The Makerfield by-election is the most important by-election in recent years.  It is almost a pre-run of the 2029 general election which may well determine whether the Labour Party survives.

Makerfield has been represented by Labour MPs since its creation in 1983.  Labour would typically get between 50% and 60% percent of the vote.  It was a ‘Leave’ voting constituency in the Brexit referendum.  Over 5 people voted to leave the EU for every 1 who voted to remain.  Inevitably, in the 2019 general election, when Starmer tried to force a 2^nd Brexit referendum on the country, the Labour vote dropped to 45% having been 60% in Corbyn’s 2017 election.  In the 2024 general election, it remained at 45%.

In the local elections on 7^th May, numerous wards in Makerfield abandoned Labour for Reform.  Was this because the erstwhile vote for Labour has finally decided that the Labour Party no longer reflects their interests? 

The answer to that question will be made clear on 18^th June.  We suspect that those who had voted Labour in 2024 were of the opinion that a Labour Party led by Starmer would not represent their interests.  But now Andy Burnham, a local lad who lives in the constituency and has had a successful 9 years as mayor of Manchester City, is standing and has made it clear that he understands well the dissatisfaction felt by one-time Labour voters for a Labour Party led by Keir Starmer.

This really seems like a last chance for Labour.  If a local lad with a commitment to changing Labour is unable to persuade those who voted Reform in the local elections to return to voting Labour in a Westminster by-election then it seems very likely that Reform will emerge as the largest party in the 2029 general elections.

However, it is far from clear that Andy Burnham, if elected, will be able to change the Labour party to the extent that is needed for it to do well in 2029.  Burnham’s natural tendency is to be nice.  He finds it easier to surrender to identity-politics that to challenge it.  He committed to accepting Reeves’ fiscal rules when put under pressure and weaseled out of his former doubts about those rules.  Has he ever had the courage to call what Israel is doing in Gaza the genocide that it is?  Has he ever criticized the eastward expansion of NATO which led to the war in Ukraine?

In short, Burham has yet to prove that he has the mettle to transform the Labour Party back into a party that erstwhile Labour supporters will again support.  If Burnham wins, a first major test will arise in the 2^nd half of 2026.  The effects of the Iran war and Ukrainian war will begin to have a huge effect on real wages.  Strikes will begin as workers attempt to defend their real standard of living.  A wage/price spiral seems distinctly possible.  How would Burnham deal with this crisis?

It is worth remembering that Burnham was very much Gordon Brown’s protégé.  And Brown effectively delegated the problem of dealing with inflation to the Bank of England.  The decision to give the BoE a more explicit and formal responsibility for controlling inflation was taken by Gordon Brown in 1998 when he gave the BoE sole responsibility for deciding interest rates.  Why is control of the interest rate considered important?  The BoE believes that there is a strong correlation between inflation and the rate of employment.  An area of economic theory, called the Phillips Curve, deals with this relationship.  A high rate of employment puts workers in a strong bargaining position which means they can demand higher wages.  In an inflationary situation, the BoE considers that it is necessary to reduce that bargaining power by creating unemployment.  An increase in the interest rate will, it assumes, reduce demand, increase unemployment and so help, ultimately, reduce inflation.

This institutional architecture to dealing with inflation emerged after Thatcher came to power in 1979.  Though she set out to more systematically destroy the bargaining power of the trade union movement with anti-trade union legislation that has largely persisted to this day.  Blair and Brown did little to reverse it when Labour finally returned to power in 1997.  This institutional architecture did not emerge from nowhere. It is the legacy of choices made — and, crucially, choices not made — in the 1970s.

That decade saw serious attempts to find a way of dealing with inflation. The Wilson government’s In Place of Strife proposals (1969) attempted to institutionalise labour relations before the inflationary crises of the 1970s took hold — and were abandoned under trade union pressure. The tripartite talks of the mid-1970s — bringing together government, employers, and unions in a coordinated incomes framework — collapsed when the social contract unravelled.  The Bullock Commission on industrial democracy (1977) proposed giving workers a formal stake in corporate governance through board-level representation, which might have created the conditions for wage restraint through partnership rather than coercion. But it was rejected from almost every direction. Employers opposed it as an unacceptable intrusion into managerial prerogative. And the trade unions were scarcely more enthusiastic: while the TUC gave formal backing, many individual unions feared that worker-directors would be absorbed into management culture, their independence compromised and their shop-floor bargaining role hollowed out.

When these cooperative approaches failed or were blocked, the field was left open for a different solution. The monetarist turn of 1979-80, and the institutional reforms that followed, embedded the Phillips curve logic so deeply into our policy architecture that it now appears to be the only available tool.

But it isn’t. The Phillips curve approach treats inflation as a demand problem to be solved by destroying purchasing power. A wage-price spiral, however, is fundamentally a distributional conflict — a struggle over who bears the cost of an external price shock. Unemployment does not resolve that conflict; it simply coerces one side into surrender.

The alternative is to manage the distributional conflict directly: through coordinated wage bargaining, sector-level incomes agreements, excess-profit levies on firms that use inflationary cover to expand margins, and — crucially — institutional mechanisms that give workers confidence an inflation generated by outside events will be distributed in a way that is based on the ability to bear that inflation.

This requires revisiting the kind of tripartite and corporatist arrangements that were attempted and abandoned in the 1970s — not naively, but with an understanding of why they failed then, and what conditions might make them work now. It means asking whether trade union density, sectoral bargaining frameworks, and works council-style representation could be rebuilt in a labour market that looks very different from that of fifty years ago.

It also requires a frank political argument: that the current institutional settlement — in which the Bank of England is handed the inflation problem and left to solve it by increasing unemployment — is not a technical necessity but a political choice. And it can be unmade.

It seems likely that Burnham, or whoever leads the Labour Party in the 2^nd half of 2026 and beyond will have to seriously revisit the problem of how the costs of an external shock are distributed throughout the society.  Would a Labour Party under Andy Burnham be up to that task?  If they are not, Reform will win in 1929.