In a recent session of Prime Minister’s Questions, Andy Burnham criticized the Conservative party’s past governance for rendering the UK susceptible to economic instability, coinciding with an increase in the nation’s borrowing costs.
During the exchange, Conservative leader Kemi Badenoch drew parallels between the current market pressures and the economic fallout from Liz Truss’s mini-budget. Burnham countered that the real issue was the Conservatives’ neglect in addressing the nation’s economic growth and debt levels, which left the UK vulnerable to financial shocks.
Badenoch pressed Burnham to clarify whether tax increases were anticipated in the upcoming October budget. The Prime Minister pointed out that his initial action upon taking office was to reduce taxes, specifically mentioning the VAT cut on energy bills, although he refrained from explicitly ruling out potential tax hikes.
As trading commenced on Wednesday, UK government borrowing costs saw another spike, with 10-year bonds rising by four basis points, reaching levels not seen since June 2008. This financial turbulence limits the fiscal flexibility available to Chancellor John Healey for the forthcoming autumn budget.
Some economists have linked this rise in borrowing costs to Burnham’s reaffirmation of his commitment to public control of utilities during his address in the Commons. However, most market experts attribute the increase primarily to a surge in oil prices.
Economist Jim O’Neill, a close ally of Burnham, expressed concern late Tuesday, stating that the Prime Minister’s remarks were not what investors wanted to hear amid the prevailing economic backdrop. He noted that traders were questioning the UK’s commitment to addressing its debt and managing expenditures effectively.
In her critique of Burnham’s extensive three-hour statement in the Commons, Badenoch remarked, “He didn’t reject any spending requests… While it’s nice that he aims to please everyone, a Prime Minister must be a leader rather than just a crowd-pleaser.”
Badenoch further stated, “He did not eliminate the possibility of tax increases. Instead, he engaged in a series of point-scoring. He claims to want new politics and honesty, yet the current cost of borrowing is significantly higher than it was under Liz Truss. The previous budget failed because spending was proposed without securing funding, which is precisely what he is doing now.”
Burnham defended his summer commitments as being funded and assured that fiscal discipline would be prioritized in the budget. He argued, “The volatility in global markets stems from the vulnerabilities the Conservatives left behind. We have achieved the fastest growth in the G7, with borrowing at its lowest in six years, and we are reducing the deficit quicker than any other G7 nation. This approach reflects problem-solving, not mere point-scoring.”
When pressed again about tax increases, Burnham reiterated, “I have already indicated that my initial moves were tax cuts, but I won’t preempt the budget discussions; that will be the responsibility of my right honorable friend, the Chancellor.” He further explained his decision to schedule the budget early to minimize speculation.
Although Burnham had expressed a desire to avoid excessive political attacks, he criticized Badenoch for her recent reshuffle in the shadow cabinet, particularly the removal of former shadow chancellor Mel Stride, who had opposed the Truss mini-budget, and his replacement with Treasury minister Andrew Griffith, who had supported it.
Burnham characterized Truss’s brief term as one that severely undermined economic confidence and negatively impacted mortgage holders. He noted, “Badenoch made a choice over the weekend to replace a shadow chancellor who acknowledged the Truss mini-budget was erroneous with one who contributed to its formulation.”
In a bid to reassure the markets, Burnham stated that his government would be founded on principles of fiscal responsibility. “We will adhere to fiscal rules while also striving to alleviate the cost of living challenges faced by our constituents. This is the strategy we intend to pursue, and I would recommend a similar approach to the opposing party.”
Burnham acknowledged his openness to O’Neill’s insights, saying, “Jim O’Neill provides me with straightforward advice. While we don’t always see eye to eye, we have collaborated to transform Greater Manchester into the fastest-growing city region in the country.”
Reflecting on the Conservative legacy, Burnham remarked, “During their time in power, we witnessed 14 years of stagnant growth and increasing debt as a percentage of GDP. The current market turbulence is a direct consequence of the vulnerabilities they left behind. We are on a path to recovery.”
