Grasp the Nettle

10 years of Andy Burnham’s vision have been proclaimed with widespread jubilation throughout Labour. This is a big ask for an increasingly volatile British electorate, accustomed to booting out Prime Ministers at a pace that would make Chelsea Football Club blush. Indeed, Starmer was ousted within 2 years of a supposed 10-year mission. The significant polling boost Burnham has provided Labour – see FPW’s shift analysis for this week – has reignited hopes of a decade of Labour rule, becoming the largest party with 208 seats in the Commons by our projections. This has undoubtedly been aided by the collapse of Reform support, due to Farage’s by-election misstep, yet do not underestimate the powerful prospect of hope Burnham has provided to the progressive wing of British politics. His lofty rhetoric must be followed through with concrete action on issues such as the cost of living, our energy crisis and regional and economic inequality rife nationwide, yet the signs thus far are optimistic.  

 

This is certainly something that has been missing from British politics in recent years. The excited mood surrounding Starmer's first few weeks of government was purposefully cauterised, pointing to a long economic slog ahead. Far from ‘Things Can Only Get Better’, the honeymoon period for Starmer’s government was intentionally cut short due to fears of misleading the electorate about the state of the country's finances. Burnham should avoid this and harness his wave of popularity by setting out a direction and settling hard trade-offs early. Burnham has significant goodwill from the population, especially across the red wall. This can easily dissipate. By rightly signing up to the fiscal rules stemming from the 2024 Labour manifesto, Burnham has muffled calls for an early election. Yet he has equally tied his hands, to an extent, with plentiful fiscal levers becoming red lines he cannot cross.  

 

An extensive vision, much of which we have yet to see, has seemingly been identified. Political and economic decentralisation, romantic re-industrialisation, and a powerful and emotive commitment to end rough sleeping are worthy aims, yet of course there are costs. Government is fraught with trade-offs. Yet the important distinction between the start of Burnham and Starmer's government is the identification of a specific direction in which the nation must be guided. There was no fundamental diagnosis of the nation's problems in 2024. Burnham, by contrast, has just that. In his maiden speech outside 10 Downing Street, he committed to an explanation of how this significant redirection of the British state would be funded in the coming weeks. Perhaps a reformation of the tax system will take centre stage here.  

 

FPW will be publishing a series of articles on the prospect of a wealth tax in the coming weeks. Burnham may have this up his sleeve already. While a significant, annual wealth tax has only been proposed by the Green Party in the UK thus far, expect Labour to flirt with the concept to an increased extent. Indeed, both Wes Streeting and Burnham have spoken on the need to shift the focus of taxation in the UK from income towards wealth. Equally, taxation of so-called ‘unearned income’ such as dividends or capital gains could be reformed to reflect the progressive taxation system built into income tax. This is no silver bullet, as will be examined in future articles. Taxing the rich will not solve all the problems facing Britain. Yet there are significant inequalities present in the tax system, and if Burnham could confront this issue, he could bolster government funds whilst simultaneously ensuring a more equal distribution of wealth and a fairer tax system for UK citizens.  

 

Perhaps to grasp this nettle, Burnham will need a mandate. The question now is whether Burnham will go out and get his own from the British people. That would be incredibly risky. Labour is polling far higher under Burnham, yet a further 117 seats would be required for a fragile numerical majority in the Commons. Burnham does not need to go to the British people yet. There are 3 more years left in Labour’s 2024 mandate, which is ample time to improve the political mood of the nation in favour of the governing party. Burnham does not constitutionally require a fresh mandate to introduce a limited wealth tax. Perhaps this will be announced in the coming weeks, and depending on its success, will form part of Burnham’s wider package ahead of the next election. Yet the instability of British politics makes predictions, and forward planning for firms and individuals, largely redundant. Do not be surprised, however, if discourse around a wealth tax slowly diffuses from the media and the Green Party into the governing Labour Party.