Burnham rejects 'tax and spend socialist' comments

Burnham dismisses 'tax and spend socialist' remarks

Andy Burnham has said he is ready to make "difficult decisions" on the economy, after a former Bank of England chief economist said investors were concerned about his willingness to reduce spending.

On Tuesday, Andy Haldane, who has advised Burnham on economic policy, said financial markets had become uneasy about his plans and now viewed his premiership as a "traditional tax and spend socialist government".

Burnham rejected that claim, saying he would not take risks with the economy and had already made hard choices since entering office.

The comments came as recent increases in the cost of UK borrowing made the government's political choices more difficult ahead of next month's Budget.

Haldane said the prime minister faced a "straight choice" between raising taxes and cutting spending at the annual spending statement on 28 October.

In an interview with LBC, he urged him not to increase taxes again, but said investors were wondering whether he was willing to risk angering Labour backbenchers by cutting public spending.

"The fiscal Achilles Heel of this government thus far has been its unwillingness and/or inability to cut public spending," he told the radio station.

"Within financial markets, we've gone from the cautious optimism of the summer months to the studied scepticism of September. The market now suspects that this is a traditional tax and spend socialist government with better TikTok videos."

Speaking during a visit earlier on Wednesday, Burnham admitted next month's Budget would be "challenging", blaming the "situation in the Middle East" for recent rises in inflation.

But he rejected Haldane's description of how markets saw the government, telling broadcasters: "That doesn't tell the story. We are not that."

He said he had already made difficult decisions on public spending, including "reprioritising" some government spending over the summer to pay for his early cost of living announcements, and scrapping the rollout of digital ID.

He added: "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 has restated Labour's manifesto pledges from the last general election not to raise the main rates of income tax, VAT or National Insurance, sharply limiting his options for raising revenue.

He has also promised to stick to the previous government's debt and spending targets, a commitment made harder by recent rises in the cost of servicing the UK's existing debt pile.

There have been forecasts that the increase, together with a worsening economic backdrop from the Iran war, will significantly reduce the £24bn buffer against those targets he inherited from the Starmer government.

Since taking office, Burnham has committed about £1.8bn to cost of living measures, some of which is to be paid for by moving money within the existing budgets of government departments.

But a plan to finance a VAT cut on household electricity bills using money set aside for the digital ID programme was criticised by a Starmer ally, who noted that funding for that scheme had not itself been confirmed.

The prime minister has also promised extra defence funding promised by Starmer before his exit over the summer, although a decision on when to meet a target of spending 3% of GDP on the military has been postponed until next year.