Andy Burnham’s economic adviser REFUSES government role and calls for ‘sensible approach to welfare spending’
Lord Jim O'Neill, the former Conservative Treasury minister widely tipped to become new Prime Minister Andy Burnham's Chief Economic Adviser, has turned down the role, saying he would rather remain an outside "voice" than accept the financial constraints of ministerial office, including having his assets placed in a blind trust. He denied any policy rift with Mr Burnham but used the announcement to press for a "sensible, realistic approach to welfare spending" and welfare reform, including changes to the pensions triple lock, arguing that years of rising government spending must eventually be addressed to sustain economic growth.
His comments came as official figures showed the government borrowed £2.3billion more than expected in July, part of a larger-than-forecast monthly deficit of £1.8billion, with welfare spending currently running at around £1billion a day. Lord O'Neill, a former Goldman Sachs chief economist who served under David Cameron and chairs the Greater Manchester Local Enterprise Partnership Advisory Board, also said he opposed further wealth or capital gains tax rises, warning they would discourage entrepreneurship and risk-taking, in an apparent signal against reported plans for Mr Burnham to fund spending through such taxes rather than welfare cuts.
- Lord O'Neill declines Burnham's chief economic adviser job offer
- Urges welfare spending reform amid £2.3bn July borrowing overshoot
- Opposes wealth tax rises, backs entrepreneurship and risk-taking instead
New here? Start with this
Welfare spending covers government support such as benefits for people on low incomes, disabled people, jobseekers and pensioners. Decisions about it affect public finances as well as the incomes of millions of households, so they are often a major point of political debate.
Andy Burnham is Labour’s mayor of Greater Manchester and a prominent figure in the party. His economic adviser helps shape his views on jobs, growth and public spending, although advisers do not normally make government policy themselves.
Labour ministers face choices over how much to spend on public services and benefits while meeting their wider economic plans. Calls for a “sensible approach” to welfare spending can refer to the balance between controlling costs and maintaining support for people who need it.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Advocates of a more cautious approach to welfare spending argue that ministers must keep support sustainable and focused on those with the greatest need. They contend that unchecked rises in expenditure can constrain funding for public services, investment and measures to improve employment, while a measured system can preserve public confidence and fiscal credibility. On this view, urging restraint need not mean abandoning compassion; it means designing support that protects people while helping the economy remain resilient.
The case against
Supporters of maintaining or increasing welfare provision argue that spending restraint can fall hardest on people already facing illness, disability, insecure work or high living costs. They maintain that adequate support is both a matter of social justice and an economic stabiliser, since it prevents hardship from escalating and sustains spending in local communities. From this perspective, fiscal policy should not treat welfare chiefly as a cost, but as a necessary investment in security, health and the capacity to participate in society.