"Andy Burnham Is Away With The Fairies" – Andrew Neil

TRIGGERnometry

Andrew Neil joins the hosts to dissect Britain's shifting political landscape, warning that Andy Burnham's Labour government is steering the country toward unsustainable tax-and-spend socialism amid rising debt and bond market pressures. The

Key takeaways

Andy Burnham's Labour platform explicitly targets state control over housing, energy, and utilities, marking a clear break from Thatcherite neoliberalism
UK bond yields have hit their highest levels since 1999, with debt interest payments already rivaling the third-largest government department at £110 billion annually

Main topics

UK political realignment and polling shifts
National debt, bond markets, and fiscal policy

Notable quotes

"If debt interest was a government department, it would be the third biggest government department in Britain."

Conclusion

The episode serves as a stark warning about Britain's fiscal trajectory and

Transcript preview

Speaker 1 (0:01) It's the people who blame. It's British attitudes to blame because the British people think they can have Scandinavian levels of cradle-to-the-grave welfare. on kind of mid-Atlantic taxes. And here's the thing, you can't. Although if people vote in a way that results in a right-of-center government that might not deliver on all these things, if the country does vote for the Andy Burnham prospectus, that's it. We are. a socialist tax and spend future. There's no going back from that. He believes that a bigger state means more growth. Obviously, he's in the way of the fairies, but that's his belief. Speaker 2 (0:48) Why don't you think it's going Speaker 1 (0:50) to work? Because I don't see anywhere in the world where it ever has. So a crisis in the bond markets could force this government into doing things it doesn't want to do. I think we are heading for some really tough times. Speaker 3 (1:07) Are you too popular? Is life too easy? Then head over to our merch store and change your life forever by telling the world you watch Trigonometry. You'll be able to buy hoodies, t-shirts, caps, stickers, posters, and of course, the world famous Trigonometry mug. Go Speaker 2 (1:22) to shop.triggerpod.co.uk. That's shop.triggerpod.co.uk and become part of the show. Speaker 1 (1:29) Andrew Neil. Welcome to Chicken On Tree. Lovely to be here in the heart of Westminster. Exactly. Thanks for giving away our location. Speaker 2 (1:36) Thank you. Now we're going to get doxxed and protested and attacked. Speaker 1 (1:40) Westminster's a big place. Yeah. And we're right next to Pimlico, as you know. Exactly. Thank you. Strong star. Speaker 2 (1:47) Andrew, what a pleasure. We've been meaning to have you on for a long time. We want to talk to you about the BBC later on, but actually, I think with... your experience and with the sort of serious commentary you provide. We'd love to just hear a very broad sweep of your thoughts on actually what is happening in our country. Speaker 1 (2:07) Okay, well, there's a lot happening, but not much of it very good. I mean, I think politics has gone through a major change. The story of 2025 was the rise of the insurgents on the left and the right. Reform doing well, taking a lead in the polls. The Greens coming up fast, causing labor palpitations, overtaking the Lib Dems. And so by this time last year, the Greens are well ahead of the Lib Dems. Labour is really worried about them. And reform is ahead in the polls, over 30%. And when they get over 30%, a lot of seats start to fall their way. And that was then. Now, here we are a year later, and it's gone into reverse. The Greens have had a bad year, though not as well covered as the bad year that reformers had, and Mr Farage in particular, and the problem. with a one-man band is if the one man has a bad—well, if the one man is out of tune, the whole band's out of tune. And that's been a problem for reform. So you've seen, to my surprise, in a way, the reemergence of the two legacy parties. Labour has had a new lease of life under Andy Burnham. They're now ahead in the polls, though not by much. They're still in the 20s. Kemi Badenoch, I think, has come through as a formidable conservative leader. Her problem is to get her growing popularity to rub off on her party, which is a very tarnished brand. And that hasn't happened yet. But it is now down to reform, Labour, Tory, the three. They're all almost, with Labour that bit ahead, but they're almost all within statistical shouting distance of each other. And that's a big change. And that's a return to a more familiar politics. In the meantime... As that political change has been going on, the British economy has turned out to be much more resilient in the face of Trump's war than I thought it would be. Nothing to write home about. But then there's no economy was writing home about with the possible exception of America before the war. And we've done not badly, just that the growth rate is redone again. I think that's about as good as it's going to get. I think we are heading for some really tough times. I think this is going to be a difficult winter, a winter of discontent, not in the old-fashioned way of strikes, but in terms of we head into winter with rising inflation, rising interest rates, rising mortgages, no end in sight with Trump's war, a new cost of living crisis coming down the pipe with energy bills, and with a political system that really doesn't know how to handle this. We're speaking in the week of the Labour Party conference. in which neither the new chancellor, John Healey, nor the prime minister, Mr. Burnham, had anything to say about the winter in store for us. Nothing. It was all about the next manifesto and all looking back, I've got a miner's lamp on my shelf and, you know, this curious mixture of nostalgia and folklore that still dominates the Labour Party. And how to deal with the cost of living crisis? how to deal with other things that are going to be difficult with rising interest rates, how you're going to ever hit your housing target if mortgages are rising. None of that was done. So we still, to me, clearly have major economic problems and a political system that is not up to providing the solutions. Speaker 2 (5:40) Well, like you said, there was a lot of very pleasant sounding optimistic promises about things that will be done primarily after the next election. So it didn't seem like there was much of substance. But the one thing that was completely missing and appears to me to be completely missing more broadly from the conversation outside of a few people is the debt and the deficit, which is continuing to increase it. And the fact that the... yields are now higher than they were under List Trust, if I remember correctly. Speaker 1 (6:09) They are, indeed. Speaker 2 (6:10) So we are now in a position where we're spending huge amounts of money paying off the interest on the debt we already have, continuing to borrow more. And now you have a prime minister who says we must undo everything that was done in the last 40 years, which means to go back to bigger government and more government intervention. What does that mean for us economically? Speaker 1 (6:30) It means that we're in trouble. and that it means he wants a bigger state and higher taxation at a time when we have the highest tax burden in peacetime already. And the state already accounts for about 45 % of our GDP, which is also high by modern times. So he wants to build, instead of saying, well, taxes are too high, the state's too big, it's not very good at what a lot of it does, let's pare it back, let's have lower taxes. Let's have a state which concentrates on doing what the state can do and do it well rather than try to do everything. He wants to move in the opposite direction. And no politician is very keen in talking much about the national debt or about the budget deficit, which every year adds to that debt because they don't know what to do about it. I mean, in America, fiscal conservatism is dead. No one talks about it on the Republican or the Democrat side. And their national debt is now $40 trillion. $40 trillion. Nobody even knows what that means. I just think it's a lot. Ronald Reagan once said to me, he said, you know, Andrew, a billion here, a billion there, it soon adds up to real money. Well, it's now a trillion here, a trillion there. And we've got a developing fiscal crisis on the other side of the channel, Francis. Got some real problems at the moment which haven't been much covered. So Britain's not alone in this, but Britain is peculiarly vulnerable to it. We still pay a moron premium thanks to the brilliant work of Liz Truss during that short period that I call the Cluster Truss. I could call it something ruder, but I know this is a family show. So I think the Cluster Truss will do, and rather than take steps that would... recognize that Rachel Reeves, Starmer, and now Mr. Healy and Mr. Burnham are going to add to that. They're going to add to the amount of spending. They're going to add to the amount of debt. And that's a pretty dangerous thing to do because at the moment, the bond markets, which is where governments go to borrow, are pretty skittish about everybody, which is why there has been a global rise in the price. You have to pay if you're a government to get your debt away. The 30-year bonds in America this year just reached a new record, the highest since 2002. This year are 10-year bonds. The government yesterday in Britain borrowed another $4 billion, and it had to pay—it's a 10-year bond. It's a gilt, as they're called in Britain. It's a 10-year gilt, and we had to pay the highest interest rate since 1999. So you can get the debt away. Are you having to pay more? And of course, down the road, you have to pay more on debt interest all the time. And it's already $110 billion. If debt interest was a government department, it would be the third biggest government department in Britain. And you have to pay it. You have to find the money for it. And we're particularly vulnerable because the bond markets are already making us pay more for our debt than any other G7 country. And we still have more inflation built into our system than Europe or the United States. And it's that inflation that nudges up interest rates. Because, you know, if inflation's 3 % and you're being asked to lend the government money, you're going to want a lot more than 3 % to get it. I mean, 3 % just keeps it. You don't make any money out of that at all. And so that... combination of our past record, the size of our debt, the size of our deficit, and the fact that inflation is kind of built into the system in Britain now means that the bond markets have us in the crosshairs more than anybody else. So come the budget, this government better be very careful what it does if it tries to fiddle or be smart with the fiscal rules. they will pay a big penalty. Speaker 2 (10:40) And as will we all. But I think it's inevitable that they will do that, given what we've already talked about, the tack towards more government, more spending, etc. And I've been a bit of an accelerationist on all of this for a while, which I think it seems to me the British public are not willing to make the adjustments that we're going to have to reckon with the massive debt and the deficit. And a Burnham-led... fiscal crisis is, as far as I can see, the only way that we're ever going to get back to some sanity. Is this a bad theory, a good theory? Speaker 1 (11:15) Well, I think you're right that no one's going to do very much without a crisis. And people are only going to tinker. Speaker 2 (11:24) Yeah. Speaker 1 (11:25) And although the government claims that the deficit is on a downward trajectory. Not quite clear that it is. I mean, we've already overborrowed in the first five, six months of this fiscal year. And we could end up borrowing as much this year as we did last year, which would be about $130 billion on top of the $3 trillion. So that doesn't send a great signal. And no one's got much appetite to do it because they're all between a rock and a hard place. Cutting public spending seems to be beyond the pale for this government. even though that would be a natural way to stop. Their own Speaker 2 (12:02) backbenchers won't let them. Speaker 1 (12:03) They won't let them because Kirstein tried in a minor way. One of the reasons why he's no longer prime minister. British government now spends about £1.4 trillion a year, but we're not going to touch spending. And there was no mention at the Labour conference of any kind of spending cuts at all. So what do you then do? Borrow more? The scope for borrowing more is going to be... very, very limited, if anything, because it's not a case that you can't borrow. But the more you borrow, the more the markets will demand a risk premium. So you'll end up paying more and more and more interest in your debt service costs will rise and rise. So where does that lead? Well, it leaves tax. And at the moment in the Treasury, they're scampering around trying to find various ways of increasing taxes because the government has ruled out an increase in income tax, VAT, and national insurance contributions of employees. These are by far the three biggest tax revenue sources. So if you haven't got access to them, you start to look at all sorts of other things, and it's the worst possible way to handle taxation. because small tax rises, by definition, don't raise much. And they're nearly all bad. They nearly all screw things up in ways you didn't foresee. They complicate what's already the biggest tax code in the world. Our tax code is longer than anybody else's. An accountant who wanted to print it out and bring it to you would need a wheelbarrow. That's how big it is. So the more tax cuts you have, small tinkering here, there, mansion tax. Remember, George Osborne's pasty tax and all the rest of it. It's the worst possible way to raise money, but they have no money. They won't cut. They can't borrow. And so that's what we're going to have. And that will set the economy back even more. So there may come a point, I don't think it'll be triggered in Britain, but it could be triggered by a loss of faith in America or by a bond crisis in France. And that will wave up against us. And just as the IMF. forced the government into drastic cuts in 1976 when we last had a tax and spend labor government. So a crisis in the bond markets could force this government into doing things it doesn't want to do. Speaker 2 (14:28) And Andrew, we went around at the time of the last one. What does that look like for ordinary people? People watching this and listening to this, what does that mean will happen for them? Speaker 1 (14:38) What happened last time was that the British government ran out of dollars. In these days, it borrowed in dollars. We don't have that problem today. We borrow in pounds. So there's no exchange rate exposure. But it borrowed in dollars. The pound collapsed and it couldn't raise the dollars to pay back in dollars. So it had to go to the IMF, the International Monetary Fund, essentially American run, for a dollar loan, which was about three billion pounds worth of dollars to pay back the dollar loans. But the price the IMF set for that was that we want major cuts in public spending right across the board. And so it was two things. It was humiliating that here was one of the great countries, great economies of the world having to go to the IMF to borrow. IMF was meant for third world countries and places that needed help in difficult times. And that... At foreign demand, we had to take huge chunks out of the budget. It was a very, very humiliating time for the country, for the Labour government, and it never really recovered from it. It never really recovered. Speaker 3 (15:55) I mean, look, we can blame politicians all we want, but there's the adage, which we all know, is that you get the politicians you deserve. How much do we all have to take responsibility for this? Because we all know that Burnham, it doesn't matter who is in charge. Once they start implementing these kind of cuts and the state starts shrinking, there's a very real risk they'll get voted out. Speaker 1 (16:20) Exactly. It's the people who blame. It's British attitudes to blame because the British people think they can have Scandinavian levels of cradle-to-the-grave welfare on kind of mid-Atlantic taxes. you know, higher than America, but a lot lower than Europe. And here's the thing, you can't, particularly once you've run out of space for borrowing. And in a way, the European left has always been more honest than the British left. The European left has always said, look, if you want all this welfare, that's fine. We're in favor of that. But everybody's going to have to pay higher taxes, not just the rich. Everybody's going to pay higher taxes from low to middle earners onwards, because that's where the real money is. The British left says, no, you can. have all of that, and we'll only tax the top 5%. Even Jeremy Corbyn, he said, we'll just tax the top 5%. We'll just get the non-DOMs. We'll just get these rich millionaires that don't pay any tax. And two things, or three things, the problem with that is, one, The affluent in this country actually pay a lot of tax. I mean, the top 1 % account for almost 30 % of income tax receipts. So they're already paying quite a lot. Speaker 2 (17:47) And the top 10%, I think, 60%. Speaker 1 (17:48) That's right. So... If you tax them too much and they walk out the door, and there is nobody more mobile than a well-educated English-speaking professional, if they walk out the door, your tax base walks out the door with it. We have a tax base more skewed to the rich paying tax than any economy in Europe. So that's your tax base that you risk walking out the door. And yet we think that it can all be financed. by not us paying more tax. Somebody else would pay more tax. And it's become a kind of free ride. Plus, there's been a psychological change. We've fallen back in love with big government. You know, it took Mrs. Thatcher quite a while to shake the government's addiction, the people's addiction to big government.