Ben Howlett
Chief Executive, CuriaAs Andy Burnham moves closer to Downing Street, close ally and advisor, Louise Haigh’s call for a new fiscal framework raises the central question facing Labour. Ahead of Burnham’s speech on Monday, can Haigh’s plan promise economic renewal without frightening the bond markets?
(Photo: Andy Burnham, Culture Secretary, Lisa Nandy, and Louise Haigh on the campaign trail in Makerfield. Credit: Louise Haigh MP Instagram)
Louise Haigh’s essay for Renewal is an early window into the economic debate now forming around Andy Burnham’s likely premiership.
Haigh, a former Cabinet minister and close advisor and ally of Burnham, has set out a case for a fundamental rethink of Britain’s fiscal framework, economic institutions, and public investment model. Her argument is not simply that the UK should spend more. It is that the machinery of economic government has become too cautious, too short-term, and too weakly aligned with the long-term renewal Britain needs.
That matters because Burnham’s expected arrival in Downing Street would come at a moment of unusual economic and political sensitivity. The country is still living with high borrowing costs, weak productivity, strained public services, low growth and fragile market confidence.
Any new Prime Minister seeking a more ambitious economic settlement would therefore face a difficult balancing act: how to convince voters that change is coming, while convincing markets that fiscal discipline has not been abandoned.
On Monday, Burnham is likely to try to square two audiences at once for his first major speech on the economy since returning to Westminster: voters who want a more ambitious economic offer, and markets that want reassurance after the trauma of the Truss-Kwarteng mini-Budget.
Expect him to talk about growth, fiscal responsibility and devolution in the same breath – arguing that Britain cannot rebuild living standards through short-term Treasury restraint alone, but also that any new investment-led approach will remain within credible rules.
The core message is likely to be that Whitehall has held back regional growth for too long, and that a Burnham government would shift more power, funding and delivery capacity to places. Politically, this gives him a route to sound radical without sounding reckless: more Manchesterism than Corbynism, more long-term investment than unfunded spending spree.
An early blueprint for Burnhamomics
Haigh’s essay tries to occupy the space between caution and change. She does not call for reckless borrowing. Nor does she dismiss the importance of market credibility. In fact, one of the most striking features of the article is that it accepts the constraints facing government, while arguing that the existing framework has turned those constraints into a permanent excuse for inaction.
Her central claim is that Britain’s economic institutions are built for short-term crisis management when the country needs long-term renewal. The argument will resonate with many inside Labour who believe the Starmer-Reeves approach restored credibility but failed to create enough political energy. It will also appeal to those who see Burnham as a vehicle for a more place-based, activist, and interventionist Labour government.
“Our economic institutions and fiscal framework are designed for short-term firefighting when long-term renewal is required.” Louise Haigh MP
This is where the Burnham connection becomes politically important. Burnham’s appeal has long rested on place, public services, and visible delivery. In Greater Manchester, his political brand was built around the idea that Whitehall is too remote, too fragmented, and too slow to understand how transport, housing, skills, health, and economic growth fit together in real places. Haigh’s essay gives that instinct a fiscal and institutional architecture.
A Burnham government influenced by this thinking would likely argue that Britain does not need a looser state so much as a more capable one. It would seek to distinguish borrowing for day-to-day spending from investment that raises growth, supports regional development and creates future assets.
It would also likely seek to shift more power away from the Treasury, and towards a stronger centre of economic strategy, potentially through Number 10, a growth ministry or empowered investment institutions.
The market test after Truss and Kwarteng
The difficulty is that the same argument will worry investors if it is not communicated with precision.
The lesson of Liz Truss and Kwasi Kwarteng is that markets do not reject all attempts to change economic policy – they react badly when governments announce large fiscal shifts without clear institutional reassurance, credible numbers or a convincing explanation of how the policy will be paid for. The mini-Budget created the impression of a government deliberately bypassing the guardrails. That perception mattered as much as the policies themselves.
Haigh’s agenda is different in substance. It is not a low-tax, deregulating dash for growth. It is an investment-led argument about housing, infrastructure, childcare, skills, industrial strategy, and regional development. But it could face a similar communications test if a Burnham government appears to be moving too quickly against the Treasury, the Office for Budget Responsibility or the Bank of England.
That is the multi-billion political and economic danger. A reform programme designed to restore long-term credibility could be interpreted as an attack on the institutions that currently certify credibility.
“After the disastrous Liz Truss mini-Budget, markets have become more sensitive to UK fiscal credibility – not only because they perceived a lack of seriousness in the way we conducted economic debates in this country, but also because it drew attention to the structural weaknesses in our economy.” Louise Haigh MP
The bond markets will not object to every form of public investment. Investors buy long-term government debt when they believe the state has a credible plan, stable institutions, and a realistic growth strategy. What they will punish is ambiguity: uncertain tax plans, unclear borrowing paths, institutional conflict, or rhetoric that suggests market discipline is an obstacle to be defeated rather than a reality to be managed.
That is why Haigh’s argument about sequencing matters. She recognises that reforming the fiscal framework in a period of market volatility carries risk. Her answer is to maintain a balanced current budget, retain independent assessment, and move gradually towards longer-term debt targets that better account for investment returns.
In other words, the argument is not to abandon fiscal discipline, but to change what fiscal discipline means.
Is there a mandate for a dramatically different economic policy?
Politically, Haigh’s argument could be powerful. There is a public appetite for the idea that Britain has been underbuilt, underinvested, and overcentralised. Voters can see the effects in housing shortages, weak transport links, struggling town centres, NHS pressures, and regional inequality. A programme that links investment to practical improvements in everyday life could offer Labour a clearer story of change than abstract fiscal management.
But the question of mandate is harder.
Labour won a large parliamentary majority in 2024, but it did so on a platform that emphasised stability, discipline, and carefully costed change. It explicitly avoided a dramatic tax-and-spend offer. A Burnham government may therefore have a parliamentary mandate to govern, but not necessarily a public mandate for a sharp departure in economic policy unless it explains that departure clearly and seeks consent for it.
That does not mean Burnham would need an immediate general election before changing fiscal priorities. Governments routinely evolve in office, particularly after leadership changes. But it does mean that the first Budget or fiscal statement of a Burnham premiership would carry enormous political weight. It would need to answer three questions at once: what is changing, why is it necessary, and why should the public and markets believe it is sustainable?
This is the point at which the comparison with Truss and Kwarteng becomes politically dangerous. Opponents would not need the policy content to be identical. They would simply need to argue that Labour was attempting a major economic turn without the mandate, preparation, or market reassurance required.
For Burnham, the answer would have to be rooted in delivery. The argument could not simply be that Britain needs a new fiscal framework. It would need to be that the existing framework is preventing the country from building homes, improving transport, strengthening public services, and growing the economy. A mandate for reform would need to be constructed through visible, practical outcomes, not theoretical fiscal debate.
The institutions in Haigh’s sights
The most radical part of Haigh’s essay is the institutional critique.
She questions the role and mandate of the Treasury, the OBR, and the Bank of England. She argues that Britain’s economic model has embedded short-termism into the structure of government, with investment too often treated as residual spending rather than a central part of fiscal strategy.
Her critique of the five-year fiscal forecast is especially important. She argues that the current system undervalues investment whose benefits fall outside the forecast window. Social housing, childcare, skills, and transport infrastructure may reduce future costs and increase productivity, but the fiscal framework struggles to capture those benefits quickly enough. As a result, governments are incentivised to cut or delay investment to preserve a narrow margin of fiscal “headroom”.
That is why she describes the current approach as managed decline. For Labour, this is a powerful argument. It turns fiscal caution from a virtue into a political failure. It suggests that the Treasury’s short-term control mechanisms may be preserving the appearance of prudence while allowing the country’s productive capacity to weaken.
But this is also where a Burnham government would need to be extremely careful. The Treasury, the OBR, and the Bank of England are not popular institutions with voters in the way the NHS or local councils can be. But they matter deeply to market confidence. A Prime Minister who appears to be weakening them could trigger anxiety, even if the policy intention is to improve long-term decision-making.
The safest route would be to present institutional reform as strengthening discipline, not evading it. Longer time horizons, better accounting for investment returns, and stronger economic coordination could be framed as a tougher, more realistic approach to fiscal sustainability. The risk is that the same changes could be framed by opponents as Labour marking its own homework.
The Budget would be the danger point
The first Burnham Budget would therefore be decisive.
Handled well, it could establish a new economic story: one that says Britain cannot cut its way to renewal, cannot grow without investment, and cannot keep treating long-term decline as the price of credibility. It could offer a stronger link between economic growth and everyday public services, particularly in housing, transport, health, skills, and local government.
Handled badly, it could become Labour’s own market-confidence crisis. If the Budget arrived with unclear numbers, vague institutional reforms, surprise tax rises or uncertain borrowing plans, the comparison with Truss and Kwarteng would dominate the politics. Even if the substance were different, the communication failure could be enough to define the moment.
The strongest version of Burnhamomics would therefore need three elements.
- It would need to maintain a clear distinction between current spending and long-term investment.
- It would need to keep independent scrutiny at the centre of the framework.
- It would need to explain the political mandate for change in language that voters understand – homes, jobs, wages, transport, energy security, public services, and regional growth.
Haigh’s essay shows both the opportunity and the danger. It offers Labour a route out of the narrow politics of managed constraint, but only if Burnham can turn it into a disciplined governing programme.
For Burnham, the prize is a more ambitious Labour economic story: one that says growth must be built, not merely forecast. The risk is that ambition, badly communicated, could look like indiscipline. After Truss and Kwarteng, no British Prime Minister gets the benefit of the doubt from the bond markets for long.
That is why the first Burnham Budget would need to be more than a spending event. It would need to be an act of political reassurance. It would have to show that Labour has learned the lesson of 2022 without becoming trapped by it: markets must be respected, but they cannot be allowed to become the permanent alibi for national decline.
To find out more about Curia and the wider Chamber Group, contact Partnerships Director, Ben McDermott at ben.mcdermott@chamberuk.com.