What business needs to know about Burnham

Now that Andy Burnham has pulled off a spectacular win in Makerfield, business needs to know what comes next and what to expect. Our CEO and Founder, Tom Lees, shares his views.

UPDATED AFTER SIR KEIR’S SPEECH ON MONDAY 22 JUNE

Now that Andy Burnham has pulled off a spectacular win in Makerfield, business needs to know what comes next and what to expect. The most important points for business are set out below:

How does Burnham become PM?

1. Starmer has heard the mood music and has accepted that his time is up as Prime Minister. He will stay on until a new Labour leader is selected.

2. The Prime Minister has now suggested a VERY short leadership contest from the 9th July until the 16th July (the day that Parliament rises from summer recess). Although the process is ultimately decided by the NEC.

3. Is there a contest? There is a multi-stage process. Prospective leaders need to secure support from 20% of Labour MPs (81 MPs), 5% of Constituency Labour Parties OR three affiliates (including two trade unions and constituting 5% of affiliate members) then it goes to the Labour membership to see if someone gets more than 50% of the vote under an alternative vote system.

4. A coronation? If only one candidate clears the MP and the CLP/affiliate stage then that candidate becomes leader (and PM) without going to the membership. Discussions will be taking place now between Wes Streeting’s team (and other contenders) with Andy Burnham to see if a deal can be done to avoid a contest.

Who is Andy Burnham closest to?

Josh Simons

Josh gave up his seat so Burnham could stand as an MP. He is a political chameleon having worked for Corbyn, then becoming central to the Starmer Project through his time running Labour Together and now has placed himself at the heart of Burnham’s team.

He is likely to be the Chief of Staff or Head of the Policy Unit. There may be potential tension in store in the future as it is not clear how closely the two align on policy direction.

Lucy Powell

Manchester MP and Deputy Leader of the Labour Party, Lucy has been running Andy’s Makerfield campaign alongside Louise Haigh. The two have known each other for many years and she will be given a Cabinet job as a reward for her loyalty and work on the campaign. Given her background in science it would seem that the Secretary of State for Science, Innovation and Technology job is the most likely.

Lou Haigh

The short-lived Secretary of State for Transport (resigning due to a historical criminal conviction for fraud) is back at the centre of politics having helped run Andy’s successful campaign. The two have known each other for more than a decade having been involved in his 2015 Labour leadership campaign. Again, she is likely to return to the Cabinet but that will surely bring back her criminal past.

Kevin Lee

Kevin is the single most trusted figure by Burnham in his team. Kevin has worked for Andy for more than 15 years including most recently as his Chief of Staff in his role as Mayor. Kevin is currently undergoing treatment for cancer. He is reportedly aware that he is not the right person to be Andy’s Chief of Staff in No10, but is likely to take on the role of Political Secretary in Downing Street which centred around keeping the Labour MPs on side and happy.

It’s the economy stupid

Most of a government’s success is down to the performance of the economy. That’s also what business cares about most.

The last time I saw Andy he was very critical of the Treasury and its approach to spending decisions - particularly a bias, as he saw it, against the North.

Since the end of May, he has expanded his economic advisory team to add credibility to his policy platform and reassure the ‘bond markets’ who see him as potential political risk and unknown.

Those advising him are:

• Richard Hughes - former chair of the Office for Budget Responsibility, advising specifically on fiscal policy/fiscal rules

• Josh Simons - former head of Labour Together, former minister/MP and policy adviser

• Andy Haldane - former Bank of England chief economist

• Ed Miliband - current Energy Secretary, former Labour Leader and economic adviser under Brown

• Lord Jim O’Neill - former Goldman Sachs chief economist/chairman of Goldman Sachs Asset Management

• Lord Stewart Wood - academic, former economics team for Gordon Brown. Ex-chief of staff to Ed Miliband

• Carys Roberts - former executive director of the IPPR think tank

• Zoe Billingham - chair of IPPR’s northern England division, advising on progressive policies

• Mark McVitie - former Labour Growth Group chief

In terms of Andy’s likely approach to the economy, much has been written about so-called ‘Manchesterism’. In my view - having lived and worked here for nearly a decade - Manchester has been successful for five key reasons;

1. Pragmatism and place before politics (Burnham, Sir Howard Bernstein and Sir Richard Leese all worked closely with Conservative governments and Labour),

2. Investing in transport links and connectivity with more public control (importantly that does not mean nationalisation),

3. Being willing to use creative financing mechanisms (see the £1bn+ Good Growth Fund that we were involved with, for example) to fund economic infrastructure,

4. Close partnership with the private sector and universities,

5. Long term thinking and consistency over many years.

I would expect that approach to continue into Downing Street when Burnham becomes Prime Minister. The two most likely candidates for Chancellor are Ed Miliband and John Healey.

Key policy positions

Heathrow - when I spoke to Andy about this around three months ago he was sceptical and felt it would undermine regional airports. If Ed becomes Chancellor he is also sceptical of the project due to environmental concerns (even though aviation is essentially a rounding error in terms of emissions).

Housing - Andy has been very pro housebuilding in Greater Manchester and sees it as key economic infrastructure. He understands current viability challenges and is very pro council homes being built.

Fiscal rules - I understand from his team that he they think there is plenty of wiggle room within the current rules to invest more in capital projects. A new rule that sees the deficit falling every year (rather than in year five of the forecast) may be introduced to show credibility with markets.

Business rates - while campaigning in Makerfield, Burnham said that “we had got it wrong” on business rates and pledged to cut business rates to support high-street shops, cafés and pubs. Funding the gap by going after long vacant properties and the likes of Amazon warehouses more.

Devolution - he clearly believes that more power should be given to local areas and away from Westminster, particularly looking at fiscal devolution and money raising powers locally.

Infrastructure/railways - he firmly believes in a ‘full’ HS2 and Northern Powerhouse Rail. But how can these be funded? He believes in more state control of the railways and has been following the TfL model in Manchester (e.g. the ability to tap in and out on commuter train routes). He is passionate about infrastructure spending, particularly between commuters towns/cities, to boost agglomeration and growth.

Nationalisation - some are presenting Andy’s comments on “the essentials of life” as grand plans to re-nationalise large swathes of the economy. This is a misreading of things. More state control (e.g. through regulation and political direction) is not the same as nationalisation. This state direction/control approach is the one he will take and in his view much more pragmatic than alternatives. One exception looks to be Thames Water where public ownership looks more likely