The Times They Are A-Changin’: What Did Andy Do..?

 

“There’s a starman waiting in the sky He’s told us not to blow it ‘Cause he knows it’s all worthwhile”

 

 

Burnham opened his account as PM saying: “Let’s build a new national sense of unity, of common purpose, and positivity. Let us make this the moment when Britain starts to believe again, the moment we bring back hope.”

Immediate actions include an extra £340million to ‘end’ rough sleeping over the next three years.

Electricity bills will be reduced by an average of £45 a year from October, due to the removal of VAT, and single bus fares across England, with the exception of London, will be capped at £2 from January.

There are also expectations of a 2% cut in business rates for the hospitality sector.

These are all part of Burnham’s promise to cut living costs: “I said I wanted to give people breathing space, and that’s what I’m announcing on my second day as prime minister. We’re taking immediate action to cut taxes on energy bills, put more money in people’s pockets and bring back hope.”

There has already been criticisms of these proposals, with many not understanding that cutting the cost-of-living is a long journey made up of small steps such as this.

In “Does PM Burham Stand a Chance” I highlighted the bigoted and puerile agenda of the right-wing media, and, true to form, the Daily Mail haven’t disappointed: “Labour mutiny over unfunded energy bills ‘bung’ on first full day as PM”, and “Burnham’s bus shambles.”

The right-wing press appear desperate to portray him as a 1970s throwback, willing to jeopardise the nation’s finances in the pursuit of greater nationalisation of utilities and council housebuilding.

 

The right-wing press appear desperate to portray him as a 1970s throwback

 

In my opinion they are deliberately misrepresenting the situation. I have selected key words from the comment that opened the article: “unity”, “common purpose”, “positivity”, “believe” and “hope”. They are the polar opposite of what the right’s offering of divisiveness, exclusivity, negative and miserly.

Burnham’s team appear to be aware of the situation, with one saying: “We need to show that he’s serious about change as the public will form their opinion of him very quickly. But we have to avoid a Liz Truss-style moment: it’s almost like the markets are waiting to be spooked.”

The term unfunded is being used to scare voters. While Burnham’s proposal may, or may not be unfunded they pale into insignificance with Truss’s £45 billion of unfunded tax cuts, which were aimed primarily at the top 5% of earners.

 

‘it’s almost like the markets are waiting to be spooked’

 

Her proposed abolition of the 45% top rate of income tax for those earning over £150,000 meant an average saving of £10,000 a year, while individuals earning £1 million saved over £55,000 a year.

By comparison , the basic rate of income tax was lowered by only 1% (from 20p to 19p).

Unfortunately, some of the mud thrown by the right-wing will begin to stick. Burham’s choice of John Healey as chancellor shows a preference for steadiness and experience; Healy is a former-Treasury minister, with advisers including Jim O’Neill and Andy Haldane.

Burnham was at pains to show he favours stability, saying: “I’ve said we’ll stick to the fiscal rules and by that I mean the existing fiscal rules and use, obviously, any flexibility within them. But we will stick to the existing rules.”

Clearly, there must be a focus on the average family finances ; when Rachel Reeves took office, they were set to be worse off in 2029 than they had been in 2019. That’s not supposed to happen. The norm is for household incomes to rise by about £5,000 (2026 prices) every 5-years.

 

‘there must be a focus on the average family finances’

 

The problem with government induced economic stimulation is that it can create demand-pull inflation, leading to higher interest rates.

However, given the depth and longevity of the cost-of-living crisis which has left many struggling with everyday living this seems unlikely. This was confirmed as ONS statistics showed the rate of consumer prices index inflation fell to 2.6% in June, from 2.8% in May.

The issue, as always, is, how do we pay for it?

Perhaps there could be higher taxation of investment income such as capital gains, dividends and rents. This would, of course, be met with derision by the right-wing media, even though the majority of their readers would not be impacted.

The real issue with the cost-of-living crisis is the fact that much of it stems from external events, often the fault of the unbalanced, megalomaniac in the White House.

Restarting the war with Iran has led to them blocking the Strait of Hormuz. Aside from the obvious impact on petrol prices, but there are knock-on effects that impact many foodstuffs.

 

‘much of it stems from external events, often the fault of the unbalanced, megalomaniac in the White House’

 

The result is simple; countries are suffering supply-side inflation through no fault of their governments.

Aside from implementing price controls, which the right-wing media will immediately react to by saying we have returned to the 1970s, governments will have to subsidise people which costs money, usually borrowed.

Turning to foreign policy, Burnham’s appointment of Ed Miliband as Foreign Secretary suggests he isn’t too worried about the relationship with Trump and the US.

In Europe, Burnham has the benefit of the trust that Starmer helped to after years of Brexiters creating suspicion and exasperation caused by the hastily negotiated withdrawal agreement of Boris Johnson.

We are part of the “coalition of the willing”, which provides security guarantees for Ukraine and, in the event of the Iran war ending, will help ensure safe passage through the strait of Hormuz.

Whilst Starmer was cautious in resetting ties with the EU to avoid angering Labour leave voters, Burnham has an opportunity to review Labour’s red lines on relations with the EU – no single market, no customs union, no freedom of movement.

 

‘Burnham has an opportunity to review Labour’s red lines on relations with the EU – no single market, no customs union, no freedom of movement’

 

European governments should be receptive in the areas of defence and, might welcome our involvement in their “made in Europe” drive for greater European sovereignty over key technologies and supply chains. However we need to be careful to avoid being seen as cherry-picking the EU benefits that suit us, and avoiding involvement with those that don’t.

Looking to the future, Burnham needs to recognise that Labour are unlikely to win the next general election as a halfway house party, afraid of upsetting Brexiters. The party has and is losing pro-European voters to the LibDems and the Greens, and working-class Brexit voters to Reform.

Realignment with Europe, whilst of great importance, is a sideshow, the real battle is inequality and the cost-of-living.

 

‘the real battle is inequality and the cost-of-living’

 

Delivering hope and positivity will help in the short term, but actions speaker louder than words. Even those of the Daily Mail!

 

 

“Turned away from it all like a blind man Sat on the fence but it don’t work”

 

 

Burnham’s first week in office is proving lively.

His messaging is positive, and along with early cost-of-living initiatives should offer people hope of something better.

He has been quick to admit the failures of the past, but unlike his predecessors isn’t using them as an excuse to hide behind.

I have read some comments that his changes are token gestures; perhaps they reminding that “”A journey of a thousand miles begins with a single step”.

Elsewhere, the Tories and their media are taking two lines of attack, the phrase unfunded seems a constant. However, capping bus fares at £2 is hardly £45bn of tax cuts for the highest earners in society.

Another line of attack is that Labour is returning to the 1970s, with Mel Stride, the shadow-chancellor saying: “I fear that he is somewhat captive to a prime minister who seems to want to go back to the 1970s and huge spending and state intervention, higher taxes, higher borrowing, and all of that, which is what we’ve seen from Labour to date, but even more of it.”   

Whether Burham can be our source of change remains to be seen, but he has made a decent start.

Also, it appears he may be a “lucky” PM. They say that “timing is everything”; the economy is beginning to grow and inflation is withing basis-points of the governments’ target rate.

It appears his inheritance might be somewhat better than his predecessor.

Lyrically, it’s Bowie time, we open with “Starman” and close with his duet “Under Pressure” with Queen.

Enjoyment may be closer than we think!

Philip. 

 

@coldwarsteve

 

 

BREAKING NEWS – King Charles has denied telling the new PM that the last time he said ‘Andy Burnham’ was when he found his brother’s porn stash.

 

 

 

 

Philip Gilbert is a city-based corporate financier, and former investment banker.

Philip is a great believer in meritocracy, and in the belief that if you want something enough you can make it happen. These beliefs were formed in his formative years, of the late 1970s and 80s

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