There has been a great deal written about Andy Burnham and what he could bring as Britain’s newest Prime Minister. Like every new leader, he arrives with optimism, ambition, and a long list of promises. His speech outside Number 10 on Monday was assured and polished, even without the support of a lectern or autocue.
He has told his ministers he will lead a “cost-of-living government” after announcing an £850m (€997m) tax cut on electricity bills and now capping bus fares.
But after more than 30 years advising businesses, organisations and political leaders, I have learned one thing: vision is important. Arithmetic is unforgiving.
It’s very easy to announce increased spending on UK defence, social care, housing, policing and infrastructure. Most people would support investment in these areas. But eventually, someone has to ask the question that rarely gets applause: where is the money going to come from?
Britain remains one of the world’s largest economies, with an entrepreneurial spirit many nations would envy. However, it also faces very significant post-Brexit challenges. The UK is carrying substantial debt and experiencing slower economic growth.
There is no magic money tree.
Governments have limited options: grow the economy, increase taxes, borrow more, cut spending elsewhere or reform how the public sector operates.
For me, economic growth must be the priority.
Growing businesses create jobs. Jobs generate tax revenues. Tax revenues fund hospitals, schools, policing, defence and the social safety net.
Markets understand maths better than politics. Investors don’t respond to slogans; they respond to balance sheets. If confidence is lost, borrowing costs rise, leaving even less funding available for public services.
That’s why Prime Minister Burnham’s greatest challenges is building confidence among businesses, investors and the public.
The UK’s new Chancellor, John Healey, will inherit a particularly difficult position at the Treasury.
In the short term, he must find ways to fund increased defence spending, while also supporting households through ongoing cost-of-living pressures, all against the backdrop of constrained public finances. Let’s remind ourselves that John Healey resigned as the UK’s Defence Secretary in June because of a disagreement with then PM Starmer over defence spending. He was being forced to make decisions that would reduce the readiness and increase risks to the armed forces.
Recent warnings underline the scale of the challenge.
Politics is often about hope. Government is about hard choices.
The leader who succeeds won’t necessarily be the one who makes the biggest promises. It will be the one who creates the conditions for businesses to invest, entrepreneurs to grow and the economy to generate the wealth needed to fund those promises.
Because in the end, every Budget has to answer the same simple question:
Do the numbers add up?
