The Possible Socialism of Andy Burnham

LONDON – Imagine that the U.S. had a gifted progressive president, with a common touch and a large majority in Congress. That’s basically what Britain has today with its new prime minister, former Manchester Mayor Andy Burnham, whose Labour Party has a working majority of 167 seats in the House of Commons.

For a generation, Labour had been badly fragmented into Corbynites on the left and Blairites on the center-right, as well as a middle group representing a “soft left.” Burnham mercifully bridges over yesterday’s schisms. He has explicitly repudiated neoliberalism—both Margaret Thatcher’s and Tony Blair’s—espousing and defining a new kind of leftism that he calls business-friendly socialism, rooted in his success as an effective northern mayor far from the infighting of Westminster.

In background conversations with senior people in politics, government, labor, and media, several people used almost identical language to say that Burnham’s keynote speech to the September 29 Labour Party Conference was the best they’d ever heard. “Britain has been on the wrong path for a long time,” Burnham declared. “Deindustrialisation. Deregulation. Privatisation. Austerity. Brexit.” He pledged to reverse all of that, so ordinary Brits could have better lives.

I come away from these interviews with the sense that Burnham enjoys a great deal of good will, but that his running room is narrow. He is likely to enjoy a honeymoon for several more months, and then he needs to start delivering more than promises and cheap transit fares, his signature in Manchester.

One prime conundrum is fiscal. Burnham has promised not to raise taxes on the middle class or on productive enterprise, nor to increase the budget deficit, yet somehow to find the money to finance expansive commitments. He has promised to return inefficient privatized services to public ownership, build lots of social housing, increase social assistance, invest in tattered infrastructure, revive the underfunded National Health Service, and a good deal more.

Some of his policy ideas do not require more public money. Ten years after the Brexit referendum passed narrowly and then backfired spectacularly with a big hit to British GDP (by 6 to 8 percent, according to the Bank of England), Burnham has concluded that reversing Brexit is no longer a third-rail, and has committed to rejoining Europe. 

That could be explicitly as a member of the European Union, or more likely, a de facto return with a deal that gives Britain nearly all the benefits of membership except voting power. Thanks to Trump and the need for European unity, continental nations will welcome Britain back.

Read: The most important Labour leader in a generation

Burnham has also begun implementing smart and largely costless policies of enhancing U.K. supply chains to increase jobs and domestic industry. He is ordering governmental departments and nationalized industries to favor domestic suppliers, particularly targeting such sectors as energy and other green infrastructure.

However, his other major initiatives will be expensive. At the Labour Party Conference, Burnham deferred the difficult tradeoffs until the next election, hoping that he would win approval for his candor. But it’s a long way to 2029. Now, with the government’s budget due to be presented October 28, he faces vexing choices.

The message from both Burnham and from his Chancellor of the Exchequer (finance minister) John Healey is that the fiscal cupboard is bare. In his own speech to the party conference, Healey stated bluntly, “The money New Labour had in the ’90s is simply not there now.” 

In fact, however, the fiscal cupboard is far from bare. Britain has a low effective tax rate on capital and income from capital. The nominal U.K. rate on capital gains from securities is 20 percent or more, and the nominal top rate on dividends is a robust 39.35 percent. But no wealthy person with the wit to hire an accountant pays anything like those rates, because the system is riddled with loopholes. Personal capital gains taxes in 2025 brought only 1.6 percent of UK revenue; dividends, just 2.1 percent.

These low revenue numbers do not even count the capital income hidden in offshore tax havens, some of them under direct U.K. jurisdiction, such as the Channel Islands. Britain could raise effective rates and get serious about cracking down on offshore evasion. 

The conventional assumption is that Brits are heavily taxed. In fact, Britain’s total revenue relative to GDP is at least five percentage points below that of most of Western Europe. But working- and middle-class people in the U.K., whose incomes come mainly from wages and salaries, do feel heavily taxed—because they are heavily taxed. It’s people who get their income from capital who are lightly taxed.

Under former Labour Prime Minister Keir Starmer, who was voted out by Labour MPs in favor of Burnham, taxes on capital were increased a bit. In her two budgets, for 2024-2025 and 2025-2026, Rachel Reeves, the fiscal conservative who served as Starmer’s chancellor, did get taxes modestly raised on capital gains, dividends, and carried interest, as well as a “mansion tax” on homes worth over £2 million. But the total increase in revenue from these taxes is only about £2.5 billion a year, out of a budget total of around £1.3 trillion.

Raising taxes on banks and aligning tax rates on capital gains with taxes on wages and salaries could raise at least ten times that. According to the Financial Times, however, Chancellor Healey signaled that there will be no further increases in taxes on capital.

In one sense, this reluctance is a British variant on a disease common to the West. Concentrated capital has far too much power, both economically and politically, on both sides of the Atlantic. If capital and income from capital were seriously taxed, it could both reduce extremes of wealth and finance other needs.

Britain, with its heavy reliance on the financial sector, is especially prone to the premise that raising taxes on capital is the fiscal solution that dare not speak its name. For more than a century, Britain’s role as a center of global finance (now rapidly fading) sapped the strength of the rest of the U.K. economy. Where other nations made and exported goods, Britain brokered and exported capital.

On the eve of World War I, more than half of the world’s sovereign bonds were underwritten in London. The industrial revolution began in England, but by the late 19th century, both Germany and the U.S. had surpassed Britain as industrial powers, as finance came to dominate Britain, which since then has exported money more than goods.

By contrast, Burnham’s entire philosophy is based on diversifying Britain’s economy, both geographically and sectorally, by enhancing Britain’s latent strengths as a service, tech, and advanced manufacturing economy. Increasing taxes on capital to energize the rest of the economy ought to be the essence of Burnhamism. We will soon find out whether he has the political nerve to do so.

The mood all across continental Europe is sour, because living standards and life chances have stagnated. And with very slow growth and an aging population, the welfare state has reached its limits. 

In Germany, the backlash takes the form of rising support for the neo-Nazi AfD. In France, it is playing out as mass and sometimes violent protests led by the young and the left, though the beneficiary could well be the nationalist right, personified by Marine Le Pen, who is leading in polls for the April 2027 presidential election.

Britain, by contrast, is quiet and even guardedly hopeful. Some of the anger that led to Brexit now takes the form of support for the far-right Reform U.K. Party. But Brexit is no longer untouchable. Reform leader Nigel Farage has made several blunders and has no real program other than hatred of immigrants; Labour has overtaken Reform in the polls; and ordinary Brits seem willing to give Burnham a chance to deliver. An awful lot is riding on whether he does.