Burnham is leading an administration that seems to have learned nothing from the administrations that governed the UK since the global financial crisis (GFC) in 2008.  All these administrations failed.  Keir Starmer failed, Rishi Sunak failed, Liz Truss failed, Boris Johnson failed, Theresa May failed, David Cameron failed, Gordon Brown failed.  By failed we mean the Prime Minister resigned or was forced to resign or lost a general election.  

A case could be made that this is not true of David Cameron who won the 2015 general election with a small overall majority.  But this was almost an accidental victory caused by the collapse of the Liberal Democrat vote and Cameron’s commitment to hold the Brexit referendum.  He resigned a year later in 2016 after the loss of that referendum.

The primary reason that all these administrations failed is because they were committed to following a set of ridiculous fiscal rules around government spending, taxation and borrowing, that limited the ability of the state to act in the way that the society needed it to act.

Fiscal rules are a somewhat new invention for which the Labour Party chancellor, Gordon Brown, must take much responsibility.  Administrations cannot avoid having views on spending and taxation.  Previous governments (including under Nigel Lawson and Ken Clarke) had fiscal objectives and targets too, but Gordon Brown introduced the first genuinely codified, rules-based framework, with a specific numerical target and an explicit accountability mechanism, rather than a looser set of policy commitments.  Brown also made the Bank of England (BoE) independent in the sense that the BoE could set interest rates without consulting with the chancellor.  Before Brown, the chancellor’s permission was required before interest rates could be changed by the BoE.

Brown felt that with his explicit fiscal rules he was introducing an era of fiscal responsibility.  In fact Brown introduced an era of great fiscal irresponsibility.  Successive administrations focused on following fiscal rules rather than doing what the country needed.

The genuine irrelevance of the fiscal rules is illustrated by the fact that in moments of crisis the fiscal rules are quickly ditched.  Thus in 2008 the government created a huge amount of money to stop the global financial crisis becoming a UK depression.  Similarly, in the Covid crisis of 2020, a huge amount of money was created to stop a depression emerging.  However, once the crisis has passed, the clamour to follow the fiscal rules starts again.

Starmer was a dour uninteresting man who seemed to have little feel for the people over which he was prime minister.  But it was not his personality that destroyed his administration.  It was the religious fervour with which his Chancellor, Rachel Reeves, proclaimed her adherence to fiscal rules.  

It should have been crystal clear to Burnham that Reeves’ preoccupation with fiscal rules destroyed the Starmer administration.  But, instead of downplaying their importance, almost the first thing that Burnham announced was that he would be a close follower of Reeves’ disastrous fiscal rules.  

By that single act Burnham has put his administration on the road to guaranteed failure.

The next general election is less than 3 years away.  If Burnham does not convince the electorate that he is making changes that will dramatically affect their standard of living, the Reform party may well form the next administration.  

Does Burnham have the intent and ability to make the required dramatic changes?  The evidence so far is not reassuring.  On the most important issues he has chosen broadly to follow the policies of Starmer’s administration:  he has declared his complete commitment to Rachel Reeves’ fiscal rules, he has declared full support for the NATO proxy-war against Russia, he has refused to describe Israel’s actions in Gaza as genocide, he continues to allow the US to use UK airfields to launch bombing raids on Iran. 

On all the major issues, fiscal rules, Ukraine, Gaza, Iran, tax increases, Burnham’s administration is indistinguishable from the Starmer administration.  Cutting VAT on electricity and limiting bus fare to £2 pounds are welcomed by the electorate but there is a tsunami of increases in the cost of living approaching, if the war in Iran and the proxy-war against Russia continue.  It is unclear that Burnham has any idea how to deal with that other than by introducing a thinly disguised austerity package.

Any Labour administration that attaches importance to fiscal rules is an administration destined for failure.  The Tories understand this.  It is no accident that forcing Labour to accept fiscal rules has been the Tories most important political objective.  Indeed the Tories have used the fiscal rules to pursue their own political objectives.

When the Tories formed the coalition government after the 2010 general election, George Osborne and David Cameron were delighted to be able to use fiscal rules to further cut services and reduce the size of the state.  The preoccupation with the size of the national debt has relentlessly destroyed one administration after another.  It created the dissatisfaction that led to Brexit.  It destroyed Theresa May’s overall majority when the electorate were given the choice of Jeremy Corbyn as a prime minister who had no time for fiscal rules.  It destroyed Boris Johnson’s levelling up agenda.  It destroyed Liz Truss and then Rishi Sunak.  It has destroyed Starmer’s Labour administration in 2 years, despite it having a huge overall majority.

But Burnham and the Labour party continue to lock themselves into this guarantee of failure.  There is no doubt it would be difficult to challenge the belief in fiscal rules which has achieved almost religious status.  Yet fiscal rules were not a focus of UK administrations until the almost philosophical desire to reduce the size of the state took hold under Thatcher and subsequent Tory prime ministers and was embraced further by Tony Blair.

If Burnham is to win the next general election he must move Labour’s preoccupation with fiscal rules to a preoccupation with resources.  For instance, if Labour is to build more social housing, Burnham’s question should not be where does he find the money.  It should be where does he find the skilled workers and raw materials and land to build this social housing.  He must shout from the rooftops Keynes’ famous statement: If we can do it we can afford it.  That should be the motto of his administration and its focus should be on finding the required resources.

We are not suggesting this task will be easy.  Galileo found it was relatively easy to show that the earth went round the Sun.  But he found the political task of having the physics accepted was much more difficult.  Burnham has a similar problem.  The economic case for abandoning the fiscal rules is relatively easy. But the political task of winning the argument to abandon a set of rules that have achieved almost religious status over the last 30 years will prove very difficult.

There is little evidence that Burnham has either the intent or ability to make this required political case.  If he does not, his administration will fail as have all those other administrations that allowed fiscal rules to limit the role of the state.  

But perhaps blundering into a war with Russia may save him.