Burnham's first budget – trick or treat?

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0:37hello and welcome to coffeehouse shots the spectators daily politics podcast i'm patrick gibbons and today i'm joined by james heel and michael simmons michael it's budget week it's the week of halloween am i stretching the link too far to ask you will this budget be a trick or a treat what an introduction what a link i feel like it's gonna be neither if it's how the Treasury have trailed it, it's going to be pretty uneventful. I think the Treasury would like to think that there's a couple of treats, potentially one on how they fund defence. We've talked on this podcast and on other podcasts, tons about puffins, this idea where you can make capital investments in something that gives you an asset and also a liability so that you kind of are balanced out for your debt fiscal rule.

1:24So if they are doing that, Healy will, of course, be presenting that as a treat. Although I think some economists would say that that's actually a bit of a trick because of the fact that regardless of whether it squeezes in within your rules, you still have to go to the bond markets for your initial borrowing outlay to fund that. And you're doing that at a time when yields are elevated. There is definitely, according to the Times, going to be a treat for pensioners, though, because I've come down from my post-Labour conference high where I was so happy that my one wish in life, the abolishment of the triple lock, was what seemed to be beginning to happen with the modest changes that the Prime Minister proposed there in Liverpool.

2:07But Stephen Swinford of The Times has reported last night that pensioners are going to be saved from a niche little tax effect that this would have brought in because at the Budget on Wednesday, John Healy is almost certainly going to confirm that under the rules of the existing triple lock, the state pension will increase by 3.9%, taking it to over£13 ,000 a year. Trouble with that is the personal allowance, as everyone knows, is£12 ,570 a year. So it would mean you would break that principle that the state pension is a tax-free benefit. it. But fear not, because John Healy seems to be introducing the quadruple lock, which is to suggest that if you are a low income person, so for example, if your only income is the state pension, then you will not have to file a tax return, you will not be taxed on it.

3:08So there you go. Another benefit, people would say, that applies to pensioners and nobody else. However, I think the devil is in the detail here, because my reaction is to be like, oh God, you know, this is going back in the wrong direction. But if it is as suggested, we don't know the details until Wednesday, but if it is just the exemption is people whose sole income is the state pension, then I actually don't think that is a massive problem. Because of one of the biggest changes actually to personal finances in this country of the last few years has been workplace pensions and auto enrollment.

3:43it means that over the next decade there is going to be hardly any people that retire without some kind of private pension income. So actually each year as we go on there's going to be fewer and fewer people who this exemption would apply to. So it's perhaps actually not worth getting too many bees and too many bonnets. I would say Patrick that you're still about trick or treat. I mean the most hoping in the Treasury I think to avoid an October surprise. really this budget I think has been dubbed by critics like Robert Jenrick the Mignana budget there's actually going to be not much in it and I think that it's been quite striking that the announcements over the weekend I mean what was all that talk about no budget leaks we see a couple of days full of budget rabbits and headlines etc are fairly worthy initiatives but not particularly exciting ones I would say this isn't going to be a home at this stage we read in the reports today in the papers that there's going to be billions more defence but it looks like there's going to be a delay in the 3 % by 2030 in defence spending.

4:41We see also about homelessness. That was the pledge that Andy Burnham made on the steps of Downing Street. There's going to be a doubling of the budget to get people out of homelessness. Everyone will be offered a bed who's homeless by Christmas, a way to fulfil that pledge. And then we also have, we said, the announcement about pensioners that John Healy got out there. And I think that this is why it's fuelling some of the speculation about an early election, because it's very much sort of battering down the hatches. It's very much trying to sort of keep some of those key voters on side and keep some of those progressives who were impressed by Andy Burnham's early stages very much part of the tent.

5:12But overall, it does seem that it's very much more about, I'd say, a sort of net neutral budget rather than anyone that gives loads of sweeties or promises lots of shocks. And James, what do we know of the dynamics within Labour ahead of Wednesday? You know, it's Andy Burnham and John Healy's first budget. Who at the moment seems happier? Who might be unhappy? I thought it was our old editor-phrase announcement actually read a great point in his Saturday Times column when he suggested that the most effective ministers at the moment were some of those who are more of the most quiet. And I actually think that there is something to be said for that.

5:41Obviously, the question around spending, I think there'll be some kind of agreement struck between John Healy and West Streeting, his successor as Defence Secretary, in terms of keeping that as a kind of issue where Labour can keep the whole military establishment together. It's interesting actually, I read over the weekend that the defence chiefs are going to be allowed to start speaking out again, so I wonder what they'll be saying. I think the big focus now is not really about the economy, it's more about the migration. And obviously we saw that last week, Miata Van Bulla versus Siobhan Amoud, that's going to be one.

6:11And I think the Tories dare play in the classic game of opposition. It's a letter from Chris Philp, page two of the Times, in which he suggests that Siobhan Amoud should resign if she can't get her delays to ILR through parliament. and that's very much ramping up the pressure trying to exacerbate that Labour splits on legal migration. I do think that overall when we look at the current direction of the government there is something of a tension though which is that on the one hand we've been in a burn promising hope, lots of upbeat policies almost kind of going back to classic Labour. On the other hand we do have people like West Street in talking about resilience and putting all this danger about sort of you know we need to be preparing for all the crises that are coming for this government and so there is that tension there.

6:48I think it points to the thing I would credit at the heart of the Burnham agenda. he's good at politics but less good at statesmanship so on the one hand I think he's playing the game of politics very well in terms of getting the progressive block all behind him, he's trying to get through these big fiscal events without any sort of major headaches but on the other hand I do wonder are we actually really preparing for the economy that West Street Ingers we need to have and I don't think we are I think the other factor that we've not really talked about yet is how lucky Andy Burnham could be about to be because on the one hand you would say look Labour are just smashing everyone else in the polls at the moment that with reform and and tories splitting the rest of the vote it's hard to look at any election whether it's next week or in three years time and that labor don't come out the largest party of and the argument against that would be well reality hits when you get to these events like the budget and you can't fix the fundamentals however i do think it's worth seeing how surprised everyone has been at the growth figures in the first half of this year they have been better than expected the imf has been happy with them and yes we're used to this kind of seasonality in britain where growth slows down in the second half of the year but actually if you look at what's been driving the growth it's been the early kind of onset of ai now could it be that actually burnham doesn't have to do anything at all and become a really successful prime minister just because he gets all this ai growth that he's got absolutely nothing to do with so i I think he could be about to be one of the luckiest leaders we've had in recent history.

8:17I mean, Napoleon liked lucky generals, didn't he? I mean, and it is interesting. I suppose the question is about how much you credit the success of Labour with Andy Burnham coming in. I would say he has benefited from some circumstances under his control, not least, I think, the tipping point in terms of reform and the media coverage. I'll be very interested to see this week on Thursday council by-elections. Now, I take a degree of pinch of salt about this because reform adopts what I would call the Nicaraguan approach to these local elections, which is that they get all their massive military force in Milbank Tower and tend to blitz different council by-elections.

8:48But we've got a few interesting ones coming up in Bassett Law and Dudley. Those are respectively held by Labour and the Conservatives, and reform obviously hold the one in Nottinghamshire. We'll be interested to see what we get on that, given we saw, I think, four Conservative wins last Thursday. So I think at a time when the right is quite split and the Conservatives seem to be doing a bit better, albeit not up on 2024, and reform clearly declined from where they were a year ago, So Burnham seems to be the beneficiary of that. I do think there is something, though, that we often on podcasts like this, and I think in the broader press talk about his issues around being a communicator who maybe says too much.

9:21Maybe there's something to be said for that after the buttoned up approach of Keir Starmer. And James, we also had more comments over the weekend from Andy Burnham over freedom of movement and rejoining the EU. What should we read into that? So I think it's two things. One mechanical, one philosophical. The mechanical is that the Sunday Times did a series of interviews over his first 100 days, which was that landmark on Wednesday. And that was the top line they chose to put on it. And obviously the Sunday Times uses a story that tends to be the one that dominates the politics of that weekend. The second point is philosophical, which I think Burnham is much more in some ways emboldened on this issue of the EU than I think many within the kind of Starmer operation of Lotto from 2020 to 2024, which is that he feels as though there's now time to revisit this question.

10:02I remain sceptical of this because I think that it would fundamentally hand over a huge amount of the government's agenda to Europe. I'm not sure necessarily, particularly with Le Pen doing a big rally over the weekend, we're going to see the kind of like-minded spirits across the continent who will want to welcome Perfidius Albion back into the fold. But he basically was just saying, look, my family benefited from schemes around movement of travel in the 1990s. He's talked about his late father, Roy, and that's why this whole thing has come up. And now, of course, he's gone on GMB this morning saying, no, no, I'm not going to rejoin.

10:30interesting of course that he did say that he wouldn't need a referendum we didn't have that as a red line and also i think the report in the time today suggesting that the ministers will have to back uh the eu position now in one sense that's nothing new collective responsibility applies to all areas of government policy on the other hand it is a big shift from 2024 and the red lines there on freedom of movement he he may think he doesn't need a referendum but presumably this is yet another thing that's would have to be post-general election because it is in the 2024 manifesto no return to freedom of movement.

11:00Hence why despite all his protestations on Good Morning Britain today, that's why people talk about an election because they see the polls going up, they see all this stuff which can't be done politically probably until after an election. That's why people think that. And Michael, just taking a step back from the announcements, you know, one of the first things that tripped up the Stama government was their announcement on winter fuel. Looking at Burnham's period so far, can you see an economic message there, whether you agree with it or not? Not really. My sense of Burnham, and Jananganesh has articulated this better than anyone else in the FT, is he basically doesn't actually care about growth.

11:32If you look at what he talks about, you know, Manchesterism, he's really dishonest about it. He doesn't tell you what actually went on in Manchester, which was private investment, bungs to private companies that started before Burnham and that he happily continued because it benefited him. There doesn't seem to be a sense that that's, you know, part of his philosophy, not because he's pro it or against it, just because it's not kind of what he thinks about. And then even the kind of more left-wing themes that Burnham talks about. I mean, Andy Haldane characterised Burnham's conference speech as a return to 1950s state socialism.

12:10But even then, if you look at the detail of it, it doesn't seem very concrete. I mean, people have been tricked into this idea that Burnham wants a wave of nationalisations, but he's never said that. Even with water companies, he said he wants public control. and public control is very different to public ownership. So I think the actual kind of economic theme of his philosophy is not really developed yet. And that's probably in part because of his seeming fallout of Haldane and Jim O 'Neill, these people who were going to be creating this vision at the start. And remember, he's a politician. I think sometimes when I was on Sky last night, I had a discussion with the host and the other guest and they were talking and they were saying, oh, well, this is a good thing.

12:48I was like, no, no, remember this guy. He's a politician. And even as a politician, He's not a philosopher. He's not a great intellectual about good growth. I agree. He doesn't know what sort of – I would say he discharacterizes the underlying reasons why Manchesterism worked. But he's a politician. And actually, if you can sell your ideas plausible and mainstream, that will see some success. The other thing we should mention on this podcast, of course, is the overnight results. I think Brazil, Lula won the presidency, and then we also had the Serbian radical right being kicked out of power there as well.

13:17Those will be two results that we welcomed in the Foreign Office when I did a piece on Ed Miliband and some of his close team earlier this year. They were very much talking about the need to have a government that progressed, that champions progressive governments across the world. They'll be very cheered by what happens there. I think it's a reminder that democracy, one thing that looks inevitable one year, 12 months later, can look very different, as we've seen in this country. I mean, we were talking about Brexit earlier. And for those of us who remember the exact result, the percentage for Lula was, I think it was 51.9 to 48.11 or something.

13:46Or 48.10. Curse numbers, right? Curse numbers. What is that actually about? There must be some statistical... I'm going to shock you. Politics tends to divide, Michael. Yeah, but it's always 52, 40. I mean, I guess it's just a coincidence, but it's a freaky one. And just finally, James and Michael, at the last budget, you both did a video for Michael's Reality Check show where you talked about the different drinks that chancellors have had at the dispatch box in budgets of old. I don't think a chancellor has had a drink since Ken Clarke. Yeah, it would have been the 96th or 97th. And that is not going to change.

14:18John Healy has already gone on the record about this to announce that he will be having, drumroll please, tap water. Wow. Well, I was going to ask, should he? And if you were the occupant of number 11, what would you drink? I would say no, he shouldn't because we all know what would happen, which would be pictures of him splashed across the papers, going drunk as a lord, etc. It's the wrong time. What you really need is a pro-growth budget to do that. And I don't think it's the right time for him. But it's a shame we could have something like Nesquik or something. I don't know where he or floats his boat.

14:48I mean, H.P. Sauce is everything everyone talks about. I was actually checking out this to a journalist the other day who came up with the line that Rachel Reeves had the smoked salmon offensive. And I thought, imagine one little innocuous bit of colour suddenly becomes you gorging on smoked salmon. You have one time you choose one item for breakfast. H.P. Sauce is John Healy. So I don't know what would be a northern drink. Bovril? Well, I totally disagree with James. I think if they want to be optimistic now, yes, have a drink. And there's a perfect drink for Burnhamism, Heliism to represent it.

15:17Spectator gin. No, it's surely a buzzball. Burnham's buzzball Britain. Oh, there we go. Let's have a big buzzball at the Dispatch Box on Wednesday. I would agree, but I don't think this is the right time, unfortunately. Maybe next year. While The Spectator will be live streaming reaction to the budget on Wednesday afternoon, I can't promise a buzz ball, but I can promise analysis from both Michael and James. And if you can't catch that during the day, we'll also be live streaming our evening event, the post-budget briefing with Michael Gove and Tim Shipman. For both events, head to The Spectator's YouTube channel at spectator.co.uk forward slash TV.

15:50And for now, thank you, Michael. Thank you, James. And thank you for listening to Coffeehouse Shots.

16:28We'll see you next time. returns and analytics in one place would used to take five separate tools ship station does in one automate fulfillment and rate shopping to ship up to 15 times more with up to 90 savings go to shipstation.com and use code audio to try ship station free for 60 days