Sending a clear signal to jittery bond investors, he pledged that his policy agenda would be “backed with sound public finances and the discipline of our current fiscal rules”. Retaining the self-imposed borrowing and debt constraints drawn up by Reeves will limit his options, but are seen as key to avoiding a market backlash that would risk causing a bigger headache.

Amid febrile conditions in debt markets worldwide, the UK’s borrowing costs have risen sharply amid the fallout from the Covid pandemic, as well as the wars in Ukraine and Iran, although bond markets were little moved after his speech.

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