Will Andy crash and Burnham?

Two weeks after Sir Keir Starmer’s landslide election victory, I wrote in the wake of his first King’s Speech that we had probably just witnessed the moment his government failed. All in all, I think events bore that out. So when I say that I think we can discern in Andy Burnham’s speech today the fault lines along which his ministry will eventually crumble, I do at least have a track record when it comes to early calls.

We cannot be so certain quite yet, of course, because a King’s Speech is a detailed legislative programme and a speech is just a speech. There may be a detailed, crunch policy programme underlying the Mancunian Candidate’s airy aspirations. But the odds of that are almost nil, and whilst we will go into more detail I honestly don’t think I can distill the essence of the occasion or the man better than did the BBC with this headline: “Burnham ends with optimistic note, but doesn’t take questions”. You bet he didn’t.

The contents of yesterday’s speech can be divided into two categories: twirling towards freedom, and devolution, which is twirling towards freedom with extra steps.

Given that Burnham has pledged to stick to the fiscal rules, that doesn’t leave him any room for radicalism

As I’ve noted before, Burnham is (barring a very significant upset) going to enter office subject to exactly the same constraints which have destroyed Sir Keir Starmer’s government: awful public accounts being pushed in the wrong direction by awful demographics, zero fiscal headroom, voters furious with repeated tax rises and a decaying cost of living, recalcitrant backbenchers who want to indulge their id and only do things which make them feel good.

Given that Burnham has pledged to stick to the fiscal rules, that doesn’t leave him any room for radicalism. And I don’t mean “much”, I mean “any”; as she has since the start of the Parliament, Rachel Reeves is borrowing every penny the fiscal rules allow, recklessly betting that everything will go right and discovering yet another “fiscal black hole” when it doesn’t. 

This means that if a new prime minister wants to fund new things, he (or, even in the Labour Party, technically she) would need either to break the current fiscal rules, raise taxes even more, or make substantial cuts. Burnham probably won’t do the first, unless he wants to go “the full Truss”, and lacks the political space to do the third, given that Labour MPs have ousted his predecessor precisely because he tried to make them do nasty, sensible things they couldn’t tell themselves “Labour stories” about. A Labour MP’s understanding of bringing down the welfare bill “fairly” — Burnham’s stated ambition — is raising it.

Which leaves option two. Now there have been some interesting noises coming from the Burnham camp on taxation, with mention of things like a major council tax overhaul, hiking capital gains tax, and devolving some tax revenue (which we’ll deal with later). 

But the detail of all that is essentially unimportant. The fundamental choice when it comes to tax is between a) raising significant revenue through a broadly-based tax that makes lots of people very angry and b) raising little-to-negative revenue through a narrowly-targeted tax that people avoid, either through clever accounting or simply changing their own behaviour. If Burnham does the former, people will hate him; if the latter, it’ll just be another VAT on private schools or crackdown on non-doms that changes the State’s trajectory not one degree, at least not upwards.

Which brings us to devolution. Now devolution is a fantastic agenda for somebody confronted by difficult circumstances they have no idea how to meet, because it is pure process from start to finish. If you argue that the way to unlock growth is to devolve power to other people, you are literally making the delivery of growth other people’s problem. Even if the results are unimpressive — even if the results are bad — you’ll still be able to say that you did your bit. You brought power closer to communities. If those communities haven’t delivered growth yet then ah, well. Perhaps they need more powers.

(If this sounds excessively cynical, it is more-or-less exactly what has happened with regards to devolution in Scotland and Wales, of which it was originally promised that it would strengthen the United Kingdom, remove the threat of nationalism, and deliver better governance and public services too. Not a single one of these things has happened, but those peddling the devolution agenda in the Civil Service and think-tanks don’t let that trouble them.)

On paper, therefore, a focus on devolution looks like a handy out for Our Friend in the North. With Labour’s back is against the fiscal wall there will be a premium on any policy which can be done for free, by which I mean which can be done without an immediate, up-front price tag. (The second-order consequences of such policies may cost lots of money, but “second-order consequences” are dark magic employed by bad people who want reasons not to do nice things that are free.) This can mean banning things (evictions), legalising things (vagrancy), or tinkering with the constitution.

But even this has its limits. Setting aside for now the thorny but important question of whether lack of devolved power is even the problem, there are good reasons that English devolution has proven such a tricky policy area (although Burnham, who like Boris Johnson talks as though tackling the north-south divide was a new idea he just had, might not know this). 

For example, the areas to which it makes most sense to devolve power economically very often do not line up with people’s local identities. This matters a lot of democratic self-government is to work and gets more fraught the more power you devolve. Then there’s the thorny question of revenue. On paper, letting local government keep more revenue if it raises it sounds sensible enough. But if you withdraw centrally administered fiscal transfers when they do, they have no incentive to do so, and if you don’t the result is a heavily distorted, subsidy-driven political order that doesn’t save you any money. To say nothing of the fact that, as mentioned above, HM Government is operating right at its fiscal limit and cannot afford easily to be parted with any revenue at all.

Both those options would be difficult and controversial, which, based on present form, is good reason to suppose Burnham won’t do either

Social care is probably as good a candidate as any for a real litmus test of Burnham’s devolutionary credo. As I set out in a recent paper for the TaxPayers’ Alliance, local government has been financially crippled by Westminster’s imposition of unfunded statutory obligations. Burnham could either transform the finances of town halls across the country by taking those obligations back to the Treasury, and face the tricky question of how to pay for them, or more radically devolve to local government control over social care policy, offering real local control (which people like) at the expense of allowing a postcode lottery (which people hate). 

Both those options would be difficult and controversial, which, based on present form, is good reason to suppose Burnham won’t do either. But if he doesn’t, the odds of his devolution agenda amounting to much are very slim indeed.

Perhaps the most symbolically charged augury of doom of them all, though, is his plan for a “Number 10 of the North”. Burnham claims this will be the “nerve-centre of a rewired Britain”, but it seems as likely to be his political tomb. In our political system, it is important for the Prime Minister to be close to Parliament, not just to vote but to be close to his MPs and the national media, both of which will remain in London. Given that Starmer’s downfall has come in part because of his refusal to practice tea-room politics, it is ominous to see his likely successor proposing to build himself a Fortress of Solitude in his comfort city-region. Not to do the meme, but they even made a TV episode about how that goes.

Sorry, dear reader, this was a bit of a long one. But I hope at least that you now understand why Burnham didn’t take questions.