Much of the UK media coverage of an expected Burnham government later this year has focused on personalities and relatively trivial policy proposals.

Broader strategic issues have largely been absent. 

However, Burnham’s local transport reforms and administrative refinements in Manchester have shown a desire to ‘make the state work’. Burnham has implied that a ‘privatisation mentality’ and an obsession with opaquely contracting everything out to the private sector, has led to the abandonment of attempts to make state institutions work properly. He’s out to challenge such assumptions, he implies.

This concept seems to lie behind Burnham’s ideas about the nationalisation of large monopolistic utility companies, which have become ‘financialised’ and thus even more abusive of power.

Burnham’s experience in Manchester seems to have convinced him that over-centralisation in government is inefficient; a departure from traditional socialist almost-religious belief in scale economies. His decentralisation verve includes fiscal decentralisation, envisaging local authorities, especially cities, raising more funds with their own taxes and levies; and switching to national taxes and hypothecated levies, which are easier to decentralise across the regions. (At present about 75%-85% of local authority income comes from Central Government, with micro-managing conditions attached).

Burnham’s attitude to economics seems superficial, but he appears to place emphasis on removing inhibitors to the growth of small businesses, in both taxes and regulation, and sees regional state authorities as having a major role in the promotion of private business activity, almost French-style. However, to help avoid a debt crisis the Burnham approach involves both tax reform and a broad rise in the tax burden.

Notwithstanding, there is no emphasis from Burnham on macroeconomic policy, but he does adhere to the concept of debt-financed Keynesian stimulae. However, in capital markets the link between higher borrowing and higher borrowing costs (even ‘borrowing to invest’) is based on the assumption that most of the consequent spending is inefficient and unproductive. Burnham implies that by making borrow-to-invest more efficient, he can break the link between higher borrowing and higher borrowing costs.

Where are the main challenges for Burnham, given such interpretations of the Burnham approach ?

The underlying problem is the Labour Party itself.

The Labour Party is no longer the party of ‘industrial labour’. It is the party of the bureaucracy and governmental institutions … and their contractors. As such they have more clout per capita than industrial labour; dual-hatted civil servants, local authority staffs, NHS, education, welfare-and-care, quangos, transport, et al.

This means Burham will face stiff resistance to a cull of governmental contractors, any increases in efficiency, or any real regulatory streamlining.

Any attempt to address the No 1 underlying problems of a sclerotic and impenetrable local and national UK state, will be vigorously opposed. 

The UK state is so sclerotic that projects seem to take three times longer than comparable countries to complete, and cost three times as much. Does Burham know why ? It may even be a taboo topic within the ‘Party of the Bureaucracy’.

Nationalisation without compensation will run into internationalised legal problems, as well and prohibitive cost.  But there’s a bigger problem. Burnham is sloppy in defining his bete noir; privatisation. Excessive and ‘corrupt’ contracting of services in not privatisation, it is just contracting out. Railways were always state owned. Train operators are contractors. Labyrinthine contracts and leases with perverse incentives don’t make it ‘privatisation’. 

Similarly, decentralisation in the UK is not really decentralisation. Until sub-national government can borrow against and raise local taxes which replace national taxes, and spend freely for its own priorities, ‘decentralisation’ in the UK is merely the slight relaxation of micro management from central government. Burnham is imprecise on such topics.

There are deeper strategic problems too for Burnham. Politics has become a supply-side game. Politicians have become PR voices for the bureaucracy. This means they are representing the interests of the state to the people, not the reverse. Couple this with an ideology which emphasises ‘changing society’ (see this job ad), rather than society changing the government, and you have a ‘top-down’ culture at the root of the very public dissatisfaction that lies behind the calls for a new PM.

The UK’s No 2 underlying problem lies with the private sector; monopolisation, financialisation and economic concentration (ie elite dominance and inequality). Unravelling this set of problems and achieving greater competition, and eventually equality, requires in-depth knowledge clearly not possessed by Burnham. Does he understand the international mechanisms through which index funds control and monopolise ? 

Given the magnitude of the UK’s economic and governmental problems, Burnham will need to understand the wider context of his proposals in order to avoid ending up just a slightly more charismatic version of Starmer.

* Paul Reynolds works with multilateral organisations as an independent adviser on international relations, economics, and senior governance.