Burnham Says He’ll Break with Consensus. Healey’s Policies Say Otherwise

The change in Labour’s message is undeniably significant. Andy Burnham rails against neoliberalism, denouncing the ‘flawed thinking of the last forty years,’ on issues from privatisation to care, which has infected Tory and Labour governments alike.

This shift is no accident. The previous government’s refusal to even slightly amend this ruling consensus caused the crisis that engulfed Keir Starmer’s leadership. Its plan for the economy was deeply inadequate, and it was obvious even before the general election that this programme would lead to conflict with the party’s base — although few could predict the speed and intensity of the collision, which reflected much wider demands for improved living standards and a new direction in foreign policy.

That all this has given rise to a more serious discussion about the course of British politics is welcome. The left is naturally relieved that the Starmer–McSweeney era is over. A change in tone is welcome but no cause for euphoria. A sober view is needed.

Burnham’s speech to conference, where he set out various progressive policies, cannot be viewed in isolation. It must be read alongside that of the Chancellor, John Healey, who described the economic framework within which the government intends to operate, laying the groundwork for his Budget at the end of this month.

Healey made one thing clear: there is no plan for any radical departure from Treasury orthodoxy. Quite the opposite. His speech was largely a stern lecture on the financial pressures and constraints binding the government. It leant heavily on arguments about what is not possible. ‘The money New Labour had in the nineties,’ he said, ‘is simply not there now.’

There was no mention of finding resources by taxing the richest individuals or corporations. Instead, Healey is reliant on ‘growth’ to generate the conditions for social improvement. Like Rachel Reeves, he proposed no major programme of public investment to deliver that growth.

In a key passage that seemed designed to line up welfare cuts for young people, he warned against a ‘bigger and bigger benefits bill’. The Guardian subsequently reported that ministers are preparing ‘sweeping plans for welfare changes’ such as cutting disability benefits for under-25s. ‘Whitehall sources said the package of changes under debate was much bigger than previously thought.’

Reeves’s fiscal events involved extremely tight spending across the course of the present parliament, with real average annual growth in spending for many government departments either standing still — after years of austerity — or falling. At the same time. billions more was allocated to military expenditure. The principal advocate in Cabinet for increasing defence spending as a proportion of GDP was the defence secretary, who is now the Chancellor.

Under Healey, higher military expenditure will continue to drag down spending on more socially useful or productive programmes. Public services will be the losers in the drive for rearmament. This is projected to result in job losses and further economic stagnation, which will place social policies even further out of reach.

On top of this, Burnham’s government now faces demands from the OECD to make ‘stronger efforts’ to reduce public spending. The combined effect is to shrink the space for any meaningful measures on the cost of living or public ownership. Many new initiatives will instead have to be funded through zero-sum trade-offs, as with the National Care Service.

Several unions are pushing for alternatives that serve the interests of the majority: wealth taxes, social tariffs, renationalisation, public investment, reforms to visa rules, and an end to inflaming conflicts in the Middle East that push up prices at home.

Perhaps the government will hedge its bets at the forthcoming budget and push its bigger decisions into the spending review next year. But the central problem remains: as long as Labour is hemmed in by the Reeves-era Treasury, this will dictate the terms of its entire domestic programme, and ensure that it falls short.