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.
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14 Comments
NOTE FOR READERS. Since we have almost zero information from Burnham on his foreign, security and defence policy approach (and that of international trade), I have not addressed any potential policy changes on the EU, the Ukraine war, the war on Iran, or China. We await clarification.
Yes indeed, “We await clarification. “
Andy likes to be liked, and for the last ten years he has been “worshipped” by a select group of Manchester public sector “lanyard-istas”. So effective has their *grooming* of Andy been, that he has also begun to believe that he is infallible.
On the one occasion he decided to tax the Manchester locals *directly* for extra funding he failed. With an eye on London ULEZ, he decided “I’ll have some of that”, and spent millions on cameras in Greater Manchester. Once the good folk of Manchester told him where to put his ULEZ cameras, the cameras never got switched on. That is the future with Andy Burnham right there. Big ill-judged ideas, high tech nobody wants, tax money wasted, and cobwebs covering dead projects he hopes that history will forget.
We’re going to need a heck of a lot more eye-liner before he’s done!
Thank you for writing this Paul. It is important to try to demystify Burnham’s policies. I understand he is going to give a major speech next week.
He will significantly reduce the impact of the Greens and that can only be good for us.
It is enough for me.
@ Tom Bailey, “Andy likes to be liked, and for the last ten years he has been “worshipped” by a select group of Manchester public sector “lanyard-istas”. So effective has their *grooming* of Andy been, that he has also begun to believe that he is infallible”.
For goodness sake, the bloke hasn’t even started yet, so at least out of common decency give him half a chance.
Private ownership and full nationalisation are the two extremes of the possibilities for ownerhship of services delivered for a community with a variable monopoly. When a system clearly fails a different method of ownership is required. What is needed is for this rather predictable turn of events to be embedded in the contractual framework of whatever system exists so it is easier and cheaper to make the necessary change and to also reduce the chances of it needing to be made.
Paul, thanks for this incisive piece on the relationship between the Labour Party and the privation of state provision in the UK. I agree with much of what you said. It chimes with some of my real-world experience.
There is a need to roll back the pseudo-privatisation you describe. And as it happens the public are treated to a teaser-trailer worthy of a Dr Who re-boot in the paper by Matthew Lawrence titled The Productive State. Described as an advisor of Burnham, what are we to make of it? Distraction? Outline plan? Flash in the pan?
Be sure that the shareholder class plan to receive those future dividends and will deploy all necessary means to ensure this is the case. Sorry PM.
I think a key question is the capability of Local Government, in its starved-for-20-years state, to deliver. It is currently well on the way to being a gutted corpse.
Recovery will need to be done as slowly and as carefully as John Healey trying to revive the Ministry of Defence.
The work done on Regional Mayors may be a harbinger of SOMETHING devolution-wise, but I’m not sure exactly what that will be.
The Manchester Evening News was part of the Burnham fan club, and so, never delved too deeply in Andy Burnham & his wife’s relationship with public funds. Now that he’s stepped outside of his secure Manchester *compound*, real journalism is going to replace any thoughts of dewy-eyed decency with deep scrutiny.
” Notwithstanding, there is no emphasis from Burnham on macroeconomic policy, but he does adhere to the concept of debt-financed Keynesian stimulae”
Blimey, I’ll bet he’s keen to keep that quiet! 🙂
The problem is that all politicians are scared stiff that any deviation from the neo-liberal consensus will mark them out a fiscally reckless. So they have to pretend that the macroeconomy is like a household even though they know it isn’t.
We might expect that modern day LibDems to be a little different. After all Keynes was a Liberal. But who, in the Lib Dems, is brave enough to speak up for Keynesian macroeconomic demand management?
Tom Bailey 26th Jun ’26 – 7:28am….The Manchester Evening News was part of the Burnham fan club, and so, never delved too deeply in Andy Burnham & his wife’s relationship with public funds.
Do you have any evidence of this or is it a case of, “If we throw enough mud something will stick?”
“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.”
Iain Donaldson made the same point recently. I’d add that it’s not just taxation. It is the ability of central government to raise money cheaply on the bond markets. It doesn’t make any sense to get involved in expensive PFI deals when money can be raised far more cheaply in other ways.
But if we have devolution without some kind of monetary devolution too this is what the devolved entities will be forced to do.
It’s not just Andy Burnham who is vague on how devolution should work. I haven’t seen much discussion, on LDV, of the details of how devolution should work. We do need that. We all know who is hiding in these details.
Peter
I think there is a lesson there from the extra freedom given to Local Government to make commercial deals etc under the Local Government Act 2003, and further by the Localism Act 2011, combined with the gutting of financial resources.
Several LAs got into serious difficulties in doing commercial deals which failed in various ways.
I think that a part of that is authority to act without expertise to manage competently.
One of my local East Midlands authorities actually owned a hotel development in Edinburgh for a time as I understand it, but they managed to exit without too many burnt fingers.
(Open to correction as I have not mapped this entire rabbit hole.)
expats is right to call out Tom Bailey’s implied suggestion of some sort of corruption in Manchester.
Either put up or shut up, Mr Bailey…….. I thought, and was told, when I joined the Liberal Party way back in 1961 that Liberals were supposed to be better than that…..