Burnham has big ideas - but what will they cost?
Up until this point, the new Prime Minister Andy Burnham has described his policy changes with a broad brush. From today, he faces the constraints
Up until this point, the new Prime Minister Andy Burnham has described his policy changes with a broad brush. From today, he faces the constraints, trade offs, and realities of high national office. For example, Burnham has said Tuesday's announcements on cost of living support would be paid for. In other words, it would mean a tax rise or spending cut, so we will see rather quickly what the new PM prioritises when push comes to shove.
Meanwhile, the markets seem to have already reacted to the suggestion he would be using some "flexibility" in his borrowing rules to help with new announcements. The UK government's 10-year borrowing rose above 5% on Monday after falling in recent days. It has not gone up in this way in other European economies. The move was not huge, but it shows the sensitivities at a moment when Burnham is overhauling his cabinet.
The "flexibility" he was talking about is, I understand, about the treatment of financial institutions. This has occurred in some green energy policies and essentially helps exempt certain types of borrowing from the measures of debt. There is scope for this model to extend to housing and other infrastructure. It was not a general suggestion of, for example, using up the increased headroom against the government's borrowing rules.
All this shows how every tricky decision and trade off is being watched by the country and the markets at the same time.
The BriefWire