The Labour Party chooses its next Leader
Keir Starmer resigns - What happens next?
by Sam Tankard, Associate Director
At the lectern outside No.10 Downing Street - an image we have become all too used to this decade - the Prime Minister resigned as leader of the Labour party. Starmer confirmed he has asked the party’s ruling National Executive Committee to find a new leader and that he would not take part in any contest, noting he would give his full support to his successor. This marks a notable change in his resolute tone over recent weeks that he would fight any challenge.
The timetable is short. Nominations will open on 9 July and conclude by summer recess. The backing of 81 MPs is required to be on the ballot. The NEC will then chart a timetable to allow members and affiliates to vote over the summer. A new Prime Minister will be in place before parliament returns in early September. If there is only one candidate, however, there will be a new Prime Minister next month. With Andy Burnham on course to secure the nomination of nearly 300 MPs, the prospect of a Burnham coronation looks most likely.
Despite spending much of the last month pushing for a contest and a “battle of ideas” since resigning as Health Secretary, Wes Streeting has immediately rowed in behind Burnham’s momentum.
Many allies of Keir Starmer, such as Steve Reed and Rachel Reeves, will now be considering their own political futures. Will the Labour right seek to rally around Darren Jones or a similar figure to at least challenge Burnham? Meanwhile, other prominent Labour figures from the party’s soft left caucus, such as Angela Rayner, have already ruled themselves out or coalesced around Burnham.
With the former Greater Manchester Mayor the favourite to take the keys to No. 10 in short order, we take a look at what his policy positions are likely to mean for a future government – even if they are far from fully formed at this stage.
What is the outlook for tax and spend under a Burnham-led government?
by GK’s Head of Policy, Hugo Tuckett
As the leading contender to replace Starmer, scrutiny of Burnham’s public spending commitments has grown in recent weeks. Burnham sought to navigate and strike a balance between the competing interests of local and national policy objectives throughout the by-election campaign. Most notably, Burnham had to stress his commitment to the government’s fiscal rules after previously arguing that Britain should not be in “hock” to the bond market to maintain fiscal credibility. He has similarly had to row back on other spending commitments, including fully compensating the Women Against State Pension Inequality campaign.
In the longer term, Burnham has signalled his desire to introduce more significant changes to public spending with the aim of bringing about greater public control of key utilities in energy and water. Burnham has said he wants to see “the essentials of life being run primarily for the public interest, not for private interests”. This would involve undoing the “privatisation premium”, according to a policy paper titled The Productive State, published by Mainstream; a soft-left Labour group close to Burnham. He is being closely advised by Miatta Fahnbulleh MP, who argues for a framework of greater state intervention to protect the public from rising costs, rather than fully fledged renationalisation.
Burnham’s commitment to the current fiscal rules and Labour’s existing manifesto commitments is likely to limit his room for manoeuvre in the near term. Recent statements by the new Makerfield MP indicate that he would stick to Rachel Reeves’ fiscal rules should he become Prime Minister and abide by Labour’s manifesto commitments not to raise income tax, national insurance or VAT, in an attempt to calm the international bond markets. To that end, he has brought on board Andy Haldane, former Bank of England Chief Economist; Richard Hughes, former Chair of the Office for Budget Responsibility; and Jim O’Neill, the crossbench peer and former minister who worked on George Osborne’s “Northern Powerhouse”. However, these tax commitments will similarly constrain any spending plans the prospective Prime Minister might hope to pursue.
What is apparent, though, is that Burnham has ambitions for much more radical changes to the tax landscape, including amending the income tax system and pursuing fundamental reform of property taxation. He has previously suggested introducing a 10% “starting rate” of tax for lowearners and raising the top level of income tax to 50%. Burnham has not yet specified when the starting rate would kick in or at what income level the 50% rate would be set. On property taxation, he has argued in favour of replacing council tax with a form of land value tax, which would see high-value properties in London and the South East pay more, while lower-value properties in the north of England would see a tax cut.
For the Metro Mayor who, for the last 10 years, has benefitted from being able to spend money on flagship projects such as the new bus network and city centre investment in Manchester, the same challenges that faced Starmer and Reeves will likely curtail much of Burnham’s flexibility on public spending.
Download the full Burnham Briefing
