Burnham will struggle to exorcise Labour’s historic weakness

No one can tell whether Andy Burnham will be a more successful occupant of Downing Street than his recent ill-fated predecessors. Britain’s most consequential postwar prime ministers were Clement Attlee and Margaret Thatcher, and few predicted their success.

But they were working within the grain of history. In 1945, the country demanded from Labour the type of radical change it was suited for, so that “homes fit for heroes”, promised in 1918 but never delivered, would become a reality.

In 1979, following the wave of strikes during the “winter of discontent”, the public sought from the Conservatives a less interventionist state and tighter constraints on trade unions.

For Burnham, in contrast, the current needs of the country conflict with the instincts of many Labour MPs and probably his own as well.

More than half of Labour’s MPs — 231 of 411 — entered parliament for the first time in 2024 after campaigning against “Tory austerity”. Yet a new form of austerity is what the country now needs if the unsustainable level of borrowing is to be brought down and resources shifted to defence.

Instead Sir Keir Starmer’s mantra was change. He sought extra funding for the NHS, more teachers, more police, net zero, easing the cost of living and ending austerity — all to be paid for by “turbocharged” growth, which, sadly, has not occurred.

He was removed because Labour MPs wanted the government to speed up the pace of change, not because they wanted to alter its direction.

To Starmer’s mix, Burnham now adds municipal socialism and fiscal devolution. Powerful mayors are unlikely to prove models of fiscal restraint. They will want to spend on reconstruction projects as Burnham has done in Manchester. They will strain the statutory restrictions on tax raising and borrowing to the limit.

Labour’s leitmotif is to improve the lives of the underprivileged. Its strength lies in its humanity. But its weakness is its over-optimism and spending money that is not there.

This is not new. In August 1931, Labour’s first prime minister, Ramsay MacDonald, facing a flight of capital, failed to persuade his cabinet to cut spending. The party split and found itself in opposition for 14 years.

“Let’s go with Labour” Harold Wilson urged voters in 1964, hoping that by boosting demand, he could raise the rate of growth. In 1966, however, Labour hit the buffers and imposed a wage freeze. After devaluation in 1967, there were massive cuts in public spending.

In 1974 Wilson had a second innings, but seemed to have learnt nothing, borrowing to pay for food subsidies, price controls and Danegeld to the trade unions to preserve the “social contract”. In 1976 the IMF demanded spending cuts.

Chancellor Denis Healey had denied that such measures would be unpopular. “At the Labour clubs you’ll find there’s an awful lot of support for this policy of cutting public expenditure. They will all tell you about Paddy Murphy up the street who’s got 18 children, has not worked for years, lives on unemployment benefit, has a colour television and goes to Majorca for his holidays.” Plus ça change.

But the cuts were unpopular with Labour MPs and ministers. Healey and subsequent prime minister James Callaghan had to convince not only the left of the party — Michael Foot, Tony Benn and Barbara Castle — but also the Keynesians, led by Anthony Crosland, author of The Future of Socialism, the bible of social democracy. Callaghan succeeded only through extraordinary political skill.

In a globalised world, when the markets lose confidence, the government must take remedial measures. Since Starmer’s government has allowed public sector net debt to grow to nearly £3tn, and balked at even modest welfare reforms that would have made a small improvement to the debt figures, it would not be surprising were the markets to lose confidence once again.

The current state of the public finances is unsustainable. Burnham may put them on a sustainable path. But it is possible we may face them being brought under control by the IMF, perhaps after an economic crisis as in 1976.

Can Labour escape its past? A history that, as the American novelist William Faulkner reminded us, “is never dead. It is not even past.” Can Burnham really exorcise Labour’s inheritance? The odds are against him.