Here we go again. Or rather, here our political leaders go again. As the reality of what Labour did to itself sinks in, the only people excited by the prospect of a change of leader, of prime minister, are Labour. If it is to be Andy Burnham, and he is the clear favourite — although with the caveat of that by-election to overcome — there will be an ecstatic response from his many supporters. The photogenic, boyish wonder, the prince outside Westminster, beyond Watford Gap, the King of the North — he will be coming to London and he will show us.
That is the rationale, that somehow Burnham brings a magic touch, injecting excitement and pizazz into a government that in two years has lost its way. The Sir Keir Starmer administration is marooned, holed, driven on to the rocks by torpor and a sheer inability to get things done. All that promise, which secured Starmer a landslide, lost in a swirling sea of scandal and uselessness. Starmer, we now realise, is ill-suited to No 10, he is not a commander, a doer, not even, as one captain of industry said to me this week, “a COO”. Ouch. Starmer, he said, would be a competent down table senior manager, “on the executive committee, but as the lawyer”.
The difference between how Burnham is perceived by his enthusiastic bag carriers and the City could not be starker. To the former, he is a Messiah, capable of transforming Britain, wresting the state machine and restoring the country to prosperity, while at the same time, advancing equality, narrowing the rich-poor divide.
Andy Burnham will merely be the latest occupant of No 10 to promise the earth
Under Andy, as they like to say, Labour will be in power for much longer than one term and those who are Labour MPs, and there are many of those, will have their jobs saved. To the latter, he will merely be the latest occupant of Downing Street to promise the earth and not have a clue how to achieve it. He too will prove short-lasting, to be replaced by another, probably, according to the current polling, Nigel Farage.
For proof they look to Burnham’s comment that Britain has “got to get beyond this thing of being in hock to the bond markets”. One of his allies, Paula Barker MP, went further, saying the bond markets “will have to fall into line” with her hero.
It’s a remark that has been quoted time and again on trading floors and in Square Mile bars these past days, to laughter and to fingers pointing at screens showing investors selling off UK treasury gilts in anticipation… of a Burnham victory.
So much for falling into line, Paula. With such ignorance it is incredible you ever became an MP, but there again, perhaps not, given the paucity of talent in the current House of Commons.
For all her faults, Rachel Reeves gets it. Yes, as the present chancellor said, she would like “to be less in hock to the bond markets”, but she knows they matter. “When you are issuing still tens of billions a year, you need to maintain that confidence.”
Added Reeves: “Would I like to be less in hock to bond markets? Of course I would. But it is the reality that we rely on those bond markets and those people participating in them to buy our debt.”
Once again, we appear to be in a “careful what you wish for” scenario, in which a panacea is being dangled in front of the electorate of Labour members, one that is greeted with mirth in more knowing quarters.
Burnham’s solution is what he terms business-friendly “aspirational socialism”. You can hear Barker and the rest cheering madly in the background as he propounds his theory. In the City, there is only silence, and much shaking of heads and smiles. You’ve got to be joking Andy.
He isn’t, of course. His views can be encapsulated in a single word, “Manchesterism”, the basis for which is “when you’ve lost control of housing, energy, water, rail, buses, you’ve lost control of the basics of life, but you’ve also then lost control of costs and public spending”. State ownership, in two words.
There are those in the City rubbing their hands in glee at the thought. They were brought up on tales of the Thatcher privatisation round, how advisers lined up to fill their boots, and fortunes and reputations were made. This will be like that, except in reverse, said one corporate finance consultant.
In an industry facing a stock market starved of big-ticket deals, and the ensuing commissions, this could be a major fillip. Just think of all those water, energy and train and bus firms to be sold back to the public sector. Marvellous.
But he’s not serious. He knows as well as anyone that given the condition of Britain’s public finances, it is not going to happen.
Andy may say it and Paula might applaud and parrot, but there is no chance of it occurring anytime soon. There is no money to buy them back. Even Reform UK has had to rethink its advocacy of renationalising the water companies. That’s not to say it’s not a good idea. The water providers are a permanent scar, polluting our river and sea water, flooding roads with burst pipes, running out in places as temperatures rise.
There is the extra problem to suggest Burnham’s idealism is pie in the sky. The reason those events occur is because the water providers do not have the cash to invest, to improve their facilities and infrastructure.
Yes, say Andy and his acolytes, that’s because they rake off thumping profits, awarding their shareholders vast dividends. To which the retort is it’s not enough.
If Andy Burnham is to stay true to his word he will have to borrow, and big
A return to the people as owners would remove the profit layer alright, but it would still leave a yawning gap between what is needed to improve and the available funding.
There would, too, be the inevitable clamour for Red Andy to follow through with his socialist principles and reduce the bills of consumers. Good for them, for votes, but only lowering standards further, as the chasm between quality of services and cash set aside for boosting standards grows ever wider.
If Burnham is to stay true to his word he will have to borrow, and big. Which means turning to those despised and dismissed bond markets.
Britain is already paying heavily for government programmes, more still as the cost of public borrowing keeps on climbing.
One statistic doing the rounds in the City is that of the £132bn Labour borrowed during the last fiscal year, no less than £110bn went on interest payments. So, racking up your credit card just to meet the monthly interest and keep the card company quiet. Not clever. Martin Lewis for one would definitely have something to say about that.
Another is that the Office for Budget Responsibility was forecasting five-year government borrowing of £329bn by 2029. That prediction, based on the Starmer administration’s spending (let alone Burnham’s) and the absence of the much-vaunted growth not helped by Reeves’s tax rises, has risen to £583bn. Gulp.
Down the M6 and M1 comes the saviour, insisting he can do it better. Doubtless, Barker will be in tow. At Staples Corner, they would be well advised to avoid rushing into central London but to divert, east, to the City. Some urgent education is in order.
