Andy Burnham’s economic credibility has been torn to shreds. By his own experts.
As Burnham moved in on No 10, one thing became clear. He didn’t know much about money. You only had to hear him talk about the bond market to realise he hadn’t got a clue. So he called in back-up. Burnham secured the support of three heavyweight economists, who were expected to take key roles in his administration and make sure he got it right. The aim was to reassure markets that he wasn’t going to run riot with the nation’s credit card, and end up even more in hock to the bond market than we already are.
And they were big names. Perhaps the most startling was Lord Jim O’Neill, the former Goldman Sachs executive. Burnham also called in former Bank of England chief economist Andy Haldane, a rare bright spark on the BoE’s low-wattage monetary policy committee. And finally, Richard Hughes, former chairman of the Office for Budget Responsibility, who nobly took the rap for Rachel Reeves’s Budget day leak. Impressed? I was. Not to mention surprised, wondering why on Earth they were willing to front Burnham’s tax, borrow and spend blitz.
Still, power makes strange bedfellows, and there they were. Except they’re not. In a moment of humiliation for Burnham, it turns out that none of these big guns has actually taken a formal Government role. Even though Burnham is ensconced in No 10, has picked John Healey as his Chancellor, and set a date for the autumn Budget on October 28. What’s holding them back?
Maybe they’re on their hols. Or waiting to hear from Burnham, who’s only just come back from his summer jolly. But reports suggest O’Neill is talking to Number 10, and doesn’t like what he’s hearing. Burnham is wavering over whether to unleash a wealth tax, a policy that makes lefties everywhere go weak with desire. It would probably destroy more tax than it generates, but the left don’t mind. So long as they’re bashing the rich, they’re happy.
O’Neill isn’t. That’s partly because he is very rich himself, and isn’t keen on being bashed. But also because he knows a wealth tax could backfire. The hullabaloo alone would cause chaos, as the Treasury battled to make it work while the wealthy packed their bags.
O’Neill also wants to retain oversight of his business interests, and can’t do that if he’s hugger-mugger with the government. Haldane and Hughes seem to be keeping their heads down. I’m only surprised they popped them up in the first place. Maybe they succumbed to early-stage Andymania. There’s a lot of it about right now.
Whatever the reason, it’s a terrible look. These three supposedly wise men were hired to assure markets Burnham would be a safe pair of hands. Now they’ve done the exact opposite.
Julian Jessop of the Institute of Economic Affairs warned their no-show could make bond markets nervous and keep UK borrowing costs high. Simon French, chief economist at Panmure Liberum, said the trio had lent credibility to Burnham’s transition, and could sink it unless they publicly back him.
It’s a slap in the face for Burnham. The men he personally called in to burnish his credentials have taken a closer look, and don’t like what they see. It makes me wonder about their credentials. What credible economist wants to front the third growth-destroying Labour tax blitz in three years?.
Burnham has retained the services of one adviser: economist Neil Amin-Smith, who advised the catastrophic Rachel Reeves. I don’t know what should worry us more. The advisers the PM appears to have lost, or the one he’s retained.