I voted Green at the last election. Before that, Labour. During a confused time in my life, I backed the Lib Dems. Urban, university-educated, a Remainer. I am part of the progressive coalition Andy Burnham must build if he is to defeat Reform at the next general election, as he did in Makerfield.
This is the fissure of modern British politics: progressives vs the new right. Young vs old. Earners vs owners. It is one that Keir Starmer, his club of centrist boys and New Labour throwbacks failed to understand. Their idea of the country, its people, the way they communicate is stuck in the late Nineties. Times have changed. The Millennium Dome has a Wetherspoons in it and a pint of Stella costs £6.43. The situation is dire, Mr Burnham.
And yet, the sensibles, the newspaper editors, the outgoing Prime Minister – a man with the authority of a supply teacher on the last day of term – would have you believe there is no alternative to stagnation, to decline, to the status quo. Their politics is one of fear and inadequacy, cowering at the spectre of the bond markets.
They are cowards. We need a new economics and a new vision. The UK has the most expensive energy prices in the developed world. We are missing more than four million homes that would’ve been built had we simply kept pace with our European neighbours’ rate of construction. When the Sunday Times began assembling its “Rich List” in 1989 the 200 most affluent families in Britain owned wealth equivalent to about 5 per cent of GDP. Today, the same group owns the equivalent of 25 per cent. The 50 wealthiest families in Britain are as rich as the bottom half of the population – that’s 34 million people. There’s plenty of money in our economy; it’s just not in your wallet, or your son’s, or your niece’s. Everything is more expensive and nothing works.
For decades, Britain has mistaken asset inflation for economic development. We convinced ourselves that rising house prices were signs of national success. The result is a nation that owns plenty but has not built a reservoir since 1992.
Resolving these problems will be hard, particularly without accelerating the incineration of our planet. Burnham does not have a natural gift for the nitty-gritty of policy. Luckily, there is an abundance of vibrant thinking on the left about how to address the housing crisis; how to carve a productive state from one that splashes £100m on a railway tunnel to protect bats; and how to end the scourge of outsourcing that leaves towns across the country dotted with slum HMOs.
What makes this moment interesting is that these ideas are no longer confined to think tanks and academic journals. Across the left, thinkers such as Daniela Gabor, Mariana Mazzucato and Mathew Lawrence are sketching the outlines of a new political economy: one that sees the state not as a referee standing on the touchline, but as an investor, a builder and a shaper of markets. Their work differs in emphasis but shares a common conviction: Britain cannot tax cut or deregulate its way out of stagnation. It must produce its way out.
You could tax wealth in the same way as work, equalising capital gains tax with income tax. That’s Reagan. You could require pension funds to buy newly minted infrastructure bonds. That’s Osborne. You can borrow. The fiscal rules are a distraction. Contrary to village wisdom, bond markets do not hate borrowing. They hate stupid borrowing for consumption, like Trussite tax cuts. Prohibitive costs – energy and housing above all – are driving inflation in our economy and, in turn, the cost of debt. Burnham could do worse than follow Mazzucato’s compass towards a common-good economy.
This does not mean bond markets are imaginary, nor that governments can borrow without limit. It means markets care less about the size of borrowing than whether there is a credible vision for what the money is buying. Burnham’s role in all of this is to tell that story, to turn it into normie populism. The choice facing Britain is no longer between the market and the state. It is between a productive economy that builds wealth and an extractive economy that redistributes it upwards. Burnham may need the confidence of sections of the elite, conferred by the presence of Andy Haldane in the background of Budget Day photographs. But underneath that, and occasionally, declaratively, in public, this is the prospectus.
It is time to declare war on the Nimbys, the landlords, the management consultants and the vulture capitalists. The people who would have you believe that running water through pipes to taps is an inordinately difficult, sometimes impossible task – but who can, miraculously, conjure complex financial instruments that indebt utility companies and extract endless dividends for their shareholders. They are your enemy. Crush them. We are creating a prosperous island home for the British people. Not an economy where you charge a toll on a road you did not build, or own an umbrella factory in a storm and call it entrepreneurship. The age of rent extraction is over. The time of the productive state has come.
Listen to Mariana Mazzucato in conversation with Oli Dugmore on our interview podcast The Exchange
[Further reading: Andy Burnham does a Lenin]
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