8 Problems Coming Down The Track For Burnham After John Healey's 'Do No Harm' Budget

Andy Burnham looked unexpectedly emotional when John Healey sat down after delivering his maiden Budget . The prime minister patted his chancellor on the back proudly, appearing to be visibly moved that they had passed this major milestone together. But not many people shared in his delight over the Burnham government’s first attempt at the biggest financial event of the year. Critics on both sides of the political spectrum soon rallied to ask: is that it?

The chancellor had vowed to give the public “breathing space” amid heightened cost of living pressures, while Burnham entered No.10 in July with a dramatic promise to bring change after “40 years of neoliberalism”. But Burnham’s own former adviser, Andy Haldane, gave the announcement a paltry four out of 10, describing it as, a “do no harm Budget”. Of course, Healey was never expected to try and undo the most significant strain on the UK – and global – economy: Donald Trump’s war in Iran .

But Healey has been criticised for kicking the can down the road even on issues that are most definitely in his control, such as the welfare bill and defence spending. Those problems are not going to go away with time, either. Here’s a look at just some of the dilemmas set to haunt Burnham in the coming months. 1. Defence Investment Healey famously quit as defence secretary in June over the government’s lack of investment in the UK’s armed forces.

The move accelerated Keir Starmer’s demise and helped pave the way for Burnham to replace him in No.10. When Burnham made Healey his chancellor, it was seen as a signal that defence spending would be a priority. Healey did manage to plug a £4.7 billion gap in the defence investment plan, taking spending on the sector to 2.7% of GDP by 2027, using capital budget cuts – including to the energy department – unallocated reserves. The Budget did also confirm that the government was aiming to spend 3% of the gross domestic product (GDP) by 2030 with the goal of reaching the Nato target of 3.5% by 2035.

Healey put off outlining where this extra bit of funding was coming from until the spending review in the summer, however. He suggested he would be “looking hard at public spending” and using “innovative financing” including a joint procurement initiative with Finland, Poland and the Netherlands to find this extra cash. Pressure over the money is will only continue to grow along with the threat from Britain’s adversaries, like Russia .

Defence secretary Wes Streeting has also called for Britain to be ready for war “in 1,000 days” – begging the question as to why the government is not ready itself. 2. Welfare Cuts Healey has refused to commit to reducing the welfare bill before the next general election – despite initially telling the BBC he would do just that, in a “Labour way”. The chancellor told the Today programme : “I have said clearly and the prime minister has said as well, we have to bring the benefits bill down.

You don’t do that by crude cuts, especially when people are feeling the cost of living pressures.” He deferred to the two large reports coming out next month which he claimed would help “map out the way that we need to change the system for the long run”. The chancellor said the current system was “unsustainable” and the government had a “moral duty” to help the one million NEETs – that’s young people not in employment, education or training.

Labour minister Sir Stephen Timms is co-chairing an upcoming review of disability benefits while another report on NEETs led by former minister Alan Milburn is being published in November. Labour is expected to respond by the end of the year with legislation to follow. But delaying a decision only gives the Tories a reason to accuse Labour of being “addicted to welfare” – especially as the sector’s spend is set to rise this year by £19 billion, taking it to a whopping £353 billion, and set to climb after that.

So far, the government has only promised to reform the existing state pension triple lock from 2030, but details are still hazy. 3. Departmental Spend Labour peer Harriet Harman said the decision to guarantee 3% of defence spending by 2030 will have other ministers looking rather nervously at their own budgets. Speaking on the Electoral Dysfunction podcast, Harman said: “Other government departments will quake in their shoes. Everyone’s got to be hoping growth is better than forecast.

If it isn’t, there’s more pressure on other government departments.” The former New Labour minister also pointed out that centralised power will – at least at first – have less money if Burnham manages to execute his devolution plans. The prime minister wants local areas to be able to invest 20% of their business rates in the areas they believe need them. The hope is that will boost growth, and then put more money into the whole system – but the government has not yet said which departments might suffer in the meantime. 4.

Cost Of Living OBR said UK living standards are projected to fall and that its latest economic forecast painted a “pretty grim picture”. It blamed the difficult financial situations facing the UK right now on the US-Iran war, which has caused higher borrowing costs and inflation. Similarly, the Resolution Foundation think tank said the £100 support payment in Healey’s cost of living budget will not be enough to offset the impact of higher energy bills with more pain on the horizon.

The think tank’s chief executive Ruth Curtice said: “This parliament is increasingly looking like one of two halves. “The first half has been marked by rising living standards, solid economic growth and extra funding for public services.” But she warned the second half would be “tough going”, and that the “scattergun” Budget did not do enough to help. UK household energy bills are forecast to jump in January by up to £400 taking a typical annual bill to £2,100 – meaning the £100 lump sum will barely touch the sides.

Meanwhile, inflation is also expected to creep up to around 3.75% at the start of next year, as the strain on the general public continues. 5. Economic Growth Burnham picked up Keir Starmer’s headline promise of prioritising economic growth, vowing to deliver : “Growth in every postcode.” But, on Wednesday , the Office for Budget Responsibility ( OBR ) predicted rising inflation would slow down anticipated economic growth over the next year.

While UK gross domestic product (GDP) is expected to improve by 1.2% this year – up from an estimate of 1.1% – it will go down in 2027. The OBR previously predicted the UK economy would grow by 1.6% next year. As the watchdog warned: “The UK’s economic and fiscal position remains very challenging. “Since 2008, repeated adverse shocks have contributed to persistently weak GDP growth and elevated levels of government borrowing. “This has resulted in a sharp increase in government debt as a share of GDP, to a level that is high by both recent historical and international standards.”

Director of the Institute for Fiscal Studies, Helen Miller, also said: “The plan to reduce borrowing has been pushed back. “This Budget has a raft of fiddly measures but very little that will move the dial on growth.” If there is less money coming in, it will be much harder for Burnham to carry out some of the more radical changes he keeps talking about. 6. Brexit Hangover The PM has suggested that he is looking to develop closer EU ties at next month’s summit, making it clear he hopes that could be an avenue for growth.

As the OBR noted, leaving the bloc may have reduced the UK economy by an estimated 6% to 8%. But that has opened up another area of uncertainty for the government: just how close should we go, and should rejoining ever be on the table? Burnham has offered up a very mixed message on EU relations so far. Last year he said he hoped to rejoin the EU within his lifetime, but insisted in May he did not want to reopen the Brexit debates. Then he suggested he could call a referendum on the UK returning to EU freedom of movement before his spokesperson backtracked.

Burnham tried to stop his ministers from discussing the EU on Wednesday, saying: “The government has a collectively agreed position, which I have set out today. “It is entirely consistent with everything that I’ve said, including in the by-election. “The red lines in our manifesto, including on freedom of movement, will stay in place firmly for the whole of this parliament.” But the cabinet is allegedly split over whether it’s worth rehashing years of Brexit debate once again and the terms of any EU deal is still very much up in the air. 7.

The Question Of Rosebank The government has not yet made a decision on whether to grant approval to Rosebank, the UK’s largest untapped oil field. Energy secretary Miatta Fahnbulleh confirmed Labour would be going ahead with plans to extract gas from the much smaller Jackdaw site earlier this month, in a push for more homegrown energy. But Rosebank is a different and much more controversial beast. Supporters say it could create up to £8.5 billion in investment for the country, create jobs and generate tax revenue.

It would also release more than 200 million tonnes of CO2, and around 80% of the oil is expected to be exported and sold internationally – so the direct impact on UK energy bills would be minimal. However, the Treasury’s calculations for the Budget included the assumption that the Rosebank would be approved. If the ministers who are minded to oppose development the site, like Fahnbulleh and foreign secretary Ed Miliband, succeed, it’s unclear how the Treasury will still make its numbers add up. 8.

Election Questions Burnham said the general election will not happen until 2029 – then changed his mind to 12 months earlier this week. “I don’t know how many times I’ve done this now, but yes, I can rule out calling a general election in the next 12 months,” he said. The Liberal Democrats are reportedly preparing for an election on December 10, according to The Times, as Burnham is “at the peak of his authority”. That would mean Burnham calls an election next week, after a previous window to push through legislation from the Budget.

The Conservatives reacted to the Budget by calling it one “for a May general election, not the future of Britain”. Starmer’s former right-hand man, Darren Jones, revealed this week he was preparing for a campaign within his constituency just “in case that changes”. However, he did tell Sky News’ Electoral Dysfunction podcast that he would imagine 2028 is the logical time for the next election. Where Do We Go From Here? Burnham initially insisted the Budget was “bold”, especially considering the circumstances.

Then on Friday, he admitted to ITV: “The room for manoeuvre wasn’t what I would have hoped it to be. I guess then the question is, you know, radical within what we were able to do. “It was quite a big call to ask the banks to repay the help they had off people 20 or so years ago. And a payment – OK, you’d like it to be more – but a payment to 20 million households is quite a significant step.” He also said that the “volatility of things means you just can’t necessarily deliver the Budget that in an ideal world you would want to deliver”.

But, after years of hankering after 10 Downing Street, the prime minister will be aware that there are many things you can change even when there is a destabilising war in the Middle East. As a seasoned politician, he musta also know that his promises to change Britain for good built up expectations