Burnham Camp Split on Cost-of-Living Plan as He Approaches Power

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(Bloomberg) — Andy Burnham, Britain’s likely next prime minister, faces competing advice from within his own camp on how to respond to the UK’s cost-of-living crisis, as he rushes to finalize his plans for government ahead of a Labour Party’s leadership contest he’s set to win.

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Key figures in Burnham’s inner circle are encouraging him to offer significant and immediate support to help struggling Britons with elevated prices, whereas others are cautioning restraint, according to people familiar with the discussions who spoke on condition of anonymity. A spokesperson for Burnham did not immediately respond to a request for comment.

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Burnham, who is expected to take over from Keir Starmer as Britain’s leader on July 20 if no one else stands against him for the Labour leadership, has said that reducing bills and making life easier for Britons will be a top priority in office, though he’s yet to set out concrete details. The inflated cost of living has consistently ranked among the top issues facing Britons in recent years, according to YouGov polling. 

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“We do need to be serious about putting more money back into people’s pockets,” Burnham told LBC last week. “Britain is paying too much for the basics.”

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The debate around how to imprve affordability arrives as Burnham is yet to disclose who he’d appoint to the position of chancellor as well as other senior roles in his team. Some investors are wary of the economic direction of his prospective premiership, after Burnham said he wants to take more of the economy into public control. He has also said he wants to devolve powers across the UK, but is yet to add more detail to those plans.

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Supporters who have been helping Burnham prepare for government include: Ed Miliband, the energy secretary and bookmakers’ favorite to be chancellor; Miatta Fahnbulleh, the former energy minister; Louise Haigh, the former transport secretary; Josh Simons, the former MP for Makerfield; and James Purnell, the former cabinet minister who is due to be Burnham’s chief of staff in 10 Downing Street and who is leading preparation-for-government talks with the civil service. 

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Burnham has also received economic advice from the likes of former Bank of England chief economist Andy Haldane, former Goldman Sachs chief economist Jim O’Neill, former Office for Budget Responsibility Chair Richard Hughes and Carys Roberts, the former executive director at the Institute for Public Policy Research think tank.

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Taking a less interventionist approach on the cost-of-living is seen within Burnham’s team as a continuation of the current government’s path under Starmer and Chancellor of the Exchequer Rachel Reeves, viewed as a strategy of conserving funds for a generous, voter-friendly budget just before the next election due in 2029, according to the people familiar with the matter.

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UK inflation was above the Bank of England’s 2% target at 2.8% in the 12 months through May, although the BOE has been reducing its expectations for its pace in months to come because of declining oil prices. Real household disposable income in the country fell by 0.8% between January and the end of March due to price rises and tax hikes — the fourth quarter in the last five where the measure has declined, according to ONS data published in June.

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Burnham is due to inherit public finances in a healthier state than when Starmer took power in 2024, after a succession of tax-raising budgets by Reeves increased the government’s fiscal buffer to more than £20 billion ($27 billion). Part of the cost-of-living discussion centers around whether to use some of that fiscal capacity early on for handouts to voters, or whether to wait, the people familiar said.

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