Be bold, Andy Burnham. The cupboard is not as bare as portrayed

Is Andy Burnham lucky – or by daring, does he make his luck? Ten weeks ago, after Reform UK’s sweeping tally of council seats in the local government elections, the bien pensant view was that two-party mainstream politics was over. Nigel Farage’s arrival in No 10 seemed inevitable. Today, he is fighting to retain his dignity and remaining credibility against Count Binface, as Reform’s poll ratings soften in a farcical byelection he triggered through a vanity resignation. It is not impossible he may lose.

The improbable victor is Burnham, who dared and won, first Makerfield and now, unopposed, the prime ministership. Well-grounded fears that Labour may lose the consequent Greater Manchester mayoralty election now seem from a distant age. Reform remains dangerous, but as immigration inflows collapse, more asylum hotels close and Farage personally trousers millions, its potency is beginning to ebb.

Importing Donald Trump’s Maga nostrums work less well in Britain – a lesson the Tory leader, Kemi Badenoch, has yet to learn. Impossibly high summer temperatures and a spate of wildfires after a winter of incessant rain has made the public recognise the reality of the climate crisis. Even in the US, tirades against net zero look increasingly absurd. Yet the British right continues to believe it is a popular cause – even as lived experience proves otherwise. Badenoch limits her support to a narrow base.

So while the economic pundit community is united in declaring that almost every dial on the economic dashboard is flashing amber or red – which they are – unsettled public opinion is suspending judgment. The electorate know Britain is in a jam, but ache and hope for better. Maybe a Burnham government is equipped to deliver what Britain needs.

It could. The economic and political cupboard is not quite as bare as is widely portrayed: Keir Starmer and Rachel Reeves did lay some useful foundations. Moreover, if Burnham continues to dare, there are mechanisms to find the money for cherished and important areas of public spending. For example, the Treasury is set to pay an estimated £125bn to the Bank of England over the next five years so it fully compensates UK banks for the money they still hold on deposit with the Bank, the result of allowing it for more than a decade to buy bonds under its quantitative easing programme. It was a means of injecting hundreds of billions of cash into the stricken banking system during and after the financial crisis of 2008.

But as former Bank deputy governor Charlie Bean has argued, those days are gone – and the banks’ profits have fully recovered. They should now share some of the pain. If the Bank was to tier these reserves, as the European Central Bank has done, so that only a fraction is eligible for full compensation, the Treasury need only cover a proportion of those losses, immediately saving at least £8bn to £9bn a year. Other avenues for revenue raising include the Wes Streeting proposal to equalise higher rate income and capital gains tax, and a crackdown on cryptocurrency fraud and tax evasion more generally.

Here is the cash for Burnham simultaneously to launch two cherished programmes: a youth package encompassing employment, training and help with housing, and a national care system. He can also partially lower employer national insurance contributions and still meet those important fiscal rules. If he wants to emulate Gordon Brown’s surprise Bank independence moment, he could create a “dual mandate” so that the Bank is mandated to target inflation and employment.

Nor, with a suitably effective chancellor ready to challenge a resistant Treasury, need the largesse stop there; as Burnham ponders what must be done, Ed Miliband’s chances are rising again. The much touted £4.7bn gap in the defence investment plan can be closed at a stroke by selling defence bonds with a tax incentive to ordinary investors. In addition, the sovereign infrastructure guarantee, strangely underused by Reeves, which guarantees that up to 95% of loans made by commercial banks on infrastructure can be deployed more aggressively to support everything from road to council housebuilding. Nor is it necessary to spend £200bn-plus on mutualising the utilities; reinvent them as public benefit corporations with the state taking £1 “special” shares.

The means to lowering energy prices quickly – an imperative finally to kill off the right’s fossil fuel case, let alone the impact on the cost of living – is to base electricity prices on cheap renewables, as China does so successfully, rupturing the crazed link to the gas price. Either pay a subvention to mothball expensive gas-fired power stations but keep them available for emergency demand surges. Or follow Octopus Energy’s recommendation and establish zonal price districts so that areas with lots of virtually free wind, sun or tidal power get cheap electricity.

If all this feeds the “socialist” dimension of “business-friendly socialism”, make some serious investment in Britain’s national jewel: our innovation economy and at least 800 young, high-growth tech scale-ups whose annual turnover is above the $25m threshold, and who will be the great wealth creating companies of tomorrow. Unleash the British Business Bank. Challenge and incentivise the City and corporate Britain to get behind them. Tax capital gains from building productive enterprise at token rates. Show you love founders, business buildrs and entrepreneurs. Say you want to see a booming stock market, the precondition for growth. Accept the terms for Britain joining the proposed EU innovation area – it is an economic imperative.

Above all, recognise there is no need to cower, duck and weave. The right’s former winning tropes – anti-immigration, anti-net zero and anti-EU – are losing resonance. More importantly, it offers no hope. Be confident in your beliefs and values. Plan for reconstruction to take a decade. Britain can build a great society and economy – and dispatch the populist right.

Burnham: just carry on daring.

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Photograph by Jon Super / AP