Burnham Confronts Challenges in Funding Ambitious Spending Plan
By Elizabeth Piper
Burnham’s Fiscal Dilemmas and Policy Challenges
LONDON, Aug 27 (Reuters) - After enjoying a summer of well-received measures giving "people some breathing space now", British Prime Minister Andy Burnham faces a much greater test when parliament resumes next week – how to fund some of his more ambitious policies.
Burnham, who entered Number 10 Downing Street in July, two months earlier than he might have liked, has focused almost exclusively on domestic issues, tweaking a system he wants his premiership to deliver a "circuit breaker" to.
Now, he must go some way to honouring the bigger commitments he made on the steps of Number 10, and set out a 10-year programme, expected to offer more detail to his promise to reform social care and end rough sleeping in Britain, while sticking to fiscal rules that limit his room for manoeuvre.
He enters September from a position of power – he is enjoying higher popularity ratings than his two closest rivals, populist Reform UK leader Nigel Farage and head of the opposition Conservative Party, Kemi Badenoch.
But as Britain's seventh prime minister in a decade, he will be acutely aware those ratings could slide quickly if his approach alienates voters.
Burnham, the 56-year-old former mayor of Greater Manchester, says he will not pull his punches with his 10-year plan.
Funding Ambitious Policies
First Problem: How to Fund Policies?
"I will give this my all, and I ask you all to pull with me," he said on July 20 as he took power. "Let us make this the moment when Britain starts to believe again. The moment we bring back hope."
But he faces a similar problem to his predecessor, Keir Starmer – his Labour government has few levers to raise funds for a policy agenda which hopes to tackle some expensive areas such as the provision of social care to the elderly.
With a budget set for October 28, finance minister John Healey has said he will honour the fiscal rules, which include a pledge to balance day-to-day spending with tax revenues by the end of the decade. But both have hinted at using the "flexibility" within them.
That could mean more borrowing for investment, and possible tax rises, despite the Labour manifesto promising not to increase the burden on "working people".
Two reviews on welfare, one looking at youth unemployment and the other on disability benefits will most probably come after the budget. Burnham has said he is against any sort of "crude cuts".
Yet, something will have to give to fund changes to social care, which economists say could cost the government billions of pounds a year.
And while that might take some time, there are more immediate problems on the horizon.
Immediate Fiscal and Political Challenges
Defence Investment Plan
Burnham and Healey need to fill a £4.7 billion ($6.4 billion) gap in the Defence Investment Plan, a blueprint that several defence experts say does not go far enough in meeting Britain's promise to bolster both NATO and Ukraine as support from the United States is waning.
Richard Dannatt, a parliamentary peer who was head of the British Army between 2006 and 2009, said he believed that Healey, having served as defence minister under Starmer, would find a way to raise the money he had previously resigned over.
"John Healey ... having had many years immersed in defence, actually knows the detail, knows the issues, and officials can't bamboozle him," Dannatt told Reuters.
Energy and Justice Decisions
Oil and Gas Drilling Projects
Burnham's government must also decide whether to approve oil and gas drilling projects that have the backing of U.S. President Donald Trump but risk alienating some voters.
Prison Overcrowding and Early Release
And he has to implement the politically difficult decision of allowing some serious offenders to leave jail early to reduce prison overcrowding.
He has twice changed position on who will be released, charging justice minister Alex Norris to find a way of blocking the release of those convicted in 2020 of killing a police officer after a public outcry.
Addressing Immigration and Public Sentiment
Housing Illegal Immigrants
Then there's the arrival of illegal immigrants over the summer – the numbers are down on last year but they are still high – and where they live poses a threat to Burnham's popularity.
He has said their accommodation should be spread more evenly across Britain and more in wealthier areas, a message that did little to stem protests outside possible new sites.
Burnham will hope he can take the public with him as he enters the more precarious part of his premiership.
"Once he's done the big picture stuff ... he will absolutely delegate to operational teams and trust that they're able to deliver," said Rose Marley, a mayoral adviser in Manchester and the head of Co-operatives UK, a not-for-profit body.
"He'll make sure that they're facing the right direction."
($1 = 0.7353 pounds)
(Reporting by Elizabeth Piper; Editing by Conor Humphries)
