Why is Burnham getting blamed for a global debt crisis?

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1:30Lewis Goodall:This was the first proper face-to-face joust between Bainock and Burnham. I think what did we learn from it? There was one issue that was hanging over everything and Bainock did talk about it, which is what is currently happening in terms of government borrowing costs, UK government borrowing costs, nearly at their lowest point now since the late 1990s.

1:51Andy Burnham:So he managed to get away with it this week, I would say, as somebody who can sort of remind the Tories that they were in power for 14 years, remind the Tories about Liz's Trust. I'm not sure that he's going to be allowed to answer as little in the weeks to come. There are people at number 10 who are across this rather than just saying, I'm sorry, love, you're on your own. You need to sort this out for yourself. I know you've got, you know, a heavy constituency postbag on this issue, but tough titties, you know, get on with it. I haven't heard that one for a while. No, we haven't. It's nice to be back.

2:21Andy Burnham:Don't hear that in rural France very often. Can I congratulate the Prime Minister on his stamina? Three hours. Yesterday. Yesterday. That was Kemi Baden-Ock at Prime Minister's Questions congratulating Andy Burnham on the length of his statement. Yeah. After a three and a half hour stint in the Commons yesterday, Burnham was back for his first PMQs of the term. Who won? Welcome to the News Agents.

3:01Lewis Goodall:The News Agents. It's John.

3:04Andy Burnham:It's Maitlis.

3:05Lewis Goodall:It's Lewis. And this was much awaited because obviously we've had this weird situation where Andy Burnham has basically been prime minister for the summer holidays. And so this was Westminster truly back. Admittedly, as Kemi Badenock was saying there or hinting at there, it was we got a bit of a preview of it yesterday because Andy Burnham did do a three hour session on the floor of the Commons where he took questions from over 100 MPs. Nonetheless, this was the first proper face to face joust between Baden-Ark and Burnham. I think what did we learn from it? Well, I think we can say a few things.

3:37Lewis Goodall:One is, is that as always happens with an incoming prime minister or incoming leader of the opposition, they promised to end punch and duty politics. They promised to end point scoring. And it lasts for precisely less than the duration of one prime minister's questions. In my view, rightly so, because we have an adversarial system for a reason. And nonetheless, they did, I think in a pretty fluent way, admittedly, on both sides go for each other. I think this promises to be one of the more interesting contests between the prime minister and the opposition we've had for some years. I think both Bainock and Burnham, proper battle of ideas, both fluent performers.

4:11Lewis Goodall:But there was one issue that was hanging over everything. And Bainock did talk about it, which is what is currently happening in terms of government borrowing costs, UK government borrowing costs. inched higher today, nearly at their lowest point now since the late 1990s, after they've been caught up in what is admittedly a global move, which is pushing government borrowing costs higher for most Western governments. This was followed by Bajnock asking the Prime Minister what he was going to do to cut government spending to convince the markets that the UK is credible. Here's their exchange.

4:46Andy Burnham:Personally, I think it's delightful that he wants to make everyone happy. but a prime minister needs to be a leader, not a people pleaser. He's talking about working together on welfare. I already made that offer, but that does mean cuts. He wants to bring the welfare bill down by spending more money. Yesterday, the prime minister told the House that his summer of promises would be paid for by reprioritising within government. So what exactly has he cut? Well, in terms of what has he cut, tax is the simple answer to that question.

5:30Mr Speaker, within days of taking office, I indicated that we would remove VAT off electricity bills. And that, Mr Speaker, will help people with the cost of living. And then days later, with the support of my right honourable friend, the Chancellor, we said that there would be a cut in business rates for pubs, social clubs, live music, venues. So this government lowering the cost of living, lowering the cost of business. And that is what we will continue to do. You saw both the fluency there and the self-confidence on both sides. I also think there's an element in which you are seeing Kemi Badenok kind of, OK, how do I approach Andy Burnham?

6:19I knew how to fight Starmer and it was Starmer would be brittle. And so if you could poke fun at him, you would get somewhere with him. I don't know whether she's yet found her mojo yet on how to deal with Burnham because he is a he's a very slick communicator. He's very capable. I think on the substantial point about the cost of government borrowing that you're talking about a moment ago, Lewis, I mean, you can have Andy Burnham standing up there and saying, you know, what have you done? I've cut taxes. Well, I don't think we'll be hearing that after the 28th of October when the budget comes.

6:51because, as you say, the cost of government borrowing, you know, this kind of ghastly phrase, fiscal headroom, any fiscal headroom that the government had that was bequeathed by Rachel Reeves has gone with the cost of what the government needs to spend to borrow money in the markets now. And that is going to have a really profound effect, I think, on our politics over the coming period.

7:15Andy Burnham:I thought it was quite a grown-up exchange. And I think, if I'm honest, that Kemi edged it over Burnham today. I thought there were moments where he was clearly slowing himself down because it was the first time. And he looked like he was buffering a little bit. You know, there were sort of moments where he was waiting for the answer to come to him as he spoke. And when he came out of that line, what have you cut? And he said, tax. Yes, he gets great cheers from the Labour benches. But actually, he hasn't answered the question. And her question still stands, which is, it's all very well coming in with the vibes.

7:51Andy Burnham:It's all very well coming in with the optimism. But if you agree with me, Kemi, that we need to cut the welfare bill, what are you going to do? Where are you showing me that stuff? If you believe that we have to bring welfare down, if you believe that we have to bring the debt down, how are you going to do that? And actually, for the course of those five questions, he couldn't really answer it. And even though he made overtures to her, to the Conservatives, to work together on things like welfare reform, he definitely didn't want to concede anywhere where his policies would actually, you know, cut in.

8:33Andy Burnham:And so what does he do? He starts playing the same old Labour tunes, you know, a bit of Liz Truss, fair enough, a bit of Andrew Griffiths, who's now Kemi Baden-Ock's side as Shadow Chancellor, who was, you know, very much a supporter of Liz Trussonomics. So he managed to get away with it this week, I would say, as somebody who can sort of remind the Tories that they were in power for 14 years, remind the Tories about Liz Truss, remind Kemi Baden-Ock that the person at her side was part of the problem in the first place. I think that's fine for now. I'm not sure that he's going to be allowed to answer as little in the weeks to come.

9:07Andy Burnham:And it was interesting, even one of his own backbenchers, and maybe, you know, this is expected and normal and this is what we're going to see more of now. But the chairman of the Defence Select Committee, Tan Desi, urging the prime minister to commit to spending 3 % of GDP on defence. Now, of course, they would say that. And of course, he will say, I'm not going to announce my budget here in the Commons today. but you will start to see now that everyone's relaxed that he can actually utter a sentence and he can hold the commons and he can win a bar election he's going to get some pressure from his own backbenchers as well as from those opposite and i think that's what you're just starting to

9:43Lewis Goodall:get the sense of now yeah look um and i think that one of the most interesting or more interesting things that burnham did say and burnham is definitely someone as prime minister who uh much more so than starmer who's very controlled he really thinks aloud you know he sort of shows his workings, which I think is both positive and negative. You heard him do that a little bit at Prime Minister's Questions where he talked about, he was asked by Tam Desi about defence spending. And he said, you know, one of the reasons he appointed the Chancellor, John Healy, in the first place was because of his views on defence spending.

10:16Lewis Goodall:And we all know, I mean, this has been one of the interesting questions over the summer, happened last week in an interview with Sam Coates at Sky. John Healy sort of slightly resiling from actually the thing about which he resigned from the Starmer government and arguably inflicted the sort of ultimate final body blow on Keir Starmer, which was basically saying, you, Keir Starmer, you, the Prime Minister, are not willing to do what it takes to keep this country safe by funding defence spending adequately. John Healy gave an interview last week where he indicated he's the Chancellor now and maybe he himself would resile from those commitments, which obviously sets up a really awkward question, which was, well, hang on a minute, if you as Defence Secretary-Chancellor thought that Keir Starmer wasn't keeping the country safe because he wasn't spending X amount of money on defence.

11:02Lewis Goodall:Surely, by definition, you're not doing the same and this Prime Minister won't be doing the same if they don't do it. And Burnham, again, actually was correcting that a little bit, Prime Minister's questions there, by saying, one of the reasons, as I say, that he appointed Healy is because he believed that and he said that he would fulfil our NATO requirements. But, of course, if he does that, John, to go to your point, That fiscal headroom is nearly now non-existent and would imply, because if we're talking about getting to 3 % of GDP and then 3.5%, we're talking about tens of billions of pounds potentially on defence, which is potentially really means a sort of swinging scythe for other government departments.

11:40I've been really struck by the way they have sort of knitted together this kind of complicated argument, which explains why John Healy is not going back on his words, even though we're not getting to 3%, which is to say there will be a review of spending which will take place in the spring next year. And we're not going to talk about getting to 3 % by the end of the decade. We're talking about getting to 3.5 % by 2035. Nice long way away. That's a long way away. Just think how far. We're going to do draconian things. That's a long grass, I see. We are going to do some really draconian things in 2034 when we may or may not be the government and have to make those very, very, very difficult, painful spending decisions.

12:28Honestly, I do think that it is a fudge, and it's obvious that it's a fudge. Given what John Healy said, given that he was prepared to resign from the government, and deliver, as you say, the coup de grace to Keir Starmer, and yet becomes Chancellor and says, oh, yeah, well, 3%, yeah, down the road, have a look at it in the new year, see where we get to. I mean, really, I think if you're Keir Starmer, you would feel royally pissed off with John Healy for having done what he did to him as Prime Minister and now does this from his elevated position in one of the great offices of state as Chancellor.

13:07Yeah.

13:08Andy Burnham:I mean, I think if you're being cute about it, you say that I'm sure John Healy cared very deeply about defence. I'm also sure that he saw this as an opportunity to inflict a mortal wound into Keir Starmer to get rid of him. And he came out of it looking quite good. And, you know, I think it's been said before that one of the things that Burnham appears to have endorsed essentially in his cabinet picks is disloyalty to Starmer. Right. So the people who stood up against him, who went to him, who said no more are the people who've been rewarded with the top jobs. And Healy, you know, par excellence is the person who delivers the mortal blow and ends up with the top job.

13:51Andy Burnham:So I think there is there is a sort of bigger framing of that, which is not just about the digits of defence spending in that. But I do think to the broader question, which is, you know, as Harry Cole, I think, has put it in the sun, the summer is now over, the storm clouds are gathering. This is not just a Burnham problem. It is not just a Britain problem. The government debt is rising the world over. In the US, they have now hit, I think it's 40 trillion. Right. So they are they are off the charts. The deficit, I think, is at is it two trillion? I mean, it's it's huge. Three trillion here. OK, so if you're looking across the board, you are not able to say, just like we couldn't with the financial crisis.

14:37Andy Burnham:Oh, this is something that Northern Rock has done wrong or this is something that British banks have done wrong. This is across the board. Right. And it's not least to do with where we are with the whole geopolitics of Iraq. Although the only thing I'd say to that is that I looked at these sort of debt charts. The New York Times published a table of, you know, where Japan was, where Germany was, where the US was, where Britain was, where France was. And look, every graph showed the cost of government borrowing going upwards, but we're much higher than everywhere else. Well, we're somewhat higher.

15:08Lewis Goodall:I mean, but in fairness to Burnham, I mean, that isn't Burnham's fault. No, no, no. I mean, you're right. I mean, that is a reflection of... Historic factors. Yeah, like just the weakness of the UK economy, the Liz Trust legacy, which so many people, including I'm sure the now Shadow Chancellor, wish to flee from and wish to forget. Yeah. And I have to say, I mean, Emily's already hinted at one person. I mean, some of the hypocrisy in some of elements of the press who, you know, now interview Liz Truss as if she's some sort of great guru. It's just whilst at the same time wishing to, I think, try and create some sort of equivalence with Burnham and Labour in terms of what is going on with the debt crisis at the moment.

15:48Lewis Goodall:The sort of thing that we saw with Liz Truss is comic. I mean, it's comic. I mean, Emily's already talked about some of it. Let's look at the facts. Japan's 10-year yield has reached 3 % for the first time since 1996. Germany, long known as a safe haven in terms of European debt, has reached its highest borrowing level since 2011 at the height of the Greek crisis. US 10-year yields, as Emily said, are now nearly 5%, a 19-year high. Yes, ours are at their highest since 2008. And yes, there are specific historic British reasons for that about the weakness of our economy, including, as the Prime Minister said as well, by the way, Brexit, which has lowered our productivity and made us less able to weather financial storms.

16:31Lewis Goodall:But let's be clear, right? Tokyo, Berlin, Washington, they're not having problems with their borrowing costs because of Andy Burnham. Right? Like that is just clearly fanciful.

16:40Andy Burnham:He's been incredibly, incredibly influential on the world. Yeah, exactly.

16:42Lewis Goodall:That is just clearly fanciful. It is true, of course, that because of a global reprice of inflation debt, the Iran war, which of course many of these people supported at the time, that is creating global problems as well as the big AI boom in debt that we're seeing. That is creating global problems, which Britain is affected by. And it is true that there is some concern about potential spending plans under this Labour government, which Burnham will have to address. But these are relatively marginal forces by comparison to the big structural questions, which are global and worldwide. and are, just briefly, to be distinguished with what happened with Liz Truss, which was a specific British phenomenon, not mirrored around the world, caused by her incompetence.

17:23Well, I thought one of the most absurd things at Prime Minister's questions today was when Kemi Badenot tried to draw a parallel with Andy Burnham's tax cuts on, you know, so some kind of business rates for pubs and clubs, which is going to cost a tiny amount of money, and tried to draw a parallel with Liz Truss's unfunded tax cuts of the top rate of tax and all the rest of it that was going to cost£25 billion, which is what really spooked the markets. And then her Chancellor comes along and says, well, we might go a bit further, actually. Yeah, exactly. So the idea that what Andy Burnham's done since he's become Prime Minister, as the Prime Minister for the summer holidays, is do something that is akin to what Liz trusted in the kamikaze budget is just ridiculous.

18:10Andy Burnham:But I think where you're right is that this whole idea of thinking out loud. He's very good at diagnosis. We get that, right? He's very good at saying, well, I can see that's a problem and obviously the prisons and that's going to be a problem. And it's quite nice to talk back to, you know, the electorate and tell them that you understand what the problem is. There is going to be a moment where it's like, yeah, okay, now what? And he's already had this from Jim O 'Neill, who is a close friend of his, the sort of Mancunian at his side. I'm sure they still are now.

18:40Lewis Goodall:Well, it's interesting, isn't it?

18:41Andy Burnham:I mean, Jim O 'Neill, he probably followed this saga, but was the one who was his appear. He's also very wealthy in his own right, you know, from money made in the city, ex-Goldmans. And he was invited into the cabinet, decided not to be because he didn't necessarily think he'd agree with Burnham's wealth tax. And he's now sort of gone not rogue, but he's kind of become quite outspoken and said, well, Burnham has to get rid of the the triple lock. Right. Jim O 'Neill is not alone. And a lot of Tories, people who've now left, we should say, the cabinet, people like Jeremy Hunt are now saying, get rid of the triple lock, things they never said when they were actually in power and had the power to do it.

19:17Andy Burnham:And so I think they're throwing this at Burnham, which is setting up the political versus economic sense. You know, everyone can see the economic sense in, frankly, turning around to pensioners and saying, you've already got two locks on this. You're going to be fine. Get rid of the triple lock. It would really save a lot of money. and Burnham kind of going, well, he's already pledged not to, right? So there are going to be, I think, a few, you know, sort of no exit doors. He's now shutting them down on himself. If he sticks to no removal of the triple lock, that's gone. So what's next? He's already said no more income tax.

19:54Andy Burnham:OK, that's gone. What next? No more VAT. Really? So what's next? Then you are getting into a place where Kemi Badenot can really actually squeeze him and say, you've left yourself no room to actually cut any of the spending that you promised.

20:08Lewis Goodall:And I think this is where John's right in terms of where the politics of all this is going now and what the politics of the autumn probably looks like. Because for me, I think what it will, if this global bond market instability continues, or it's not really instability, it's just going in one direction, which is becoming, it's becoming more expensive for governments to finance their debt, including ours. then the big mismatch of course will be the politics on which Andy Burnham ran and the economic reality on which he must which he must oversee and which affects him and afflicts him as it did with Keir Starmer because of course the big test will come if Lord O 'Neill is right which is that the bond markets it will be helpful and I think he must surely be right on this the bond markets might want something to show the government seriousness about tackling the long-term debt and deficit to show that Andy Burnham is more than simply the Prime Minister of Good Times and Mary England.