Andy Burnham said this week that he has made a ‘clear diagnosis of what has gone wrong’ in Britain since the 1980s, when he returned to Parliament after 10 years in the wilderness. Is his diagnosis correct? Yesterday I looked at Burnham’s claims about political centralisation and the privatisation of economic power, neither of which happened. What other claims did he make?
The country deindustrialised – mixed
Burnham claimed that Britain deindustrialised in the 1980s. Manufacturing as a share of GDP has indeed declined since 1979, falling from 28.5 per cent in 1979 to around 8.5 per cent today. But this was already the direction of travel: manufacturing output was 32 per cent of GDP in 1973. British manufacturing was already in serious trouble before Margaret Thatcher came to power: between 1973 and 1979, output fell by 7.6 per cent, while it rose by 19.6 per cent in France. In fact, some economic historians have argued that Thatcher’s reforms improved the relative performance of British manufacturing, so whether or not deindustrialisation was a deliberate ‘wrong turn’ or a natural consequence of globalisation is up for discussion.
Burnham at his worst turns into something of a Jim Royle, wagging his finger at the ghost of Maggie Thatcher
Leaving the figures to one side, Burnham’s prescription for this change is the same as every other post-war government’s: a general economic rebalancing away from London and the South East. This was the thinking behind Clement Attlee’s 1945 Distribution of Industry Act, Ted Heath’s 1972 Industry Act and George Osborne’s Northern Powerhouse, as I’ve written before. Rhetorical commitments to industry are not a break with the past – David Cameron after all promised that a ‘march of the makers’ would lead Britain out of the recession.
In reality, Burnham has no coherent industrial policy. He wants to pursue higher spending on entitlements like social care and higher taxes, doing little to address the structural reasons why Britain’s manufacturing is declining – expensive energy, restrictive planning laws and expensive labour. He has shown no interest in protectionist policies for British manufacturing (such as tariffs against cars imported from China). He has acted against the political consensus on pursuing higher defence spending, which could create business for British arms manufacturers, because he wants to maintain the explosive growth of the welfare state.
‘Austerity followed’ – Mostly untrue
Burnham also invoked the ‘austerity’ of the coalition era as another reason for decline. The coalition certainly made grand promises about fiscal discipline when it took power in 2010. George Osborne promised in his emergency Budget that the deficit would be largely eliminated by 2015. But, as with the promise to reduce immigration to the tens of thousands, this did not come to pass.
Real terms spending increased over the 2010s, albeit at a lower rate than during the New Labour years. Real terms increases for spending on the NHS were ringfenced and overseas aid grew by 31 per cent between 2011/12 and 2014/15. There were significant cuts in certain departmental budgets, particularly in areas like justice – causing huge problems in the courts and prisons – but on the whole we did not experience real austerity.
In 2015 the left-wing economist Yanis Varoufakis said ‘he [George Osborne] hasn’t really practiced austerity, he has talked about austerity and it didn’t work’, saying that the Chancellor gave up on it when it started to damage the economy. As the Institute for Fiscal Studies put it in 2015, poor economic growth between 2010 and 2012 convinced the government that they should promise fiscal consolidation after the next election instead of going further with deficit reduction. Strangely Burnham also used Prime Minister’s Questions to criticise the Tories for increasing debt as a percentage of GDP during their fourteen years in government.
Decline was exacerbated by the ‘hollowing out of councils and depriving them of the agency to fix any of this’ – Mostly untrue
Leaving aside that governments have consistently devolved power out of Westminster since the 1980s, this statement presupposes that with further devolution councils and local governments would have been able to improve their economic performance.
This does not withstand scrutiny. Because further devolution has already been tried, we can assess its impact. A 2026 study which examined six regions empowered by the 2016 Cities and Local Government Devolution Act found that there is ‘little evidence that devolution accelerated growth overall’ and that ‘wealthier districts within devolved areas tended to grow faster than expected, while poorer districts often fell behind’.
More specifically to councils, the idea that they have been ‘hollowed out’ is more mixed. From a resourcing perspective, local government financing has fluctuated over the years. Between 2000/01 and 2009/10 real terms local government spending increased by 57 per cent, before a 21 per cent fall between 2010 and 2019, followed by rising levels in the 2019-24 Parliament. If Burnham is referring to the powers that councils have, the picture is again mixed.
Thatcher did cut some of the revenue-raising powers that councils had (taking control of setting business rates and collecting the money centrally before distributing it), but this was partly reversed by George Osborne. Not only that, a change delivering government through ‘partnerships’ has given councils more influence, for example Community Safety Partnerships from 1998 and later Integrated Care Partnerships in the NHS. Many of the ways in which local authorities lost their power, for example the creation of Academies outside of local education authorities, were already being reversed by Starmer’s government.
Burnham at his worst turns into something of a Jim Royle, wagging his finger at the ghost of Maggie Thatcher from his sofa while accusing ‘neoliberalism’, ‘trickle-down economics’ and ‘austerity’ of ruining his life. This paranoid, conspiratorial understanding of how the economy works may provide comfort to people who want to blame external forces for their circumstances. But as Burnham found this week, reciting these tired incantations will not convince the markets to let you borrow more money. Quite the opposite.
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