‘The economy is not magically better’: Inside Burnham’s Budget dilemma

As Andy Burnham travels to Liverpool this weekend, three questions loom over Labour’s annual party conference. What, exactly, can the Prime Minister do to give voters hope after two years of miserabilism under Sir Keir Starmer? How is October’s Budget going to be anything other than grim? And can he make a successful fist of his premiership without calling an early election? Last week Hayden Munro, Burnham’s political secretary, set out the “narrative” for conference in a private meeting with special advisers in No 10’s state room. Shorts “Bringing back hope” is the conference tagline, Munro told attendees. In interviews, meetings and at fringes, ministers will push the message for “a fairer, more united country,” to “restore the right values,” and “put the care of people as the first consideration”. Burnham will pledge to “make the choices that are needed to end rough sleeping, solve the social care crisis and get more young people into work,” alongside promising to run a “cost of living government,” with further “immediate action” to “provide the breathing space people need.” He will outline plans to devolve power “out of Whitehall,” to “reindustrialise Britain” and regain public control of “the essentials in life” including energy, water and housing to “make them affordable again.” Energised by a series of announcements over the summer and a visibly upbeat Prime Minister, Labour heads to Liverpool in a better mood than the last two years. Such is the upbeat spirit, the Prime Minister’s aides fear he will be overwhelmed by selfie-seekers and miss important meetings. “We’ve had to squash what would be a usual half-hour appearance down to 15 minutes and squash 15-minute slots to brief brush-bys in an attempt to try to keep huge demand from hosting organisations happy,” one conference organiser told The i Paper. “So that’s good news, considering [if Starmer had remained in post] we could have been begging people to come along to our conference and spend money at it,” they added. Nerves about the Budget If there is a cheerfulness about the conference, there is also a growing sense of nervous anticipation about the Budget. “It’s a bit bizarre, having a conference in the middle of the pivot from optimism to ‘the Budget is going to be difficult’,” one Labour MP said. A month out from his statement to Parliament, Chancellor of the Exchequer, John Healey, will talk to business leaders in Liverpool. But unlike Burnham’s glad-handing, Healey will have to spend some of his time working on his Budget plans over room service in his hotel. Back in London, Treasury officials are examining increasing taxes on banks, oil and gas companies and gambling, with no final decisions yet made. The window for public and business submissions to the Budget ended last week, and Healey hosted the final of a Dragons’ Den-style competition in which Treasury civil servants, from apprentices to IT workers, presented Budget suggestions. Burnham and Chancellor John Healey are said to be wary of further tax rise speaks (Photo: Annabel Lee-Ellis/AFP) Treasury insiders have suggested Healey does not want to announce a wide-ranging Budget. Burnham, meanwhile, warned the left of his party last week he is mindful of how high taxes are already. In her two budgets, former Chancellor Rachel Reeves raised taxes by a cumulative £68bn in 2029-2030, the latest point Burnham can call an election. Nonetheless, most economists expect Healey will have to raise taxes to help plug the headroom gap in the public finances as borrowing costs keep rising, driven by the US war in Iran. “We’d be utterly irresponsible to pretend that a change in personnel means that the difficult economic picture is somehow magically better,” a Labour source said. Change in leadership style Nevertheless, a change in leadership brings about a shift in styles. A government insider who has worked with both Starmer and Burnham said: “Andy has a very strong initial opinion on everything, even if he’s not read the briefing. He’s very instinctive. And that can be a good and a bad thing, because you have a values framework in which you know where he’s going to go. “But sometimes he’s like, ‘I don’t like that. I want a better answer’ without really understanding why the answer is not better. That can get him into trouble, such as during the prison places crisis,” the source said. Some in the party think Burnham created an arbitrary line to decide which prisoners would qualify for early release by guaranteeing the killers of PC Andrew Harper would remain behind bars. This caused a backlash from other victims whose offenders were freed to make room in jail cells. Burnham bounce sparks election chatter There are signs the public likes this new, instinctive communicator. A Burnham bounce in the polls has sparked talk of an early election, which was turbo-charged when Reform UK received a record-breaking £72m in donations from two cryptocurrency billionaires this month. Within Labour circles, debates varied from how to retrospectively label the payments illegal to whether Burnham should accept the situation and call an election swiftly before Reform can use the funds. At a mid-September Downing Street rose garden reception for party donors, most of the Cabinet were out on a charm offensive, mingling with benefactors including former Autoglass boss Gary Lubner and Fran Perrin, one of the three daughters of David Sainsbury, the scion of the supermarket dynasty who was made a Labour peer in 1997. Celebrity potter Grayson Perry, another donor, added a colourful note as Healey stepped in for Burnham who was mourning his father. “It was a thank you for what you have done and a thank you for what you’re about to do, or we’d like you to do,” according to another source close to a party donor. A large-scale seat by seat poll published by YouGov last week did nothing to diminish the chatter among Labour MPs. It put Labour as the largest party, with 241 seats. Kemi Badenoch’s Conservatives would be in second place with 130 seats and Reform in third place with 123 seats. Senior No 10 staffers held private discussions about the levels of polling support they would need to call an election. “They’ve had conversations about what would the parameters be… but I don’t think they’ve made a decision, and ultimately I don’t think they will,” according to one recent visitor to No 10. “Meanwhile, MPs seem to want to talk themselves into it.” Burnham has been quick to dismiss such talk, however, telling reporters on Friday that the next election will be held in 2029, adding: “All of this speculation on an early election, I can knock that dead.” Lessons from history Bound by the 2024 manifesto, which doesn’t allow higher income tax, VAT or national insurance, some Labour MPs think Burnham would have to seek his own mandate to raise taxes. However, Burham already believes the country is overtaxed. What’s more, he has learnt lessons from history. In September 2007 newly-installed prime minister Gordon Brown toyed with the idea of calling an early general election. Shortly afterwards, when the Conservatives took the lead in the polls, Brown changed his mind. “We’re just trying to get rid of the speculation because what Brown let happen was it built up around him and he didn’t damp it down because he was testing to see whether he should or shouldn’t. And he looked weak when he didn’t,” a senior Labour source said. Burnham has learned lessons from his former PM Gordon Brown’s indecision over calling an early election (Photo: Arthur Edwards/Getty) No 10 Chief of Staff James Purnell has privately told MPs there are no plans for an early election. Sceptics say, naturally, he wouldn’t tell gossipy parliamentarians. But it is one thing to keep the party and country guessing; there are constitutional considerations too. At some point Burnham would have to inform King Charles as head of state. Sources told The i Paper outriders for the King had been concerned enough by speculation that Burnham could go to the country as soon as December that they made discreet inquiries of senior Labour officials at the Goodwood Revival meeting last weekend. Amid vintage cars, a Vespa rally and live jazz, an unofficial but clear message was passed that Burnham has no plans to call an election. Labour loyalists hoping for further signs of an upcoming election will be let down at the conference. Constrained by the harsh fiscal reality, Healey’s address on Monday and Burnham’s on Tuesday will steer clear of populist offers. “Andy’s speech is going to be visionary and optimistic and have real content, but both the speech and the Budget would be peppered with retail short-term transactionalism, if that was where the thinking and planning is at, and it really isn’t,” a Labour insider observed. Autumn storm clouds Back in London, the Budget is not the only cloud on the horizon. Labour’s party managers are concerned about a large-scale rebellion on the Northern Ireland Troubles legacy bill within a fortnight of Parliament reconvening. Burnham is also waiting on key reports on welfare reform. Later this autumn, the Prime Minister will launch a year-long consultation on his 10-year-plan for government. Baroness Casey will present her recommendations for social care reform next summer; an issue Burnham has called a personal priority. None of these plans will be cost-free. Although Burnham promised to prioritise domestic issues, he has had to address international obligations. But considering his debut trip to the UN General Assembly, he appears to be limiting his time overseas. A whirlwind trip to New York last week saw the Prime Minister on US soil for 24 hours, cramming in meetings with 25 world leaders. Burnham’s whirlwind trip to New York saw him meet Donald Trump and other world leaders (Photo: Julia Demaree Nikhinson/AP) They included Donald Trump, who couldn’t resist a jibe at Starmer. US-UK relations are “more up now than they were with your last prime minister, let me put it that way,” the President remarked. ‘Getting it right’ Meanwhile, Burnham so far appears to be captaining a happy Labour ship, helped in No 10 by his long-time friend, Purnell. “James is very much not a yes-man to Andy. But he is very respectful of the fact that Andy is the Prime Minister, and he doesn’t want any of the drama of being the story like [former chiefs of staff] Morgan McSweeney or Sue Gray,” according to a Labour insider. “The incumbents in No 10 are remarkably respectful of Keir, his government, his people, his achievements and will never talk it down, but they were clearly studying what not to do in great detail and how to get it right,” the source said. Downing Street declined to comment. Getting it right is Burnham’s chief concern. Labour knows it cannot afford another change of leader before the election. The party’s conference is unlikely to be an issue. Getting the Budget right is another matter entirely.