The Treasury will check Andy Burnham’s ambitions – unless old orthodoxies are challenged | Larry Elliott
The article, an opinion piece by Larry Elliott, examines the early days of Andy Burnham's premiership and John Healey's chancellorship, drawing parallels with Denis Healey's tenure at the Treasury 50 years ago during the 1976 economic crisis. It argues that while today's economic backdrop is less dire, John Healey faces the challenge of reconciling his pledge for fiscal discipline with the government's ambitions to reverse decades of Thatcherite policy and rebuild British manufacturing, with the Treasury likely to constrain Burnham's broader aims.
The piece notes early symbolic moves such as a VAT cut on electricity bills and a cap on bus fares, alongside the removal of Starmer loyalists from cabinet, aimed at signalling a fresh start and countering the threat from Reform UK. It highlights the retention of Shabana Mahmood as home secretary as a sign of continued tough migration policy, which could push businesses to train UK workers rather than rely on overseas labour. Elliott concludes that despite Burnham's wish to build an economic power base at No 10 to rival the Treasury, his first day in office already demonstrated the Treasury's enduring dominance.
In short
- Larry Elliott compares John Healey's chancellorship to Denis Healey's in 1976.
- Burnham wants to challenge fiscal orthodoxy and reindustrialise Britain.
- Treasury power still likely to constrain Burnham's economic ambitions.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Advocates for challenging Treasury orthodoxy argue that Britain's industrial decline and regional stagnation stem from decades of under-investment driven by fiscal conservatism that prioritised short-term deficit reduction over long-term growth. They contend that bold government investment in manufacturing, infrastructure, and skills is essential for genuine economic transformation, and that growth itself ultimately improves public finances and living standards more effectively than austerity constraints allow. From this perspective, the Treasury's conventional thinking represents an ideological choice rather than an economic necessity.
The case against
Defenders of fiscal discipline argue that Treasury constraints reflect genuine economic realities, not outdated ideology. They contend that unconstrained government spending generates inflation, erodes savings, and raises borrowing costs for businesses and households, ultimately undermining growth. From this view, market confidence in sterling and government solvency are prerequisites for sustainable investment, and Treasury caution—whilst sometimes frustrating—protects the economy from the instability that has damaged prosperity most severely for vulnerable populations.
Explained simply
The Treasury is the government department responsible for taxes, public spending and managing the economy. Its chancellor must balance those duties with the government’s plans, which can include costly changes to public services and industry.
Andy Burnham is the new prime minister, and John Healey is chancellor. Burnham wants to change the direction of economic policy and rebuild British manufacturing, while Healey has promised to keep public finances under control. Their relationship matters because the Treasury can limit what the government can afford to do.
The article also links today’s debate to the 1976 economic crisis, when Denis Healey was chancellor. It describes measures such as lower electricity bills and capped bus fares as signals of a new approach, while the government’s migration policy could affect how employers recruit and train workers.
Business Government Markets Politics UK World