You want honesty, Andy? Britain is out of easy options

Britain's new prime minister, Andy Burnham, is asking voters to be honest with themselves ahead of next week's Labour conference and a tough Budget. FT columnist Robert Shrimsley argues that the honesty must start with Burnham himself. Debt interest now takes £1 in every £12 of government spending, net debt stands at 94% of GDP and Russia is testing Nato almost daily. Shrimsley thinks deep welfare cuts are unlikely, so he says the cleanest option is to set aside Labour's manifesto and raise income tax to pay for defence and ease borrowing. He compares the moment to James Callaghan's warning in 1976 that Britain had lived on borrowed time..By Robert Shrimsley.When a prime minister, especially a Labour one, starts telling the country we are “going to have to be honest with ourselves”, it is normally time to watch your wallet. Andy Burnham has spent the first weeks of his premiership trying to foster a sense of hope and belief in the country. Now comes the punch. As he prepares for next week’s conference speech and a tough Budget, Burnham is now into the hard realities of the job. Both he and Britain are out of easy choices. But the honesty he demands from the nation is also required of him and his party.Labour leaders’ conference speeches have delivered some moments of drama, soaring rhetoric and political courage. Neil Kinnock turning on the hard-left entryists of the Militant Tendency or Hugh Gaitskell vowing to “fight, fight and fight again” to save his party from unilateralists.But Burnham’s model should be another brand-new leader, chosen midterm. In 1976 James Callaghan faced a more immediate economic crisis than Burnham does. But the recognisable echo from then is of a nation that cannot continue as it has.Braving a surly membership, Callaghan told his party that Britain had “lived far too long on borrowed time, borrowed money and borrowed ideas”. In the most memorable passage, he added: “We used to think you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that option no longer exists . . . insofar as it ever did exist.” Burnham will not like the Callaghan precedent — he lost the subsequent election. (Callaghan also memorably ignored advice to call an early election.) But it was an example of the honesty Burnham is demanding. Burnham does have a vision for the country. His plan for a decentralised nation where regions can drive their own growth strategies is serious.But it won’t solve the challenges of today, this year or even next year. Those issues are where candour comes in. The government is spending £1 in every £12 servicing its debt interest. Net debt is 94 per cent of GDP and borrowing is still rising. Britain has an ageing population and voters are making more demands on the state than they are willing to pay for. The taxes already raised by Labour have hurt business and undermined competitiveness.Above all, Britain needs to modernise defence and re-arm in the face of threats from Russia. Vladimir Putin is testing Nato on a near-daily basis. The government at length published a defence investment plan but, in the words of the former general who co-authored the review on which it is based, the UK is currently going to get there five years too late. This cannot be put off.So if Burnham and his chancellor, John Healey, are offering honesty next week, their message is: we are spending too much for the tax we are raising. The choice is tax more, spend less or both. There is no reason to doubt Burnham’s desire to reduce welfare spending, but there are upfront costs, and the timeframe and reality of Labour politics mean tax is the more likely lever.Healey could find more money. Gambling taxes, changes to capital gains tax, including ending the CGT uplift on estates, which resets to an asset’s current market value on the owner’s death, and extending the council tax surcharge to properties worth £1.5mn are among the ideas floating around — though CGT increases are unlikely to raise anything close to the amount its champions imagine.But this is still more salami-slicing, taxing business or hitting investment, which will undermine the long-term ambition of raising levels of growth and investment. The alternative Callaghan moment would be to tell the party conference to prepare for serious and significant spending cuts, to welfare especially but also other popular programmes. This would be a better course for an overtaxed nation. But there is no reason to believe Burnham can deliver cuts swiftly or that this is the prime minister he wants to be. He has already declared that “national security can’t come at the expense of social security”. Even on the broadest interpretation of this remark, it reveals his instincts.In the absence of large cuts, the simplest, most efficient way to fund Britain’s defence and ease borrowing is to set aside Labour’s manifesto and raise income tax. It spreads the burden, does the least economic damage and confronts the country with the choices it must make.This too should be part of the hard truth Burnham is right to say the country needs. It is to tell the voters that the UK is in a defence emergency, that the manifesto has been superseded by world events both economic and military. It would be preferable to find the money for defence through cuts elsewhere, but he doesn’t have the time for protracted wrangling with his own party. .Read more:.Andy Burnham enters No. 10: Is Britain's new PM a class warrior or Blair 2.0?.The politics of a manifesto breach on tax when cost of living tops the public concern will almost certainly prove too unappealing. Instead, the signals so far are another patchwork Budget, the erosion of fiscal headroom and a gamble that the bond markets (to which Burnham hates being “in hock”) will settle.Levelling with the country is necessary. Labour and the UK both need a Callaghan moment. A truly honest conversation starts with a leader ready to face the consequences of their candour..© 2026 The Financial Times Ltd..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox every morning on weekdays. Register here.Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.

You want honesty, Andy? Britain is out of easy options

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