Burnham’s wishful thinking: Hitting home-owners with higher taxes won’t boost
The most refreshing aspect of the Andy Burnham economic prescription for Britain was his avoidance of ad nauseam attacks on Tory chaos.
There were even points of optimism about Britain’s science, innovation, and creativity. For those critical of Britain’s insistence on allowing overseas companies to bid for major new contracts, squeezing out domestic firms, there were encouraging words.
It is possible that a Number 10 North, based in Manchester, would more clearly see the impact of great chunks of British business disappearing into foreign and private equity hands under the noses of Keir Starmer and Rachel Reeves. Then again, pigs might fly.
Among firms under threat are budget airline easyJet, logistics and data centres group Segro and Unilever’s food arm.
Overseas ownership will mean decision-making moving abroad along with a slug of tax revenues. Forget British local and community control. Such deals will put executives in Minneapolis, San Francisco and Baltimore in charge.
Labour has stood by as control over vital public services such as the Royal Mail have fallen into the hands of a foreign marauder with service levels in shocking decline.
Tax and spend: Prime Minister in waiting Andy Burnham, pictured, has announced his plans for the ‘biggest council house-building programme since the post-war period’
Burnham desires state control over utilities, with Thames Water offering the most immediate challenge.
Yet moving Thames Water into special administration would immediately add a new debt pile onto a stressed government balance sheet.
There would be less chance of returning it to private control speedily if there were an insistence on state involvement.
Pleasing words of support for pubs, hospitality, and the High Street were heard from the presumptive Prime Minister.
There was no acknowledgement that net zero energy policies have raised costs to unacceptable levels.
The same sectors have been bashed by the jump in employers’ national insurance and higher minimum wages. Business rates reform is critical but barely touches the sides.
Burnham has placed affordable housing at the core of his agenda. How short memories are. Reeves made housing the centrepiece of her growth plan.
The 1.5m new homes pledged in this Parliament have moved ever further into the distance, with an estimated 300,000 or so certified in two years.
Capacity shortages, planning delays, and withdrawn help for first-time buyers have all seen production capsize. Lowering stamp duty might be a useful start. Hitting home-owners in the South East with ever higher property taxes won’t.
Debt bomb
A rebooted PM must live in the real world. An early reading recommendation is the just-released annual report of the Basel-based Bank for International Settlements (BIS). Those with memory of the great financial crisis will know the BIS saw it coming.
Concerns highlighted by the BIS are the oversized role of highly leveraged hedge funds in sovereign bond markets and an AI bubble.
As Britain knows only too well, from the fragility of bond markets during Rachel Reeves’ sojourn at the Treasury, it doesn’t take much to deliver havoc.
Britain is often seen as the most exposed among G7 rich countries to hedge fund speculation.
Most of the G7 has debt-to-output ratios of more than 100pc. The BIS fears the involvement of private credit players could accelerate contagion in a crisis. It urges governments – are you listening Andy Burnham – to deal with debt levels.
It also warns that borrowing for capital spend on AI could be unsustainable. Only last week, SpaceX, an AI behemoth, raised $25billion through an oversubscribed debt issue.
Stretching the limit on the UK government credit card, amid a debt-laden precipice, would be madness.
Global retreat
As long as I can remember, BT’s international operations have been a problem.
Britain’s flagship telecoms group had an impressive client list of customers but making the economics and returns work has been tricky.
Boss Allison Kirkby’s solution was building a cloud presence through its Global Fabric service, enabling the international unit to be hived off into a separate joint venture with Verizon. ,
Sad to see UK corporations dumping global operations. Sometimes, needs must.
DIY INVESTING PLATFORMS
AJ Bell
AJ Bell
Easy investing and ready-made portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free fund dealing and investment ideas
interactive investor
interactive investor
Flat-fee investing from £4.99 per month
Freetrade
Freetrade
Investing Isa now free on basic plan
Trading 212
Trading 212
Free share dealing and no account fee
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.