Labour’s internal warfare broke into the open on Thursday as Keir Starmer and several cabinet ministers criticised Andy Burnham over his comments dismissing the bond markets.
Senior party figures compared the Greater Manchester mayor’s attitude to the cavalier approach taken by the former Conservative prime minister, Liz Truss, in a sign of how low relations between No 10 and Burnham have plunged.
On Thursday, UK borrowing costs surged to the highest level since early September, in what may have been market unease at Burnham’s comments. One official said the rise was equivalent to half of what it would cost to scrap the two-child benefit limit, which Burnham has called for.
Starmer is understood to be furious at Burnham’s admission, in several interviews, that he would seek to challenge the prime minister for the leadership if there was a path to do so.
Cabinet ministers explicitly criticised comments from Burnham in a New Statesman interview published on Wednesday, in which he disagreed with the economic approach of the chancellor, Rachel Reeves. “We’ve got to get beyond this thing of being in hock to the bond markets,” he said.
The remarks have incensed those in government. “If you don’t want to be in hock to the bond markets, don’t announce plans that involve billions of borrowing,” one senior source said.
The deputy leadership candidate, Bridget Phillipson, said that working people had already suffered from a “reckless approach on the economy” from Truss.
Burnham has proposed a slew of policies, and told a Guardian documentary that the two-child benefit limit was the “worst of Westminster”. This prompted disdain from within government because Burnham abstained on the legislation that introduced the cap.
He said he had fought hard at the time to find a way to oppose the bill through an amendment “but the nuances of that debate just got lost”.
Burnham has suggested in other interviews he would favour higher council tax on more expensive properties, investing more in building council housing and a 50% rate of income tax on higher earners, as well as nationalising water and utilities.
Starmer and Phillipson both criticised Burnham’s comments on Thursday, and warned ignoring market forces would put the UK at risk of a Truss-style economic meltdown.
In an interview with the Guardian, Phillipson said she had “a lot of respect for Andy” but added: “We have to tread with real care around casual language on the bond markets. Working people ended up paying more on their mortgages because of Liz Truss’s actions and what happened there.
“So let’s just pause and consider whether it’s really a responsible approach for a party of government to be talking in that kind of language, because working people have suffered once because of a reckless approach on the economy. And it’s through having credibility and a clear plan on the economy that we are able to invest more in public services.”
Starmer told broadcasters he would not be drawn on the mayor’s “personal ambition” but said he would take a tough line on the challenge to the fiscal rules. The prime minister said: “It was three years ago this week that Liz Truss showed what happens if you abandon fiscal rules. Now, in her case, she did that for tax cuts, but the same would happen if it was spending.
“I’m not prepared to let a Labour government ever inflict that harm on working people … And there’s nothing progressive about borrowing more than we need to. It’s nothing progressive about abandoning fiscal rules.”
Burnham – who would need a Westminster seat to challenge for the leadership – is seen by a number of Labour MPs as an opportunity for a change in economic strategy and a more robust challenger to Nigel Farage’s Reform UK.
He said Labour MPs were privately urging him to run, but said any such move would have to be “more than a personality contest”. He told BBC Radio 5 Live he would not “speak in code”, “toe the line” or “be quiet” about issues important to Greater Manchester.
In a separate interview with the Telegraph, Burnham accused Downing Street of creating a “climate of fear” and spreading “alienation and demoralisation” among MPs. He said that while he was not “plotting to get back”, the leadership was “for other people in Westminster to make a decision about”.
But it was Burnham’s comments on the economy that prompted the prime minister’s supporters to go on the attack. Steve Reed, the housing secretary, said Starmer had got used to people “taking potshots” at him in opposition before he “picked this party up off the floor and led us to a record-breaking election victory”.
Labour MPs and ministers told the Guardian they were annoyed by the leadership speculation, and suggested Burnham was losing support as a result.
“Andy’s problem is everybody knows what he’s about and nobody knows what he’s for,” one MP from the 2024 intake said. “It’s gobsmacking from someone who left Westminster when the going was tough, having stood by Corbyn in the shadow cabinet, who is consistently throwing grenades into the parliamentary party from afar for months on end and is now seemingly desperate to get back to Westminster.”
A senior Labour source said: “If I could offer Andy a bit of advice, it’s that he’s coming across as a bit desperate.”
Another senior Labour aide added: “You just do not mess around with this stuff on the bond markets. Setting out a policy platform like this just makes him look ludicrous. In the last few days he has spent tens of billions of pounds and actually it doesn’t get him any closer to the leadership but it does put the markets on edge ahead of what is already a difficult budget.”
