In his first speech as Prime Minister to the September Labour Party conference, Andy Burnham announced that he intended to reverse the damage caused by 40 years of neoliberalism.  One could be forgiven, therefore, for expecting that the first budget of his administration would contain some interesting proposals.  But it did not.  John Healey, Burnham’s chancellor, delivered a very low-key budget that was aimed at reducing a little the tsunami of cost increases that people will experience over the next 6 months.

There is much talk in the media that the chancellor was severely constrained by the geopolitical situation.  That situation is dominated by two ongoing wars in Ukraine and the Middle East which have severely limited the supply of energy and fertilisers to the world market.  But Britain is not an innocent bystander in these wars.

Britain and the United States strongly supported the eastern expansion of NATO which inevitably led to the war in Ukraine.  And Britain seems even more determined than the US that this war should continue.  Yet, if the war were wrapped up, and Russian oil and gas were allowed to again flow westwards then many of Burnham’s immediate cost of living problems would vanish.

The war in the Middle East is a somewhat different matter.  There seems to have been little enthusiasm in the Foreign Office for Trump’s war against Iran.  Perhaps it was understood that this war could have serious implications for energy supplies and could limit Britain’s ability to continue the Ukraine war.

Certainly the government story is that it is Trump’s war in the Middle East that must bear primary responsibility for the cost of living increases that Britain will experience over the winter and beyond.  Little is said about the initial responsibility of the war in Ukraine for cost of living increases.

Burnham seems intent on supporting the continuation of the Ukraine war.  He will meet with no opposition from the other political parties who compete with each other in stating their support for that war.  When Healey announced in his budget a further £10 billion of economic and military support for Ukraine including £500 million over this winter there was no dissent within the House.

One might have hoped that the unions would point out the relationship between the war in Ukraine and the cost of living crisis in Britain.  But the unions are, for the most part, equally vociferous in demanding that the war against Russia should continue to be prosecuted.  They show no political understanding that the war is essentially a NATO war to weaken Russia using Ukrainians as cannon fodder.

Burnham’s situation is certainly made very difficult by the wars of choice in Ukraine and the Middle East.  But another constraint is his commitment to follow Rachel Reeves’ fiscal rules.  It is possible that this will be the more important constraint since it appears that it will be the constraint on which Kemi Badenoch will choose to fight the next general election.  In order to meet the fiscal rules Badenoch demands that welfare should be cut.  She argues that people are choosing not to work because welfare payments are so good.

Burnham’s answer to this argument is vague and stems from the fact that, despite claiming to want to reverse 40 years of neoliberalism, Burnham fully subscribes to the neoliberal belief that the UK state is financially constrained.  In other words, Burnham has swallowed completely the carefully managed neoliberal myth that if the state is to spend money then it must get that money from taxation or borrowing like a household would have to do.

The Tories successfully boxed Starmer and Reeves into a corner with this false account of government spending.  Despite a huge parliamentary majority, the Starmer/Reeves administration had collapsed within two years.  Badenoch has now started to do the same with Burnham in preparation for the 2029 general election.  It is unclear whether Burnham understands the danger or knows how to avoid the trap.  On the economic side, Burnham appears to live in a pre-Keynesian world that fails to understand how it could ever make sense to pay people decent wages to dig holes and fill them in again rather than to let them decline in a pool of unemployed labour.

With the exception of the Greens, all the political parties live in this pre-Keynesian world.  At their 2026 conference the Greens passed a motion basically saying that government spending decisions should be taken based on their effect on society rather than on how they affected financial ratios like debt to GDP.

If Burnham does not move into an equivalent space, his project to reverse 40 years of neoliberalism will likely fail.