Alex Brummer: Burnham’s Higher Tax Plan for Homeowners Won’t Solve the Housebuilding Crisis

The most striking feature of Andy Burnham’s economic pitch for Britain was that it did not lean heavily on the familiar refrain of Conservative turmoil.

At times, there was a notably upbeat message about the strength of Britain’s science base, innovation economy and creative industries. Those concerned that the UK too often allows foreign companies to compete for major contracts at the expense of domestic firms will have found some of his remarks encouraging.

A Manchester-based “Number 10 North” might, in theory, be more alert to the consequences of major British businesses slipping into overseas or private equity ownership while Keir Starmer and Rachel Reeves look on. Then again, that may be wishful thinking.

Among the companies facing potential threats are budget carrier easyJet, logistics and data centre group Segro, and Unilever’s food division.

Foreign ownership would shift key decisions overseas, while also potentially taking a significant share of tax revenues with it. Any notion of local or community control in Britain would be weakened, with executives in Minneapolis, San Francisco and Baltimore calling the shots.

Labour has also watched as control of essential public services, including Royal Mail, has passed into foreign hands, even as service standards have deteriorated sharply.

Burnham has signalled support for state control of utilities, with Thames Water presenting the most urgent test case.

Yet moving Thames Water into special administration would immediately add a new debt pile onto a stressed government balance sheet.

There would be less chance of returning it to private control speedily if there were an insistence on state involvement.

Pleasing words of support for pubs, hospitality, and the High Street were heard from the presumptive Prime Minister.

There was no acknowledgement that net zero energy policies have raised costs to unacceptable levels. 

The same sectors have been bashed by the jump in employers’ national insurance and higher minimum wages. Business rates reform is critical but barely touches the sides.

Burnham has placed affordable housing at the core of his agenda. How short memories are. Reeves made housing the centrepiece of her growth plan. 

The 1.5m new homes pledged in this Parliament have moved ever further into the distance, with an estimated 300,000 or so certified in two years.

Capacity shortages, planning delays, and withdrawn help for first-time buyers have all seen production capsize. Lowering stamp duty might be a useful start. Hitting home-owners in the South East with ever higher property taxes won’t.

Debt bomb

A rebooted PM must live in the real world. An early reading recommendation is the just-released annual report of the Basel-based Bank for International Settlements (BIS). Those with memory of the great financial crisis will know the BIS saw it coming.

Concerns highlighted by the BIS are the oversized role of highly leveraged hedge funds in sovereign bond markets and an AI bubble. 

As Britain knows only too well, from the fragility of bond markets during Rachel Reeves’ sojourn at the Treasury, it doesn’t take much to deliver havoc. 

Britain is often seen as the most exposed among G7 rich countries to hedge fund speculation.

Most of the G7 has debt-to-output ratios of more than 100pc. The BIS fears the involvement of private credit players could accelerate contagion in a crisis. It urges governments – are you listening Andy Burnham – to deal with debt levels.

It also warns that borrowing for capital spend on AI could be unsustainable. Only last week, SpaceX, an AI behemoth, raised $25billion through an oversubscribed debt issue. 

Stretching the limit on the UK government credit card, amid a debt-laden precipice, would be madness.

Global retreat

As long as I can remember, BT’s international operations have been a problem. 

Britain’s flagship telecoms group had an impressive client list of customers but making the economics and returns work has been tricky.

Boss Allison Kirkby’s solution was building a cloud presence through its Global Fabric service, enabling the international unit to be hived off into a separate joint venture with Verizon. ,

Sad to see UK corporations dumping global operations. Sometimes, needs must.