What is Manchesterism?

What is the Political Economy of Manchesterism??

“Business friendly socialism”, has been touted numerous times. We feel this is oxymoronic. Any business-friendly policy can’t be socialistic, and any form of socialism in practise can’t be business friendly. Andy Burnham has already stated that he will stick to the Fiscal Rules, one of which is no borrowing for day-to-day expenditure. With the scale of our National Debt, and the reactivity of bond markets when they smell blood in the water, or unsustainable borrowing – and given the scale of bond holdings that are index linked – any persistent inflationary rise will directly accentuate this debt..

So, what is Manchesterism? Subsidised energy bills; rent control; greater public control of utilities and other public services… Burnham recently said utility companies could be controlled through regulation rather than public ownership – though it’s understood Thames Water will be taken into public hands (without as yet an indication as to how to write down their astonishing corporate debt). I fear what is concerning about greater government control of private sector services’ in an attempt to bring down prices – as the cost of living is the main political concern repeatedly raised across the country, since Covid. Many of these sectors are already regulated heavily, and the margins are deceptive, not least in protracted real term rises in labour costs, post the 2024 election.

Burnham states there’s excessive profit in the social care sector, though they would no doubt dispute this – but this is not the same as the private rented sector, where though rents have increased dramatically, property costs, mortgage rates, renter’s rights and meeting minimum safety standards have already resulted in fewer private sector landlords, reducing housing stock available for rent and consolidating remaining stock among fewer, now stronger, property conglomerates. None of these sectors will be particularly receptive to a denial of the price signal, through rent controls.

Remaining ways to raise tax revenue might include taxing investment income in the same way as income from work, for instance landlords don’t pay national insurance on investment income from housing – and this might glean an additional 10 to 20 Billion pound, or roughly 1.5% of Gov expenditure on Public Services. Hardly enough to move the dial.

So – we feel the question really comes down to, will the medicine kill the patient? According to data from the Institute for Fiscal Studies, the tax-to-GDP ratio—the gold standard for comparing the total tax take across different periods—is historically high, post WW2. Burnham hasn’t yet taken office, but on this diagnosis, I’m not convinced Manchesterism will translate across the UK.

#Manchesterism #AndyBurnham #Tax #Debt #PM