Prime Minister Andy Burnham has firmly rejected characterizations of his administration as a “traditional tax and spend socialist government,” insisting he remains willing to make tough economic decisions. The comments follow warnings from former Bank of England chief economist Andy Haldane, who serves as an advisor to the PM, that financial markets have grown skeptical of Burnham’s commitment to reducing public expenditure.
Speaking to LBC, Haldane suggested that investor sentiment has shifted from the cautious optimism seen earlier in the year to a more guarded stance by September. He argued that the government’s primary fiscal weakness lies in its reluctance to cut spending, warning that markets now view the premiership through a stereotypical leftist lens, remarking that it resembles a “traditional tax and spend socialist government with better TikTok videos.”
During a visit to a manufacturing site on Wednesday, Burnham acknowledged that the October 28 Budget would be “challenging,” attributing recent inflationary pressures to the ongoing situation in the Middle East. However, he pushed back against Haldane’s assessment, stating that the economist’s view did not reflect the government’s actions. Burnham highlighted that he had already reprioritized spending over the summer to fund early cost-of-living interventions and had scrapped the digital ID rollout.
“So it’s not the case that we aren’t going to take difficult decisions. We will take difficult decisions to make sure the economy remains on track,” Burnham told broadcasters.
The dispute arises as the cost of UK borrowing has risen, narrowing the political options available to the government. Burnham has reaffirmed Labour’s manifesto pledges not to increase income tax, VAT, or National Insurance rates, while also committing to the previous government’s debt and spending targets. These constraints are compounded by rising debt servicing costs and a deteriorating economic backdrop linked to the conflict in Iran.
Predictions indicate that these factors may erode the £24bn fiscal buffer inherited from the Starmer administration. Since taking office, Burnham has allocated approximately £1.8bn toward cost-of-living measures, partly by reallocating funds within departmental budgets. A proposal to offset a cut to VAT on household electricity bills using money designated for digital ID has drawn criticism from allies of the former prime minister, noting that funding for the ID scheme was never formally confirmed.
Additionally, Burnham has committed to additional defense funding promised by Starmer before leaving office, though the timeline for reaching the target of spending 3% of GDP on military capabilities has been deferred until next year.
Haldane’s TikTok jibe is pretty harsh, but the markets don’t care about social media strategy. Borrowing costs will keep rising.
If we’re scrapping digital ID to fund energy bills, I’m all ears. At least someone is listening to ordinary voters these days.