Andy Burnham's Economic Challenge: Growth and Fiscal Constraints

More investment and more focus on skills are likely needed. Burnham has implied boosting both, along with more state control of utilities to lower bills. Underpowered growth is one reason hiring is at its lowest level in five years. Young people are hit particularly hard. The article cited automation and higher minimum wages as factors behind weak hiring. Job losses are concentrated in retail and hospitality, industries most vulnerable to higher labour costs and typically a source of entry-level jobs.

A recent report by former Labour minister Alan Milburn highlighted how the erosion of such posts contributed to rising youth joblessness. The number of young people not in employment, education, or training (NEETs) is rising. Milburn warned NEETs could hit one in six young people, potentially blighting lives for decades. The second part of that report, with policy recommendations, will be published later this year. It is expected to call for a radical overhaul of how every part of the public sector interacts with the private sector.

Defence and Welfare: The Hard Choices

The costs of providing better and safer lives could mount fast. The government has pledged to increase defence spending to 3.5% of GDP by 2035. Burnham has indicated support. That could take tens of billions of pounds. John Healey quit as defence secretary over what he called the Treasury's unwillingness to commit the resources the nation needs. Finding that cash may mean taking it from other departments already facing budget squeezes.

Welfare spending is set to rise by over a quarter between 2025 and 2030. The main increases are sickness-related payouts for working-age adults and pensioner benefits. Pushing through welfare reform proved difficult for Prime Minister Sir Keir Starmer. The government's official forecasters have flagged that the cost of the state pension under the triple lock system is set to double within 50 years. Simplifying that formula could mean smaller pension increases and save tens of billions. It is an approach backed by many economists, including Lord Jim O'Neill, one of Burnham's new advisers. Would Burnham venture where few politicians have and upset the most influential group of voters?

Housing adds another layer. With house prices rising more slowly than earnings, purchasing a home for the first time is more possible than a couple of years ago. At the start of the year, Nationwide Building Society said mortgage payments accounted for a third of take-home pay, well below the record of 48% in 1989. Today's buyers tend to juggle high rental costs too, making it harder to save a deposit. The average age of the first-time buyer has risen. The most sustainable solution is to build more homes. The government is behind on its target. New homes were down 6% last year and below the 300,000 needed to hit the target. Burnham wants to build more social housing. Successive governments have found it is not easy. (For context on institutional housing policy, see the recent House set to pass housing bill capping institutional home purchases at 350.)

The easiest way to fund his plans would be to draw on the spoils of faster growth. Like many before him, Burnham's vision appears to be that you have to spend more money to make money. The question is whose money.