Less than three months after taking office, Prime Minister Andy Burnham is already on a "downslope," according to a former adviser. Andy Haldane, who previously advised Burnham, stated that the Prime Minister's "high-water mark" has likely passed, predicting economic and political challenges as families face a "cost-of-living squeeze" this winter.
Haldane, currently president of the British Chambers of Commerce and a former chief economist at the Bank of England, also described Burnham's proposed national care service for older adults as well-intentioned but "probably unfundable" given the nation's "precarious" fiscal situation. The Prime Minister had outlined his vision for an NHS-style service, funded by adjustments to the state pension's triple lock, during his Labour Party conference speech.
However, experts, including those at the Institute for Fiscal Studies, have questioned whether the projected savings would be sufficient to cover the costs of such a plan. Haldane suggested that Burnham's conference speech may have represented the peak of his early premiership.
"I suspect the high-water mark, both economically and politically, was probably Andy's speech a couple of weeks ago," Haldane told LBC's Nick Ferrari at Breakfast. "You know, we're now seeing prices on the forecourt going up, we'll see food prices going up as we approach Christmas, we'll see energy prices going up at the turn of the year. That cost-of-living squeeze will be real. It'll probably be compounded by a cost of borrowing rise. So, I think from here we're into the downslope economically and possibly politically as well."
When asked about the affordability of the social care plans, Haldane elaborated, "I think Andy's intentions are honourable, but probably unfundable. Everyone wants to tackle the social care crisis. Everyone wants to tackle our defence problems. Everyone wants to tackle the NEETs crisis among young people. But they all come with a fat cheque applied. And at the moment, this is an unforgiving environment for any borrower. I worry that we are in a precarious position fiscally."
The UK's public finances have been a concern, reflected in global bond markets where the government faces higher borrowing costs compared to other G7 nations. The yield on ten-year UK gilts has recently reached 19-year highs, exceeding 5.5 percent, while 30-year yields have topped 6 percent for the first time since 1998.
Although Haldane and former Goldman Sachs chief economist Jim O’Neill served as informal advisers to Burnham during his ascent to prime minister, neither has taken government positions. Haldane has previously expressed criticism of Burnham's approach, stating that the Prime Minister is increasingly seen as leading a "traditional tax and spend socialist government with better TikTok videos." He has also warned that Burnham's "unwillingness and/or inability" to reduce public spending is a significant vulnerability, suggesting that without action on this front, the Prime Minister will remain beholden to the bond market.