Andy Burnham has been skewered. By one of his own financial advisers.
Andy Burnham has been skewered and Labour’s Budget will be a nightmare (Image: Getty)
Just a few weeks ago, Burnham was boasting about the top financial experts advising him. Today, he’ll wish he’d kept his mouth shut. Because those experts have looked at his behaviour as PM and taken fright. Today, one has penned a piece for the Financial Times, setting out what chancellor John Healey must do in the autumn Budget. And it’s completely the opposite of what Burnham and Healey plan to do. Labour must reverse course now. They won’t.
Last week, I wrote that Andy Burnham had just got slapped in the face by the very experts he’d called in to beef up his financial credibility. He called in three hugely respected financial names to advise him, but two have already got cold feet. Former Goldman Sachs executive Lord Jim O’Neill instantly went AWOL, worried by reports that Burnham is going to introduce a disastrous wealth tax. Now Burnham’s second guru, the whip-smart former Bank of England chief economist Andy Haldane, has publicly torn Labour to shreds.
This morning, Haldane set out what this year’s autumn Budget must do to revive our ailing economy. He doesn’t mention Burnham and Healey by name, but he’s skewered them both. Haldane savaged the last two Budgets and warned of the dire consequences of a hat-trick of Labour disasters. He’s also shown Healey a simply way out of the mess Labour has got us into. Sadly, he won’t take it.
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Haldane wrote: “Britain’s last two Budgets were presaged by drawn-out and messy speculation about tax rises. Amid the uncertainty, consumers and businesses paused spending and growth slowed.”
He says another bout of pre-Budget speculation about spending, taxes and borrowing risk disaster at a time when gilt yields are soaring and “bond markets are only a hiccup away from a heart attack”.
Haldane says our public sector finances are “in a parlous state”: “Debt is close to 100% of GDP, annual debt servicing in excess of £100billion and borrowing costs at their highest this century.” That sounds like everything I’ve been banging on about for years.
He then notes that “the UK has not run a fiscal surplus, nor generated a percentage point of productivity growth, since 2001”. These factors are not unconnected. His conclusion? Britain should not tax or borrow a penny more. It will only crush economic growth by crowding out the private sector.
But that’s exactly what Burnham is planning. The PM can’t open his mouth without a new spending pledge popping out. Unbelievably, Healey is considering fiddling with fiscal rules to borrow an extra £9billion a year by the end of the parliament. It’s madness.
Haldane sets out what Healey must do instead. And it’s very simple. He wants the chancellor to announce “a moratorium on further rises in the tax and regulatory burden on consumers and businesses for the remainder of this parliament”.
No more tax hikes! No more regulation! Imagine that. The country would breathe a massive sight of relief, and the private sector would start investing and spending again, generating growth. Instead of feeling crushed, we’d be revived.
Will Healey listen? There’s not a snowball’s chance in hell. Labour wants to tax and spend, and will keep doing so even if it means crushing the growth we need to keep our profligate state alive. In that case, we’re all skewered. Even Burnham’s advisers know it now. And they’re letting rip.