Andy Burnham, often seen as Britain's prime minister-in-waiting, has diagnosed the country's economic malaise correctly: four decades of neoliberalism have failed, particularly in former industrial heartlands. His challenge is to deliver a radical reindustrialisation agenda without suffering the same fate as Liz Truss, whose tax-cutting mini-budget was rejected by financial markets within weeks.
Burnham's Diagnosis and the Need for a New Approach
Burnham argues that the economy has become dominated by the City of London, manufacturing's share of output has shrunk, leading to a permanent trade deficit, and living standards are barely higher than before the 2008 banking crisis. The neoliberal policies introduced by Margaret Thatcher have failed most spectacularly in Scotland, Wales and northern England. However, to succeed where others like Keir Starmer have not, Burnham must go beyond Labour's current approach of smarter regulation, fairer taxes and better economic management.
As argued in the forthcoming book Reindustrialise Britain by Costas Lapavitsas, Doug Nicholls and Larry Elliott, the real problems are of production, not distribution. New planning laws and a wealth tax are insufficient. A state-led strategy of reindustrialisation is needed, focusing on foundational industries like steel, advanced engineering, automation, digital technology and clean energy. This is the only path to genuine economic sovereignty.
Public Investment Through a National Investment Bank
Serious public investment should be channelled through a properly funded national investment bank, providing long-term patient capital for transport, energy and industrial supply chains. A 10-year programme would be tied to public equity stakes, rebuilding public wealth. The aim is to crowd in private investment. Burnham has shown as mayor of Greater Manchester what can be achieved: identifying cluster locations with infrastructure investment to attract high-value private employment.
Obstacles include the loss of technical knowhow and hands-on experience due to manufacturing decline. Britain needs technicians and engineers, requiring investment in skills and technical training. Unions have a key role, and a break with neoliberal dogma means seeing organised labour as part of the solution.
Facing Market Backlash and Breaking the Doom Loop
Burnham must be ready for backlash from financial markets. Even before taking office, there are signs of pressure: Starmer has left it to his successor to fund the government's defence investment plan, sparking speculation of tax rises to avoid breaking fiscal rules and alarming bond markets. If Burnham bows to this pressure, he will perpetuate the cycle of weak growth, higher deficits, spending cuts and tax increases that slow the economy further.
To break this doom loop, the Bank of England's mandate could be broadened to provide low-cost patient capital for reindustrialisation. The Netherlands shows it is possible to borrow for public corporations without bond market backlash, provided borrowing is against reliable revenue streams. Ultimately, targeted controls may be needed to prevent manufacturing being at the mercy of footloose capital.
None of this will be easy, but the alternative is continued managed decline—or more precisely, mismanaged decline.
