Mick Hartley

Matthew Syed isn’t on board with the Burnham project which seems about to be forced upon us. And neither is Robert Colville:

Everyone apart from Keir Starmer now accepts that Andy Burnham will soon be prime minister. The big question is who will be his chancellor. This essentially boils down to a contest between Ed Miliband and sanity, in the rumoured form of Pat McFadden, John Healey or even Yvette Cooper — who would make history as the first woman to make absolutely no impact in not one but three great offices of state.

After Pat McFadden’s complaint that “every meeting I have is: ‘Who can we tax in order to pay benefits to others?’”, he should surely be a lead contender. Too sensible, perhaps?

But even if Ed gets the chance to wreck yet more of the British economy, where will the money come from?

Some within Labour have convinced themselves that the middle classes are undertaxed. But that is a statistical illusion. The British state asks its citizens to contribute towards a whole range of costs — auto-enrolment pension contributions, university education, social care, dentistry, eye tests, TV licences — that usually come out of general taxation elsewhere.

Burnham, to his credit, has acknowledged that people are suffering. He has vowed to retain Labour’s manifesto pledge not to raise income tax, VAT or employee national insurance. Indeed, all factions within the Labour Party — with the partial exception of Rachel Reeves — now accept that putting taxes on work was a calamitous error. (As some of us warned them quite forcefully.)

Instead, the new MP for Makerfield and those around him want to tax wealth. They’ve talked about replacing stamp duty with a more punitive land tax, and equalising the tax on capital gains and income. But it is very, very hard to tax wealth without deterring investment — which in turn hammers growth. And given the scale of Britain’s borrowing, you’d need to treble or even quadruple such taxes to fill the gap.

In the 2010s it was often said that Labour’s big intellectual problem — and big electoral obstacle — was that they hadn’t worked out how to run the country without spending more money. The same is true today, but even more so. The only way that Labour can see to “deliver change to the electorate that put their trust in us” is to spend. But the financial markets demand that they save.

The inability to reconcile those tensions was what doomed Keir Starmer. It will almost certainly do for Andy Burnham, too.