Where are Andy Burnham’s economic advisers?

Andy Burnham’s allies boasted that highly-regarded economists had been lured as advisers. Mauricio Alencar and Ali Lyon report on the non-appointments of some of Britain’s best economists – and what the Prime Minister and Chancellor’s new teams look like. 

In the end, all it took was a few rumours. In the weeks leading up to Andy Burnham’s coronation as Prime Minister, bond investors had been demanding a steadily higher premium on Britain’s government debt, fearful of a more expansionist – and inflationary – fiscal direction.

The former Manchester mayor’s remarks questioning whether we should be “in hock” to the bond market – and his insistence on bringing more utilities into public control – hung over that period like a rain-packed cloud. That was until, with his ascension all but assured, it emerged via a coordinated series of news stories that his team was being advised by three of the most feted economic brains in the country.

Concern over those remarks dissipated. Optimism took its place as it was reported almost simultaneously across Fleet Street before the Makerfield by-election that former Bank of England chief economist Andy Haldane, former Treasury minister and Goldman exec Lord Jim O’Neill, and ex-Office for Budget Responsibility chair Richard Hughes had the next Prime Minister’s ear. Reassured by the presence of this trio, financial markets largely greeted Burnham’s ascension with a shrug.

A few weeks, and an almighty reshuffle of front and backroom staff later, and City PM understands that not one of those market-calming heavyweights has landed an official role in Burnham and John Healey’s new-look administration. 

A hodgepodge crew of generalist special advisers, even more generalist MPs and political veterans has emerged in their place – leaving nervousness over the direction of Burnham’s premiership to stalk the City’s investors and once again.

Observers have suggested that the names were useful to Team Burnham in the early days, even if they proved to be “decorative.”

It is understood that ongoing conversations are being held between O’Neill and Burnham’s teams over the prospect of a formal role, though one has not yet been agreed. 

With Sir Keir Starmer and Rachel Reeves out, there is a sense of limbo hanging over financial aides that had supported the government’s two most important leaders. 

While some political strategists have been kept on, it is still unknown whether Minouche Shafik, the former IMF deputy director and Bank of England deputy governor, will stay on as Number 10’s chief economic adviser. She was brought in by Starmer before last year’s Budget to shore up the government’s economic credentials. Number 10 officials have refused to deny claims she is leaving.

The roles of other economists who have provided input to the government over the last 10 months are also up in the air. The productivity mastermind John Van Reenen, the LSE professor, offered advice to Reeves up until April this year. A council of economic expertise set up by the former Chancellor has also not yet been re-convened. Two economists who are serving one-year terms on the team, LSE’s Anna Valero and inequality researcher David Sturrock, are scheduled to leave before the Budget takes place. 

Instead, the only ‘National Economic Council’ assembled by Burnham in the new No 10 North consisted of mayors and ministers, not economists or industry leaders. A meeting in Manchester city centre in late July was promoted as a “revival” of a committee that handled the government’s response to the Great Financial Crisis of 2008.

It is understood both Healey and Burnham are still contemplating what to do with authoritative advisers on economics, a month after taking up residence in Downing Street, and even after a string of bold economic announcements on business rates and energy taxes was rolled out.

For an upbeat Prime Minister who was quick to get news out that he had held phone calls with some of the most respected economists in the country during his by-election campaign, there is no suggestion that Downing Street’s economic operations have yet created a team centred around real fiscal know-how and much business acumen. 

Investment minister void

Also unnerving City figures is the void left by Lord Jason Stockwood in the investment brief. The Grimsby Football Club owner faced an uphill battle to win over the Square Mile given the storied reputation of his sparklier predecessor, former Darktrace boss Poppy Gustafsson. But through a combination of puppy-like enthusiasm and northern charm, though, the angel investor succeeded.

“He was very receptive to the community,” a tech investor told City PM. 

One of Stockwood’s flagship measures was the delivery of a well-received Regional Investment Summit, in which private investors and business announced north of £10bn of spending outside the capital. Such a summit could have been purpose-built for a Burnham and Healey-run Treasury. And yet, Stockwood finds himself out of a job. The ministerial brief has also been left unfilled, leaving the recently-appointed chief executive, Shell chair Parminder Kohli, to run the Office for Investment alongside the civil servant Ceri Smith.

“I was sorry to see Stockwood lose that role,” the investor said, adding: “He had the right background – labour values with a strong entrepreneurial background.”

Burnham leads on ‘cost of living government’

Burnham’s change in tack underpins his desire to be more hands-on with the Treasury than Starmer ever was, having once been a minister in the then all-powerful department under Gordon Brown.

In his first Cabinet meeting, he set out his ambition to lead a “cost of living government”. A decision to relieve Lord Richard Walker, the Iceland supermarket boss and mega Labour Party donor, of his title as the “cost of living champion” may explain how the Prime Minister wants to take credit for the government’s economic wins, whenever they come. 

At the end of Starmer’s premiership, Walker had begun to make a series of bold – and politically unpalatable – policy recommendations around the pension triple lock and the “disaster” scenario where Ed Miliband was made Chancellor. In an online post, Walker complained that it was “damn hard to get anything done” while he was in the building and urged Burnham to get cost of living policy work “away from the Westminster bubble”. 

And so the newly minted PM has put pressure on himself to deliver on his promises. But there is still a buffer that could protect Burnham from being blamed for economic mistakes, largely built on the idea of continuity. 

Burnham’s continuity buffer

He has not completely done away with all of Starmer and former Chancellor Rachel Reeves’s top aides. Varun Chandra, the much-liked business adviser who previously led the financial advisory firm Hakluyt & Company, has been kept by Burnham. Chandra has been tasked with persuading executives that Labour has in fact been “pro-business” even as extra taxes on everything from employment to dividends have infuriated lobbyists and investors. 

As has Neil Amin-Smith, the former think tanker and Treasury official. Once elected the sexiest Londoner, the former Clean Bandit violinist – the band famous for its hit tune ‘Rather Be’ – was one of Reeves’ top-paid, full-time advisers. He is now an economic adviser to Burnham, as reported in The Times.

Starmer and Reeves’s Treasury team has also been partially restored. Appointments involved some demotions. Emma Reynolds was made the chief secretary to the Treasury, having previously been the City minister and environment secretary under Starmer. James Murray, who was once the chief secretary to the Treasury before temporarily replacing Wes Streeting as the health secretary, was made financial secretary to the Treasury.

Burnham retained some Resolution Foundation pedigree in the department, too. Torsten Bell, the left-leaning think tank’s former chief executive for nine years, and Dan Tomlinson, who was an economist at the organisation, have held onto their jobs as pensions minister and exchequer secretary to the Treasury. The latter has also been handed the improved title of “growth minister”, previously held by the Brownite minister Lord Spencer Livermore. 

From Canada’s perspective, the two appointments that are seen as crucial to maintaining business relations are Lucy Rigby as the City minister, again, and the introduction of Baron David Pitt-Watson as parliamentary secretary. Healey made a point of namechecking both when he addressed City investors and business chiefs in his first Square Mile speech as Chancellor. He said the two selections were a “way of reinforcing [our] commitment to the City, to the financial services at the heart of our flourishing British economy”. 

Pitt-Watson was previously Labour’s director of finance, having worked at Deloitte and McKinsey. The Scotsman has become influential in the party on all things banking, pensions and financial markets regulation. In 2012, he contributed as a panel member to the Sharman Inquiry on liquidity risks, which led to auditor rules being tightened, and later co-wrote a book that argued asset managers had failed to properly serve savers and manage investments that delivered gains from long-term investments. 

Louise Haigh will also surely look to have her say as the chancellor of the Duchy of Lancaster and the Prime Minister’s right-hand woman. Since leaving as transport secretary just five months into the Starmer government, she has repeatedly criticised the UK’s economic framework. Her main targets over the last two years have included commercial banks for profiting from the Bank of England’s quantitative tightening programme, the Office for Budget Responsibility for ignoring the values of public investment, and Reeves for creating fiscal rules that forced the government to only make “short-term fixes”. One Labour strategist goes as far as to say that Haigh is in charge of the government’s economic policy, adding – somewhat unkindly – “with her Chat GPT.”

Healey’s team

Ministers and aides borrowed from the Starmer and Reeves era might come in handy for Burnham when things get  tough again. Another energy price surge, an interest rate hike or an AI bubble-burst are just some of the lurking economic threats that could undermine the Prime Minister’s cost of living drive and hopes of getting young people into jobs. Starmer and Reeves’ favoured personnel now have an even more important – and more challenging – job in getting the UK economy to work under Burnham. 

But it will be Healey writing the Budget on 28 October, and he will at least want to show that there was a good reason he was  picked over Shabana Mahmood. 

He did not appear to be the first choice Chancellor but he now faces the challenge of uniting different factions of the parliamentary party that regularly clash on wealth taxes, fiscal rules and private enterprises. Burnham’s choice is also curious; in June, Healey accused the Treasury of failing to make national security a top priority after the department refused to lift defence spending to three per cent of GDP. 

But the experienced Labour peacemaker is no stranger to the department. He served as a Treasury minister in the Blair and Brown years and has contributed to economic discussions over the years. In 1998, Healey wrote a paper with Ed Balls, who became Brown’s chief economic adviser before being made a Treasury minister in the later Blair years, on regional development. He later reflected that the government could have gone further in devolving powers to local authorities. 

Now, 28 years later, he is expected to preside over the most radical Budget yet on devolution. The issue of transferring power out of London and distributing a share of income tax income to mayors will be at the top of the agenda.  

His own backroom team will be headed by Will Straw, the son of the former home and foreign secretary Jack Straw who was the executive director of the losing Britain Stronger in Europe campaign during the 2016 Brexit referendum. Straw has been a long-time think tanker and served as the chief executive of The King’s Trust, the charity set up by Charles III that helps vulnerable young people with unemployment, disability and homelessness. His lack of private sector experience has raised some eyebrows in the City.

Another adviser in Healey’s team includes the former London council lobbyist Shadi Brazell, who previously worked for James Murray when he was chief secretary to the Treasury, while the new Chancellor has also re-hired aides from his days in the Ministry of Defence. 

Healey’s team will likely have to work closely with the Prime Minister’s own policy entourage – a break from the last government where Reeves had almost-total control over economic decisions during Starmer’s premiership. 

But advisory teams across the government so far appear to revolve around sensible politics over sensible economics. In other words, non-partisan, highly-respected economists with controversial and risky ideas have been shunned to prioritise aides who understand how Labour could get re-elected. 

Looking at the heap of Burnham’s economic pledges that could rack up to tens of billions of pounds, the relationship between Number 10 and 11 could become as unpredictable as ever. 

In a recent interview, Healey said he would be prepared to tell Burnham that there weren’t endless stacks of cash available to be spent. He would likely need to weigh the political cost of saying no before calculating the economic cost of bold policies to the Treasury.