Andy Burnham’s summer tour of the United Kingdom, which begins this week, has two goals.
The first is presentational. Leaders only have limited time to determine their reputation and he wants to meet the people he now governs. But even that presents risks – the capacity of a pithy heckler to deflate politicians is well-documented.
Far more challenging, however, is the message he brings with him. That this isn’t just the Andy Burnham Experience, it’s a “Cost of Living Tour”.
Burnham is right that the cost of living is a high priority to millions of Britons. He has also already displayed more understanding of the public’s priorities in his first couple of weeks than Keir Starmer managed in two years.
Hence early announcements about plans to reduce bus fares and temporarily cut VAT on electricity bills, which he presented to the electorate as a way to create “breathing space”.
Since then we’ve seen more along similar lines: most recently the new government accelerated Starmer’s planned restrictions on “subscription traps”, where consumers are stopped from cancelling subscriptions they no longer want.
Such measures are better than a poke in the eye with a sharp stick. But they also have their limits; ministers say the subscription rules (among other “rip-off” business practices being targeted) will save the public an estimated £400 million a year. That’s a lot of money, and not to be sniffed at, but in practice it amounts to a small increase in disposable income for some, not a major dent in the overall scale of the challenge for millions of people.
The danger for Burnham is that having committed himself to overcoming the cost of living problem, he may find himself unable to do very much about it.
While there are rip-offs out there, the uncomfortable truth for left-leaning politicians who suspect the private sector of stuffing its pockets with gold is that most of the real economy operates on tight margins in a competitive environment.
That’s particularly true of some of the biggest influences on household budgets. The new Chancellor, John Healey, began his tenure by warning supermarkets of dire consequences if they commit “price gouging”, “at the [petrol] pump or the till”. In truth, major supermarkets run at margins as low as 3 per cent, precisely because they compete intensely with one another. Even then, they face pressure from discounters who squeeze their profit margins even lower. They do so to make a profit, of course, but the effect for all of us is to keep food and other shopping as affordable as possible. And they pay a lot of tax along the way.
Burnham’s energy VAT action is more instructive. With the state spending £45 for every £100 generated by the economy, the government itself surely has as much influence over the cost of living as anyone.
Evidently the Prime Minister realises this. When he wanted to give “breathing room”, he acknowledged it by giving us all a six-month cut in tax on powering and lighting our homes.
Look beyond VAT, and you find a sizeable chunk of energy bills are made up of green levies and other policies imposed by the government. Beyond energy, tax hits people in the pocket directly and indirectly, as does regulation, for example how planning regulations help make housing unaffordable.
If he wants to find ways to alleviate the pressure on household budgets, then the Prime Minister should look close to home.
In theory, that’s good news for a politician hoping to make good on his promises. At least there are factors within his reach (indeed within his own office) which are part of the problem, and he isn’t just the victim of events well beyond our borders or too great for him to possibly influence.
On the other hand, it poses a specific challenge to a Labour Prime Minister, trying to shepherd a bruised and disillusioned party back into good spirits.
The Starmer government wasn’t wheedling around the edges with a policy to take on “rip-off businesses” worth £14 a year per household solely because it lacked imagination. (Partially, but not solely.) It also lacked the desire or the authority to make the drastic changes to public spending necessary to reduce the more than a trillion ponds which comes out of people’s pockets in tax every year. When it tried, even on a relatively small scale, it lost its MPs so badly that it eventually destroyed the government.
This spells danger. Andy Burnham has acknowledged, explicitly, that the cost of the state is a cost of living issue. He has acted, albeit temporarily, to show that political leaders can help by reducing the tax burden. But he may not have the freedom of action to follow the principle through to its end conclusion and actually bring lasting, material relief to voters.
Tax may be fiscal policy, but it is now a major consumer issue. The Prime Minister has the skills and persona to be a retail politician, and has told voters that this is a lever he can pull. If he cannot capitalise on that opportunity then Kemi Badenoch certainly should.
Her party has long viewed financial management, and the growth of the economy, as among its strongest topics. As such, this is a theme she is well-placed to develop, and her instincts are to be the champion of everyday common sense, out to smash the thoughtless dogmas of those who believe more government is the answer to everything. What’s more, it would give her a direct hook to start to pry apart Burnham’s story about himself.
The new Prime Minister has made the argument himself, by putting the cost of living front and centre and using the tax system as a route to alleviate it. So if he fails to follow through then Badenoch may take up the invitation in his place.
More of your money, in your pocket. Cut the cost of living by cutting your biggest bill. Your work, funding your family and your future. This was once core Tory territory – it can be again.
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