My reading of what has come out of analysis of Andy Burnham’s statements suggest that he would like, if he is to get the time, to reorder tax priorities so that those who own most of British property get taxed on its value not at sale but during ownership.
The City doesn’t like Andy Burnham and says so through the bond market and especially Government bonds. Here’s the FT.
Burnham has already faced pressure over Britain’s borrowing costs, after bond investors reacted negatively to the prospect of him challenging Starmer for the role of PM, pushing 10-year gilt yields to their highest level since 2008.
Gilt investors told the FT last month that Burnham was the least market-friendly of the leading potential successors, who include Angela Rayner, Ed Miliband and Wes Streeting. Market participants are also nervous about whether Burnham would replace Rachel Reeves, whom bond investors regard as a credible chancellor.
From what I see so far , Burnham looks at increasing borrowing and repaying borrowing from growth. He does not look the worry that many in our pension bubble paint him. Others may want more of him than he will give.
Land Value Tax
What Burnham has scared the wealthy with is a Land Value Tax which would hard for land owners to avoid, you can’t move land around, it cannot be offshored , who it is owned by is registered. But reforming the current system to introduce a new land value tax would be politically painful, complex and costly during the transition.
The big bet is that voters will re-elect a Labour Government that has a clear vision. If the vision is to abolish Stamp Duty , which hurts the young renters aspiring to own, and Council Tax that means a like for like property can be a lot cheaper to own in Westminster than Manchester, then that may look a vision that is popular. Here is Dan Niedle, founder of Tax Policy Associates, whose vision has been quoted on this blog recently.
There is
“a fantastic economic case for replacing council tax, business rates and stamp duty with an LVT.
He sees this tax as
“increasing house building and freeing up the labour market”. But the move would take “political courage”.
In truth, Labour has lost the popular vote to Reform. The question is whether they lose power to Farage or Lowe , or whether they can regain popular support.
Since without a vision Starmer is seen to lose, the bet on Starmer with a vision is a shot to nothing.
The importance of income to the old and money for their social care
Pensions are about income. They are funded by deductions from pay and as part of deferred pay by employers. They are increasingly being paid not as income but as wealth. The taxes on this wealth implemented by Rachel Reeves were on a pension pot being used to protect the wealthy from inheritance tax.
Burnham has said that he will abolish IHT and replace it with a levy to pay for Social Care for the elderly. My natural sympathy is to any politician who is prepared to advocate change that encourages people to live long in confidence!
Burnham has taken a nuanced approach to wealth taxes, pledging to scrap inheritance tax and replace it with a social care levy.
As health secretary from 2009 to 2010, Burnham argued in favour of charging a flat 10 per cent levy on all estates on death to pay for free social care for all.
The idea resurfaced in 2023, when he said:
“I would abolish inheritance tax in its current form, but replace it with a care levy which everybody would pay — but obviously the wealthiest would pay the most.”
He reaffirmed his support for the proposal at his campaign launch, saying:
“I’ve long believed we should have a different way for paying for care.”
There is a reason to feel supportive for Andy Burnham, his views are well articulated and are popular in a way that the current Labour leadership’s aren’t.
Actually, one area of finance that Labour has got right and will be implemented before the next election is pensions. I would like to see a second term for Labour to ensure continuity and if this seems unlikely, we should look to history.
The radical leadership of Margaret Thatcher initially was rejected , she nearly fell foul of the nation. She pulled her power back by winning a mad war with Argentina and then a madder war with miners and their unions.
My vote was never for Thatcher but it would be for Burnham if he spells out clearly who will win and who will lose economically. We will need to know why so the vision must be better articulated.
Burnham could be a match for the right. What Reform want to do for older people – depending on pensions and the NHS – is not a pleasing vision; it’s a nightmare.