Andy Burnham’s own adviser is issuing an urgent Budget warning (Image: Getty)
As the Budget looms, a financial expert who just weeks ago was advising Burnham on the economy has publicly warned that the PM is about to make a huge mistake. Burnham’s plans to spend more and expand the state are ill-timed and plain wrong, he says. They risk reducing economic growth rather than increasing it, leaving us more vulnerable to financial chaos. Chancellor John Healey’s Budget is shaping up to be a disaster, at a time when Western governments can’t afford to put a foot wrong.
That’s the verdict of former Bank of England chief economist Andy Haldane, writing in the Financial Times today. Just weeks ago, Haldane warned the nation to brace itself for a “traditional tax-and-spend socialist government”. With debt rising, gilt yields soaring and France burning because the country won’t accept spending cuts, his warning couldn’t be more timely. In Haldane’s words: We’re living on borrowed time.
National debt has reached £3trillion, we’re borrowing another £135billion this year, and 30-year gilt yields are at their highest level this millennium. This is no time for a third Labour Budget tax raid, piling more pressure on consumers and businesses, as Rachel Reeves did, twice. But will Burnham listen? He won’t. His mind is already set.
Haldane says Labour and the Tories now have markedly different economic policies. “Andy Burnham’s conference speech was a homage to 1950s-style state socialism. Kemi Badenoch’s speech was a throwback to the smaller state and lower taxes of the 1980s.” He then examined which offered the likelier path to growth today. And his answer was clear.
With borrowing costs rocketing after years of near-zero interest rates, Haldane said we desperately need to balance the books and work down our debt. That would calm the bond markets and reduce our debt-servicing costs, saving billions. That’s what Badenoch plans to do.
The alternative is to do what Burnham and Healey are plotting: expand the state despite its manifest failings. Public sector productivity has barely improved this century, while private sector productivity has increased by more than 40%. Burnham is backing completely the wrong horse.
Haldane said that expanding our expensive, inefficient state risks crowding out the more the productive private sector, slowing growth and potentially triggering a Liz Truss-style gilt and sterling crisis.
Will the PM listen to his own adviser? Even if he wanted to, he can’t. The Labour Party didn’t elect Burnham to shrink the state. They want him to expand it at speed, regardless of the cost.
Predecessor Keir Starmer went on a tax-and-spend spree, but came unstuck when he tried to cut a measly £5billion from the welfare bill. Labour launched a massive revolt. Burnham has learned from that mistake. He’ll look at his restive backbenchers and the riots in France, and conclude this is no time to cut spending.
So next week, we’ll get exactly the Budget we don’t need. More money taken from the productive private sector, and chucked at the unproductive state. It’s the wrong medicine at the wrong time, and the wrong Prime Minister is about to make the wrong decision, meaning Britain will take yet another wrong turn next week. And become ever more like France, which has made so many wrong turns there’s no going back.
Andy Burnham Told He’s ‘Living on Borrowed Time’ – But He Won’t Even Listen
Andy Burnham is facing mounting criticism over his economic agenda, with warnings that Britain has little room for further borrowing and that expanding the state could create serious financial risks. As the government prepares for another crucial Budget, the debate is becoming increasingly focused on whether higher public spending can deliver the growth and improvements in living standards that voters expect.
The criticism reflects a fundamental disagreement over how Britain should respond to years of weak productivity, pressure on public services and rising government debt. Burnham has argued for a different economic direction, promising greater public involvement in essential services and a stronger role for the state. His critics, however, believe that the country needs tighter spending controls, a more competitive private sector and a clearer commitment to reducing borrowing.
The phrase “living on borrowed time” captures the urgency of that argument. It is a political warning rather than a settled economic verdict, but it raises an important question: how much freedom does the government have to pursue an ambitious programme when the public finances remain under pressure?
The warning behind the political confrontation
One of the most prominent criticisms has come from Andy Haldane, the former Bank of England chief economist, who has raised concerns about the economic direction associated with Burnham and the government’s approach to spending.
Haldane’s warning, as reported in a recent opinion article, centres on the risk that a government committed to expanding public services could underestimate the consequences of higher borrowing costs and weak productivity. His argument is that Britain cannot assume that additional state spending will automatically generate stronger economic growth.
The concern is particularly significant because governments must pay interest on their outstanding debt. When borrowing costs rise, a larger share of public money has to be directed towards servicing existing obligations rather than funding hospitals, schools, transport or other services.
That creates a difficult situation for any prime minister. Spending more may help address immediate social problems, but if the money does not generate sufficient economic benefits, the country could find itself carrying higher costs without achieving the improvements it needs.
Critics therefore argue that Burnham must demonstrate how his plans would improve productivity and increase the economy’s capacity to generate wealth.
Supporters of a more interventionist approach offer a different interpretation. They argue that investment in infrastructure, housing, education and health can strengthen the economy over time. In their view, cutting spending too aggressively could damage services, discourage investment and make it harder for people to work productively.
The disagreement is not simply about whether public spending should rise or fall. It is about which forms of spending deliver lasting benefits, how those benefits should be measured and how the government can finance its ambitions responsibly.
Britain’s debt problem cannot be ignored
Public debt has become one of the central issues in Britain’s economic debate. The government must meet the cost of existing borrowing while continuing to finance public services and respond to changing economic conditions.
Higher interest rates make this task more expensive. They can also influence the cost of borrowing for businesses and households, affecting investment decisions, mortgages and consumer spending.
For the government, the consequences can be particularly difficult because debt interest competes with other spending priorities. Money used to service debt cannot simultaneously be spent on reducing hospital waiting lists, improving local transport or supporting vulnerable households.
This is why fiscal credibility matters. Investors need confidence that the government has a credible plan for managing its finances over the medium and long term. If confidence weakens, borrowing costs may increase further, leaving ministers with fewer choices.
However, reducing borrowing is not as simple as announcing spending cuts. Lower public expenditure can have economic consequences of its own, particularly if reductions affect services that support employment, health or business activity.
A sustainable strategy must therefore consider both sides of the equation: controlling expenditure and creating the conditions for stronger economic growth.
The question facing Burnham is whether his programme can achieve both objectives. His critics want clearer evidence that additional public investment will produce measurable returns rather than create permanent commitments that become increasingly difficult to finance.
The argument over a bigger state
Burnham’s political message has placed greater emphasis on the role of government in addressing problems that he believes previous administrations have failed to resolve.
His agenda includes a stronger focus on housing, social care and the delivery of essential services. He has argued that the country needs a different approach after years of economic stagnation, regional inequality and pressure on household finances.
For supporters, this represents an attempt to tackle structural problems that the private sector alone has not resolved. They argue that reliable public services can improve people’s quality of life and help workers participate more fully in the economy.
Critics question whether expanding the state is the right response when public-sector productivity remains a concern. They argue that additional funding will not necessarily improve outcomes unless institutions become more efficient and ministers establish clear priorities.
There is also a risk that greater public spending could place additional pressure on businesses and taxpayers if the government relies on higher taxes to finance its plans.
Businesses may respond to higher costs by reducing investment, delaying recruitment or passing some expenses on to consumers. The precise effects would depend on the taxes involved, the wider economic environment and how the additional revenue was used.
Yet it would also be misleading to assume that every increase in public spending damages growth. Investment in effective infrastructure, skills and health services can support economic activity. The central challenge is to distinguish productive investment from expenditure that produces limited or temporary benefits.
That distinction will be critical as the government develops its economic strategy.
Why the private sector matters
One of the main arguments made by Burnham’s critics is that sustainable prosperity ultimately depends on a productive economy capable of generating higher incomes and a reliable tax base.
Private businesses play a major role in creating jobs, developing new products, investing in technology and expanding exports. When firms become more productive, they can potentially pay higher wages, increase profits and contribute more in tax revenue.
If government policies make it more expensive or difficult to invest, economic growth could suffer. But the relationship between public policy and private investment is complicated: businesses also depend on reliable infrastructure, a healthy workforce, an educated population and stable institutions.
The debate should therefore focus on how government can create the conditions for businesses to succeed while ensuring that economic gains benefit a broad section of society.
Burnham’s critics want stronger assurances that his plans will not crowd out private investment or leave the state absorbing resources that could be used more productively elsewhere.
Supporters would respond that the government can play a constructive role by addressing market failures, coordinating major infrastructure projects and providing services that businesses need.
Both arguments point towards the same underlying test: whether the policies improve the country’s productive capacity over time.
The political difficulty of cutting spending
Even if ministers accepted that some spending needs to be reduced, implementing cuts would be politically challenging.
Public services have large numbers of users and employees who depend on them. Reductions can create immediate opposition, particularly when people believe that previous spending decisions have already left essential services under strain.
The experience of recent governments also demonstrates the difficulty of making substantial changes to welfare policy. Proposed reductions can provoke resistance from within a governing party, especially when they affect people who are financially vulnerable.
Burnham must therefore navigate competing expectations. Some voters want lower taxes and tighter control over public expenditure, while others expect the government to improve services and provide greater protection against economic insecurity.
These demands can conflict. A government cannot indefinitely promise better services, lower taxes and falling borrowing without explaining how the objectives will be reconciled.
That is why the Budget will be an important test of the government’s priorities. The key questions will include which programmes receive additional funding, where savings will be found and how ministers intend to support economic growth.
The answers will matter more than political slogans.
Will Burnham listen to the warnings?
The accusation that Burnham will not listen reflects the frustration of critics who believe that his preferred economic approach places too much emphasis on public spending and too little on fiscal restraint.
However, disagreement with economic advisers does not automatically establish that a policy is unworkable. Economic forecasts are uncertain, and governments must make decisions based on competing evidence about growth, taxation, public services and social needs.
The appropriate test is whether ministers explain their assumptions, publish credible costings and respond to evidence when policies fail to deliver the expected results.
If Burnham believes that public investment can improve productivity, he will need to show how that improvement will happen, how long it will take and how the government will manage the financial risks in the meantime.
If critics believe spending must be reduced, they should also explain which services or programmes they would change and what the consequences would be for households and businesses.
Without those details, the debate risks becoming a clash of political identities rather than a serious discussion about the country’s economic future.
A defining moment for Britain’s finances
The warning that Britain is “living on borrowed time” highlights the pressure facing a government that wants to pursue ambitious reforms while maintaining confidence in the public finances.
Burnham’s supporters see a chance to change the country’s economic direction through stronger public services, investment and a greater focus on regional opportunity. His critics fear that expanding the state without convincing evidence of higher productivity could leave taxpayers facing greater costs and the government with fewer options.
The outcome will depend on the policies actually implemented, the quality of their delivery and the economic conditions in which they operate.
Britain needs stronger growth, dependable public services and a credible plan for managing its debt. Achieving those objectives will require difficult decisions rather than promises alone.
For Burnham, the challenge is to demonstrate that his economic programme can deliver tangible improvements without creating financial commitments that become unsustainable. For his opponents, the challenge is to show that restraint can protect the public finances without undermining the services and investment needed for long-term prosperity.
The debate is far from settled. But as the Budget approaches, one issue is becoming increasingly difficult to avoid: the government must explain not only what it wants to spend, but how it expects those decisions to strengthen Britain’s economy and secure its financial future.