Andy Burnham, a leading contender for the position of Prime Minister, is facing questions about the funding of his proposed policies following the release of economic data showing a decline in household disposable incomes and a downgrade in growth forecasts. Official figures released for the first quarter of the year indicate that disposable incomes, after accounting for inflation, fell by 0.8 percent. This metric, known as RHDI per head, has now decreased in four of the last five quarters. Concurrently, the economic growth projection for 2025 has been revised downward from 1.4 percent to 1.3 percent.
These economic indicators emerged as Burnham outlined a vision for what he terms 'good growth,' diverging from 'trickle-down' economics. His proposals include greater state ownership and a significant expansion of council house construction, aiming to be the largest program since the post-war era. He has also suggested rebalancing economic power and wealth away from Westminster and indicated a potential for increased taxation, particularly in the South of England. Fears have been raised that his plans, being developed by a potential future Chancellor Ed Miliband, could lead to tax hikes for wealthier families. Burnham has previously supported measures such as a property tax, increased capital gains tax, and a 'death tax' to fund social care, along with a revaluation of council tax that could impact bills in London and the South East.
Burnham's recent speech in Manchester emphasized a need to move beyond an economic system he argued has not served ordinary people since before the Thatcher era. He proposed a model that would ensure 'equivalent living standards' across all regions, drawing a parallel with German post-reunification legislation. A key element of his proposed 'Manchesterism' includes establishing a 'No10 North' base in the city, a concept critics have labeled impractical and costly.
However, the details provided in his address were sparse, and he did not take questions from the media. This has drawn criticism, with some suggesting he is seeking power without accountability. According to the Office for National Statistics (ONS), GDP grew by 0.6 percent in the first quarter, consistent with previous estimates. However, there are suggestions that some economic activity may have been accelerated in anticipation of geopolitical events, such as the conflict in the Middle East. Liz McKeown, Director of Economic Statistics at the ONS, stated that while first-quarter growth remained unrevised, the 2025 forecast was slightly reduced. Services were the primary driver of growth in the quarter, with contributions from computer programming, wholesale, and advertising, partly offset by declines in rental and recruitment sectors. Production and construction also saw overall growth, though construction only partially recovered from recent weakness.
The RHDI per head metric was introduced by Keir Starmer as a parliamentary goal. Data indicates that higher taxes and inflation eroded wage increases in the first quarter, pushing RHDI per head back into negative territory. Since the beginning of 2025, this measure has declined by 1.9 percent. The household saving ratio continued to decrease at the start of 2026 but remains higher than pre-pandemic levels.