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From nationalising utilities to spending on welfare, Andy Burnham is talking as if Britain's a rich country. In fact, the economy is on life support, taxes are too high and unemployment's rising. Will he grasp the scale of the challenge or lead Britain down a disastrous path?
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0:00
I'm afraid we need to talk again about
0:02
Andy Burnham because there is a fair to
0:05
middling chance that he will crash the
0:07
economy. Welcome to the week in business
0:09
with me, Christian May.
0:14
Right, Andy Burnham.
0:16
Worth just taking a moment to think
0:18
about the unusual dynamics of the
0:20
by-election that's taking place uh this
0:22
time next week, I think.
0:24
One in which uh in order to change the
0:26
government, you must vote for the
0:28
government.
0:29
We'll leave it up to the good folk of
0:30
Makerfield to determine
0:32
uh quite how that might play out. But,
0:35
Andy Burnham has made no secret of the
0:37
fact that this is the first step on his
0:40
return to Westminster, the next step
0:42
being replace Keir Starmer as Prime
0:44
Minister. So, we are required to
0:46
consider what that would mean, who would
0:48
be in his team, what his thinking is,
0:51
what his priorities are, where does he
0:53
want to spend the money? What money, you
0:55
might ask.
0:56
Let's think about timings, considered
0:59
this might be what are we we're now
1:02
June, July, August, maybe Labour Party
1:04
conference, who knows quite when and if
1:07
this leadership challenge takes place,
1:08
and whether Keir Starmer fights and wins
1:11
it, which is what he says he wants to
1:13
do.
1:15
Two to three months down the line from
1:16
now, things will be very clear.
1:20
Inflation will be higher, unemployment
1:22
will be higher, growth is pretty anemic,
1:25
most recent analysis from the CBI just
1:29
this week, putting forward their
1:31
prospects for growth in this country and
1:34
for unemployment, it's not looking good.
1:36
My point is that if Andy Burnham becomes
1:39
Prime Minister, he's going to walk into
1:40
number 10 in the middle of an economic
1:43
storm.
1:45
And of course, he's trying to win an
1:46
election, so he's not talking like that
1:48
at the moment. He's talking about all
1:49
the things he'd like to do, what he'd
1:51
like to nationalize, what he'd like to
1:53
subsidize, where he wants to spend his
1:55
money.
1:56
At the moment,
1:58
he he's living in this fantasy world of
2:00
saying what people want to hear and
2:02
talking in pretty broad strokes.
2:04
Most recent of which is his nod to the
2:07
so-called WASPI women, women largely
2:09
born in the 1950s who felt that they've
2:12
been shortchanged on the state pension
2:14
because of a change to the pension age.
2:17
They claim that they were not made
2:18
aware. Other people claim they should
2:19
have just kept an eye on their post.
2:21
That's a debate for a different day or a
2:23
different video at least. But it is
2:25
again telling that Andy Burnham is
2:26
flirting with a billions and billions of
2:29
pounds worth of payouts to correct what
2:31
he continues to describe as an
2:33
injustice. Keir Starmer once said the
2:35
same thing, but then he got into
2:36
government and he looked at the books
2:37
and he said it's not a good use of
2:39
taxpayer's money and it's not
2:40
justifiable.
2:41
Will Andy Burnham have no choice but to
2:43
conclude the same? Who knows?
2:45
Alongside those pretty terrible
2:47
conditions of growth and unemployment
2:49
and inflation, he's also going to pick
2:51
up the can on defense spending, which is
2:54
a huge area of debate in Westminster at
2:56
the moment. The defense chiefs say they
2:59
need about 30 billion quid just to meet
3:01
their commitments, and it looks as if as
3:04
of today the Chancellor has managed to
3:06
cobble together less than half of that,
3:09
and even that's coming by telling other
3:11
departments they've got to cut spending.
3:12
She has hinted that taxes might have to
3:14
rise again in order to pay for defense
3:17
spending.
3:19
Which taxes? Again, this will be a
3:21
challenge for Andy Burnham.
3:23
I fear that wealth taxes, a variety of
3:26
wealth taxes, and taxes on business will
3:29
be where this government looks,
3:32
where an Andy Burnham government will
3:34
look. Wes Streeting, for he will be
3:36
around in a post-Starmer world, has said
3:39
that he's found a wealth tax that works,
3:41
equalizing the rates of capital gains
3:43
tax with income tax with some changes
3:46
around the sides. Andy Burnham has
3:48
talked about land value taxation.
3:50
They're all talking about which taxes
3:51
are worth looking at. Again, not to cut.
3:54
That's not in them. That's not their
3:55
instincts, but to raise.
3:57
And one of the reasons that they will
3:59
need to continue to find money well
4:01
outside the defense budget is to do with
4:04
the welfare budget. Again, something
4:06
which will fall on Andy Burnham's desk
4:08
if he becomes Prime Minister.
4:10
He will face the same Labour Party that
4:12
Keir Starmer and Rachel Reeves faced and
4:14
lost to when they tried to shave 5
4:16
billion quid off a 300 billion pound
4:19
budget. Uh they caved. They crumbled.
4:22
Labour MP's said, "No."
4:24
Welfare spending will increase. They've
4:26
reinstated
4:28
or rather they've scrapped the cap on
4:30
two-child
4:32
benefits. That was a decision that they
4:34
made just this week. We had a senior
4:36
Treasury Minister being grilled by MP's
4:38
asked about why they're not able to do
4:41
more to help people with student loans.
4:43
And she said, "We need the money for the
4:45
two-child benefit cap." So, there you
4:47
go. They you know, they're not even
4:48
hiding it. These are their choices. The
4:49
triple lock is an area which over the
4:52
years ahead is going to absorb tens of
4:54
billions of pounds.
4:55
We had Jeremy Hunt, the former
4:57
Chancellor in this studio last week,
4:58
made a very eloquent and coherent case
5:00
to scrap the triple lock, something
5:02
which is supported by the Resolution
5:04
Foundation, which is where the Pensions
5:07
Minister Torsten Bell used to work. Used
5:09
to head that organization. They're just
5:11
joining many other people in pointing
5:12
out the triple lock is totally
5:14
unsustainable. And as Jeremy Hunt said,
5:16
this isn't about cutting the state
5:17
pension. It's just about saying, "Let's
5:19
have a system whereby it increases in
5:22
line with the inflation." Leave aside
5:24
the the 2.5% or the wage growth
5:26
measures, whichever is higher, which is
5:28
how they currently calculate it. You
5:29
could save tens of billions of pounds.
5:32
There are tens of billions of pounds to
5:34
be found in the welfare budget. I tell
5:35
you where there aren't tens of billions
5:37
of pounds to be found, and that's in
5:38
taxing individuals or businesses any
5:41
more than this country is already taxed.
5:44
We are frankly maxed out in that regard.
5:47
But I do worry about what's going to
5:49
come this autumn. There will be another
5:51
budget. If you thought the speculation
5:54
ahead of the last two budgets steered by
5:56
Rachel Reeves was intense, wait until
5:58
you try and figure out what's going to
5:59
be in Andy Burnham's first budget.
6:03
As I said, I fear it will be tax rises,
6:06
it will not be spending restraints, and
6:08
it will be against a backdrop of no
6:10
growth and higher inflation. I'm afraid
6:13
the situation will call for a radical
6:16
combination of spending cuts, call it
6:18
austerity if you like, start with the
6:20
welfare bill, and indeed tax reductions
6:24
to try to take the pressure off people
6:26
and businesses in this country. It's
6:28
going to be a very important debate, and
6:30
I'm afraid it's going to get quite
6:32
messy.
6:33
That's why we need to talk about Andy
6:35
Burnham, and we'll talk about him again,
6:37
no doubt, possibly as soon as this time
6:39
next week. But that's it from me for
6:41
now. So, until then, stay up to date and
6:43
in the know on the City A.M. app and on
6:44
cityam.com, and I'll see you again
6:46
shortly.
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