"He's The Next Nicola Sturgeon!" | UK Borrowing Costs Hit 28-Year High Amid Burnham Challenge Fears

Added: 2026-05-22

[00:00:00]Now, let's move to this. Um, we mentioned the bonds and all that goes with it, the ramifications and the implications. Michael Simmons is economics editor at the spectator. Good afternoon to you, Michael. I do think there are politicians out there and this won't be any news to you that sort of think that um everything runs in a you know completely separate um part of the of the world and there's no knock-on effects or connections to decisions that are made. when of course we know that when it comes to economics um comments from a prime minister, resignations from cabinet ministers have huge implications, the knock-on effects are tangible.

[00:00:39]>> Yeah, you're absolutely right. And I think when um politicians don't understand this, um they're not malicious. They just don't get, you know, how connected into the financial system we are as a country and where our um money comes from. I mean, when it was first rumored that Burnham was, you know, going to be making a run for the the top job and the guilt yields first spiked because there were concerns in the markets about the kind of leftward direction he might go. One particular Labour backbencher said, you know, well, tough. Uh, the bond markets will have to fall into line and I text one of my um market sources asking for a reaction to that. Um, and if I was to read out their response, you would end up getting in trouble with offcom. So there's this there's this misunderstanding um between both sides and and I get the argument that you know this doesn't seem very democratic does it? Surely if the public wanted to vote in a left-wing government that wanted to spend more and invest or whatever it was then you know no one should be able to stop that. But look you you can't vote away reality.

[00:01:44]Over decades and decades we've built this economy that doesn't pay for itself. You know the tax doesn't pay for the welfare system. It doesn't pay for our schools, for hospitals. So, we have to rely on the kindness of strangers, aka the bond markets. And that amount we're borrowing now, and forecast for what we're going to borrow, have got so high that the people that are buying this debt are saying, "Okay, we'll keep buying it, but we're going to do it at a really high premium."

[00:02:09]>> Indeed, I think it was the Labour MP Paul Barker that initially made those comments, wasn't it, that the uh the markets will have to fall into line. It was kind of it felt very much like and I I say this not as a pjorative. It's a very sort of socialist thing to say, isn't it? You know, well, they'll just those money people like they're that they sort of act autonomously to anything else. They'll just have to wait. And I thought it was rather interesting because I'm sure uh Miss Barker would have been one of the first in lines to talk about how the money markets reacted when Liz Truss was prime minister. She would have had no trouble in making that argument.

[00:02:42]>> Yeah, absolutely right. And actually what we're seeing in the bond market is kind of the same reaction to Liz Truss but on the other other scale. So the Liz tr the reason the bond markets didn't like Liz Truss's plans forgetting what was going on in the Bank of England which a whole separate issue. But the reason they didn't like Liz Truss's mini budget was because it had a load of tax cuts that were going to be funded by borrowing unfunded tax cuts. And what you're seeing in some of the plans that Burnham has hinted to, what Angela Rainer, people like Clive Lewis have expressly stated is the same on the other side is unfunded spending. Yeah.

[00:03:19]And this is the point. People think that, you know, the bond markets have some kind of political view. They'd accept some kind of borrowing but not others. That's not the case at all. They just care what the total number is, what the inflation forecast is, what the likely borrowing is going to be. They don't really care what you're going to do with that borrowing. I mean, in a way, they're they're politically agnostic.

[00:03:41]>> Indeed. And that's the way it's it it's kind of always gone. And I suppose it it it perhaps will continue to do so, but it doesn't alter the reality um in this respect, does it, Michael? That we, you know, we're not really an economy that needs any kind of wobbles at the moment.

[00:03:56]>> Yeah, absolutely. And with every crisis we have, we seem to have this problem where the support that we go into, I mean, we hear that the chancellor is going to set out her energy support plans next week. Every time we do that, you know, we borrow a little bit more to fund it. Um, you know, we take away the price mechanism and then the next time a crisis comes along, we're even more closer to that cliff edge. And if we do want to get to a more democratic position where um we don't have to be in hawk to the bond markets as Andy Bernham infamously said, then we need to fix the fundamentals. Um and that doesn't have to be a right-wing economic or a left-wing economic approach. We either need to have serious austerity where you cut the size of the state so that we can reduce borrowing and that we've got more um room to maneuver or if you're of a left-wing persuasion and you would rather see the state saying at its current size or potentially even bigger then you need to have an honest conversation with the public about how you fund that through tax rises. And by the way, that doesn't mean taxing the rich. That means taxing the everyday worker even. And no one's being honest about these being the realities of the kind of financial constraints we live within.

[00:05:09]>> Yeah, I I can see um a prime minister Burnham coming and we'll come to him in a second, but um you can almost uh we remember when Gordon Brown, you know, lobbed up the top rate attacks to uh to 50p uh for about 10 minutes before he walked the plank. Uh there was that moment. I I can almost see that happening soon. Now I I've often wondered about this because you know my my brain is kind of capitalist. I you know we all have a an understanding that you know sometimes broadish shoulders bear the brunt and all those kind of cliches but the reality is broadish shoulders >> probably already do bear the brunt if it's about the pure finances of it. So um and it shouldn't be just for those people who've done all right or even just okay to pay for everything. So we we understand all of those arguments.

[00:05:57]What is the reality on that point, Mike?

[00:05:59]I'm not expecting specific figures here, but if you just said, right, it's 45p top rate of tax, it's now going to be 50. What happens to the economy? Does is there suddenly this, you know, billions and billions pour into the Treasury?

[00:06:11]It's happy days all around. Everybody blows or lets off their vuvu ZA and has a nice glass of bubbly.

[00:06:18]>> Well, not quite. I mean you might get this like temporary boost but um the the fact of the matter is although the public don't seem to think it the richest people in society are already paying a huge share of tax. I mean the the top 1% of taxpayers are responsible for something like a third of all the tax as it is. So there's not actually that much room to kind of squeeze them more. And and you mentioned you know we like to say that these people have the the broadest shoulders. Well, they've also got the longest legs. And there does become a point where people who are who are mobile and will say, you know what, I don't need to live here anymore.

[00:06:56]I'll go to um another tax regime. But even if they all stayed here and nobody left, you're still only getting a few billion pounds and that's not enough to make a difference to kind of balancing the books. We're what we really need if we were to get to a more kind of fiscally balanced position is tens of billion pounds. And what no kind of uh politicians on the left are honest about is the only way you get to that kind of money is by putting the basic rate of income tax up. So that means on on the average worker on most of us they would have to pay one or two percentage points more. And that is just the reality. If you want to raise that kind of money but hey what politician is going to stand for election promising to do that?

[00:07:40]>> Yeah. Although I I can absolutely see Andy Burnham's first U budget containing a tax rise at the top because it's the visuals and the optics might well suit him. But who knows? I mean, he might he might surprise us. Speaking of Burnham, you've written a great piece headlined why Andy Burnham is the next Nicholas Sturgeon. I mean, who doesn't want to read on after that headline? Um, just explain more if you could, Michael.

[00:08:03]Yeah, I mean th this might be a bit of my PTSD because before I was a journalist, I I worked in the Scottish government um under Nicholas Sturgeon and it just strikes me that they're quite similar politicians in that if you think of them as as a vibe. I mean before Nicholas Sturgeon became incredibly unpopular. She was wellliked in in Scotland across the board actually and she had this sort of woman of the people vibe. people were very forgiving of her. If mistakes were made, she would apologize even if the mistake wasn't corrected. They would kind of accept the apology and that allowed her to get away with lots of things that most politicians would not. And I think Andy Burnham has this same thing where people view him as popular. They like his vibe.

[00:08:49]They like his kind of uh boy done good kind of thing. Um and they ignore the reality. And the reality of Andy Burnham is if you look at his claims about the economic successes of Manchester, I would suggest they're not that all that stacked up stacked up to be. I mean, some of his claims about the growth of Manchester uh could be down to ONS kind of dodgy data. We haven't seen serious wage increases there. So, it's not like people are actually much better off because they live in Manchester. and even if all his numbers were correct, it's still he kind of far behind um London. So my comparison kind of between the similarities of Andy Burnham and Nicholas Sturgeon is they're they're both these politicians who are great communicators, but I'm not sure there's actually that much substance behind them.

[00:09:36]>> Yeah, it's interesting. The Labour Party as a a kind of whole talk a lot about um breakfast clubs as as we know. It seems to be if you're in an interview um and you're not sure what to say, just mention breakfast clubs. Even one doesn't even exist in you. Just say it does cuz we'll all believe it does. Um Andy Bernhams is buses. Of course he loves a loves a bus. I I said before he's he's seen more in a high viz than my bin man is. I think um somebody here Kim says one of Burnham's greatest achievements in Manchester is see how many times he can get himself pictured with a bus. Just Google Burnham bus and see how successful he has been. Um he does. You know that that seems to be his big thing, doesn't it? The bus.

[00:10:16]>> Yeah. Well, absolutely. and and all these politicians need to have one of these things to to hammer them home. And I mean, in a way, I'm not critical of them for that because, you know, that's that's the job of politics. But, um, where I think he might come unstuck is you might get away with that at the kind of devolved local politics level. But if he is to become prime minister, people are going to expect real change. that change that people can see improvements to living standards that you won't be able to hide behind sort of slightly questionable ONS figures and I think if he's unable to deliver that as I suspect he won't be able to um then you know he's might be flying a bit close to the sun.

[00:11:00]>> Yeah. Do you It's interesting. We've been talking sort of throwing a wider question out Michael about has the UK become ungovernable and if you consider sort of um the the kind of atmosphere with which um in which government's function now compared to what it once was social media everybody has a we're almost in a the era of the perpetual >> comment um it's happening in real time.

[00:11:27]Everything is commentated on whether it's a newspaper column, whether it's a radio show, whatever it happens to be.

[00:11:34]Everyone has the conch, the spotlight is there for us all. And it makes I don't dispute it makes things very difficult and different. Um, is it likely do you sense there is this is an era we're in?

[00:11:46]Because it is I do sympathize with governments right now because anything they say is subjected to the often the most ridiculous scrutiny but often to the point where they do change policy.

[00:11:59]They think, "Oh god, there's a lot of people on Twitter don't like this, so we better change it." That never used to happen.

[00:12:05]>> Yeah. Yeah. I I I think that's that's got worse. But um I'm not I wouldn't go as far to say, you know, that's made us ungovernable. It's definitely harder to be in government when it was in in the days when there was less instant scrutiny, but it's not that we're ungovernable. It's that we've had, you know, bad government. Um but where I do have sympathy with kind of the political class is I think voters are actually a large part responsible for this because the economic medicine that this country needs, you know, to to bring down debt, to bring down welfare because of our aging demographics are so unpalatable politically um that if you ask voters about this, they say, "Well, you know, yes, this is a problem. We need to bring down the welfare bill." um you know there's there's tax or we need to we need to up up taxes to pay for it or whatever it is to balance the books. But then when you say okay you agree this is the problem. Do you agree with the the remedy whether the remedy is disability welfare cuts or whether the remedy is tax rises on the average worker the voter says no absolutely not. And I think unfortunately that's why we don't have a politician, any political leader really of any party who's prepared to set out these tough choices because they'd they'd be absolutely destroyed at the ballot box. And I don't know what the solution to that is. Us as voters have to come to see that before you're going to get any, you know, politician brave enough to put their head above the parapit and kind of offer that tough medicine.

[00:13:34]>> Yeah, spot on. Michael, great to have you on with us. Thank you, sir. Have a lovely weekend. Michael Simmons is economics editor at the Spectator. Thank you to him.