Having spent 30 years as a Labour MP, I have long argued that tinkering around the edges with the UK’s badly skewed economy simply will not do. Andy Burnham seemed to agree when campaigning in the Makerfield by-election in June.
Back then, Burnham promised a new direction, a break with neoliberalism and the hope of a better future. He seemed to understand that the country needed a rupture with the status quo in order to address the underlying economic, political and social malaise.
Within weeks of winning his seat, he became Labour leader and entered Number 10 without a contest, meaning there was no real space to interrogate his political programme. The Labour Party and the country took him at his word, because we had to.
The Budget, then, is the first time Burnham’s vision has been properly tested. We should judge it by a ‘Makerfield test’: if the policies unveiled do not work for his constituency, or constituencies like it, they do not work at all. And by that measure, the Budget has failed.
Chancellor John Healey said he would secure growth in every postcode. A £100 one-off energy payment is very welcome, but the energy sector has been ripping consumers off for a generation, while retail giants take advantage of their market power by driving up the cost of groceries. If we really want to help people in every area of the country, why not take on the privatised monopolies directly, not with a few more rules, but with proper public ownership?
Finding additional money for defence is an inevitable choice for a chancellor who helped precipitate Keir Starmer’s downfall by resigning as defence secretary. But the defence industries are concentrated in a small number of regions and will do little in terms of growth for the large part of the country.
Healey has delivered a Budget within the same fiscal constraints as his predecessors, one that simply does not shake off the cloying grip of neoliberal ideology, Treasury orthodoxy, and the usual vested interests lobbying the government. If the chancellor cannot deliver radical change at a macro-economic level, the only option is to tinker around the edges with micro-economic policy. But that strategy simply doesn’t transform the country in the way Burnham promised Makerfield, and Britain, he would.
What is clear is that over-reliance on official institutions, which Burnham has spoken strongly against, has produced a Budget that is at best mildly progressive.
Of course, there are good things in the Budget. Healey’s pledge that every penny of the Miners’ Pension Fund will go to miners was welcome, but it should never have been in doubt – and questions still remain over when and how that will happen.
It is also welcome that the chancellor has recognised the need for “breathing room” from the cost of living crisis, especially with a 6% levy on banks’ profits above £100m. But the truth is that this levy is less than it ought to be, and will apply for only 15 months. It does not go far enough at a time when banks make billions in super profits as many struggle.
NHS founder Nye Bevan once said socialism is a language of priorities, a mantra that any Labour chancellor should heed in a Budget. That’s why it is disappointing that the chancellor is pushing ahead with plans to abandon the pensions triple lock, a move projected to save £15bn a year, while ignoring policies such as equalising capital gains tax, which could raise over £19bn a year by 2030. Britain doesn’t have to choose between offering a decent pension and decent care. We can, and should, provide both.
The country needs to fundamentally rupture with the neoliberal status quo. In recent decades, the government has ceded control of the main economic levers to the Treasury, the Bank of England and the Office for Budget Responsibility, making it difficult for any government to intervene adequately in the economy.
Indeed, the UK’s institutions have been colonised by neoliberalism. We have witnessed a long history of catastrophic forecasting failures due to Whitehall orthodoxy: from Denis Healey’s misjudged swingeing cuts in the 1976 IMF crisis to joining the European Exchange Rate Mechanism in 1990 and exiting two years later on Black Wednesday, the promotion of austerity over much of the past two decades, the blind eye turned to deindustrialisation, and most recently, the miscalculations of the Truss Budget.
Burnham previously criticised our central institutions, arguing that top-down neoliberal economics doesn’t work. Why, then, expect the country to continue to accept the Treasury’s orthodoxy?
His government has spoken a lot about a “radical rewiring” of the state to restore democratic control. But the Budget was always touted as a ‘safety first’ fiscal event, with the promise that a 10-year plan is on its way to address the underlying crises in our economy. My concern is that putting off big decisions until next year’s Spending Review, as the chancellor has said he is doing, suggests potential cuts down the line.
The truth is, the UK’s economy is still constrained by tight fiscal rules, which will not deliver the urgent changes needed, especially for communities such as those in Makerfield. Indeed, I would advise that the chancellor needs to be careful to avoid the accusation that he is starting to look a lot like his much-criticised predecessor, Rachel Reeves.
