Ruth Sunderland: Andy Burnham’s Manchester-ism Won’t Be Enough to Fix Britain’s Problems

“How do we just make people feel better?” Andy Burnham posed the question before heading into No 10 — and it was a sharp one.

He was speaking specifically about lifting the basic rate income tax threshold, but the point reaches far beyond tax policy.

For years, many people in Britain have felt their prospects deteriorating, driven by a growing sense that the social contract has fractured.

Hard work and careful saving no longer seem to bring the rewards they once promised. Ambition, too often, is met not with encouragement but with resentment.

Younger generations, in particular, are finding the traditional markers of adult life increasingly out of reach, held back by student debt, soaring house prices and deeply troubling levels of unemployment.

The mood of the country can even be read in the stock market. Shares linked to two enduring British preoccupations — homes and holidays — tell their own story.

Ryanair, the budget airline, reported a steep fall in profits as rising energy costs hit hard and consumers became more hesitant about booking flights.

Shares in housebuilders have languished because of concerns over higher interest rates, with some economists predicting a hike in the autumn.

The nationalisation of British Steel and the possibility of the same for Thames Water is giving off depressing ‘70s vibes and corporate Britain has become rich territory for bargain-hunting overseas predators.

The wider backdrop is extremely challenging. US and South Korean markets, the latter dominated by two memory chip companies, have been riddled with nerves over an AI bust. 

OpenAI and Anthropic, the companies behind ChatGPT and Claude respectively, have reached stratospheric valuations ahead of their planned floats, creating more fear of a bursting bubble.

The pensions of millions of Britons are in hock to tech share valuations. Let’s not forget we have a loose cannon in the White House, that hostilities between the US and Iran are escalating and that Russia continues to wage war on Ukraine. 

Our new PM and his Chancellor John Healey will need more than Manchester-ism.

Fat cat tax

The High Pay Centre think-tank, which has been reporting on chief executive rewards for the past 15 years, is likely to close later this month due to lack of funding, but not before issuing its latest report showing the gap between FTSE 100 bosses and their workers is at its widest for eight years.

The ratio stands at 130:1, meaning it would take a typical employee 130 years to make as much as his or her chief executive takes home in twelve months.

In its parting shots, the think-tank calls for a ‘fat-cat tax’ – so that firms face a corporation tax surcharge if the pay divide between top executives and the rest becomes too wide.

The superficial appeal of such a levy is obvious in Burnham’s Britain, but it’s too simplistic to work. How wide a pay gap is too wide? 

A one-size-fits-all regime would be unfair, because median worker salaries at, say, Goldman Sachs and their relationship to top pay will be very different from those at, say, Tesco. 

A tailored, industry specific tax would be too complicated. FTSE 100 bosses are not even the fattest cats (with the possible exception of Melrose bosses last year). 

The really big earners are not at plcs but in the private sphere, where their rewards are harder to scrutinise. Socialist-style solutions are not as simple as they sound.

Great British sell-off

Segro’s rejection of another bid from Prologis smacks of playing hard-to-get in order to squeeze a higher price from the bidder rather than of genuine opposition.

If the board does sell out, it will be a real shame to lose one of the UK’s most high-profile real estate investment trusts (REITs) and will embolden other predators including Boaz Weinstein of Saba, who is menacing Workspace and Grainger.

The number of publicly listed REITs has more than halved to 40 from 83 in 2019: In an uncertain world, UK property assets at a big discount are a temptation to overseas buyers.

Segro is a big developer of data centres, which are a strategic asset and may provide grounds to invoke the National Security and Investment Act. 

Andy Burnham will not be able to achieve his ambition to reindustrialise if the Great British sell-off continues unchecked.