Key facts
- Andy Burnham faces a difficult economic landscape, the ongoing impact of the war in Iran, and domestic challenges.
- The UK budget is scheduled for October 28, with limited room for maneuver due to rising debt interest payments and inflation.
- The government may extend the freeze on fuel duty, which is due to finish at the end of the year.
- Labour aims to improve ties with Europe to break down trade barriers caused by Brexit.
- The Holborn and St Pancras byelection on October 8 will test Labour's ability to win back progressive voters from the Greens.
- Decisions on new oil and gas drilling in the North Sea have been delayed.
- A review by Stephen Timms concluded that the personal independence payment (Pip) is not fit for purpose.
- Thames Water, with debts of £20 billion, is controlled by hedge funds and distressed-debt investors.
- The UK is renegotiating or scrapping a draft deal to give up sovereignty of the Chagos Islands to Mauritius.
- Changes to settled status for migrants are planned, potentially affecting eligibility for benefits and NHS services.
Andy Burnham is preparing to navigate a series of significant challenges following the Labour party conference, as the government grapples with a difficult economic climate, ongoing international conflicts, and domestic policy hurdles. His leadership will be tested by key decisions on the budget, energy policy, and public services.
The budget, set for October 28, presents a significant hurdle due to the global economic downturn, exacerbated by the war in Iran which is driving up energy prices and inflation. Chancellor John Healey faces limited options, with rising government debt interest payments and shrinking fiscal headroom. Major spending decisions are likely to be postponed until spring, with the hope of economic improvement. Targeted cost-of-living support for those most affected by energy bills may be the only positive economic news available. The energy regulator's announcement on November 25 regarding the January price cap could lead to substantial price increases, prompting a decision on whether to extend the fuel duty freeze beyond its year-end expiration. Some Labour MPs advocate for wealth taxes, but Healey is constrained by manifesto promises not to raise income tax, national insurance, or VAT.
Burnham also has an opportunity to improve relations with pro-EU voters by fostering closer ties with Europe. Building on previous work, the UK is seeking to reduce trade barriers stemming from Brexit. However, disagreements persist, particularly over the EU's "made in Europe" procurement policy, which disadvantages non-EU countries. Talks are anticipated in early November.
The Holborn and St Pancras byelection on October 8 poses a challenge to Burnham's efforts to regain progressive voters who have shifted to the Green party. Labour hopes its uplift in polls will secure the seat, while the Greens aim to leverage the election to highlight leftwing concerns. A convincing Labour victory would signal progress in appealing to voters who have defected from Labour to the Greens on issues like Gaza and benefit cuts.
The government has indicated a willingness to permit new oil and gas drilling under existing North Sea licenses, a stance that has drawn criticism from environmental groups. Decisions on fields like Jackdaw and Rosebank have been delayed, possibly to avoid controversy around the Labour conference or the Holborn byelection. Burnham will outline his views on the UK's net zero commitment at the Cop31 climate change conference in Turkey in November.
Welfare spending, particularly disability benefits, remains a sensitive issue. A review by Stephen Timms found the personal independence payment (Pip) system to be inadequate, and health adviser Alan Milburn has reviewed strategies for moving young people into work. The government must decide on reforms without alienating MPs or voters, balancing the need for change with Treasury concerns about rising costs.
Burnham's commitment to increasing public control over essential services faces practical realities. A decision is imminent on Thames Water, which is reportedly facing financial collapse. Nationalization could be costly, especially if creditors challenge administration terms. The company, burdened by £20 billion in debt, is effectively controlled by hedge funds and distressed-debt investors.
Burnham's stance on the Chagos Islands, where the US president expressed concerns about relinquishing sovereignty, puts the UK government in a difficult position regarding a draft deal with Mauritius. Renegotiating or scrapping the agreement presents a thorny international issue.
Despite data suggesting a reduction in small boat arrivals and overall migration, the issue remains controversial. Home Secretary Shabana Mahmood is finalizing changes to settled status, proposing longer waiting periods for migrants to access benefits and NHS services. These changes may apply to individuals already in the UK, alongside other migration system reforms.