Britain, which promised economic freedom when it left the European Union (EU) 10 years ago, has shifted course from deregulation to tighter control. In the 2016 Brexit referendum, Britain said it would become more prosperous by escaping EU regulations, expanding the market, and loosening activities by corporations. But Andy Burnham, the former Greater Manchester mayor who has solidified his status as the next prime minister, said the state would again control water, electricity, and dwellings that had been left to the market.
Former Mayor Andy Burnham is expected to run unopposed as the Labor Party's prime ministerial candidate on Aug. 9, replacing Prime Minister Keir Starmer, who released his resignation on the 22nd local time. With no rivals at present, he is expected to be elected prime minister by mid-July. Burnham was born into a working-class family in Liverpool and studied English literature at the University of Cambridge. He served as a Vice Minister in the Tony Blair government and as culture secretary and health secretary in the Gordon Brown government. After losing the Labor Party leadership contests in 2010 and 2015, he moved to become Greater Manchester mayor in 2017.
Burnham, who left London for Manchester in 2017, is set to return as prime minister after nine years. Burnham is expected to bring to London the same economic blueprint he presented in Manchester. The economic blueprint Burnham has presented in Britain is called "Manchesterism." It reclaims from the private sector the bus routes and fares that were handed over through privatization in the 1980s, and lets local authorities directly spend budgets for transport, dwellings, and education. During his mayoral term, Burnham launched the integrated transport network "Bee Network," combining buses and trams, to revive public transit use. Burnham calls this "corporations-friendly socialism."
If he becomes prime minister, Burnham is expected to expand the same approach to the water and energy institutional sector to strengthen public control. Manchesterism finds the reasons for expensive water, electricity, transport, and rents not in inflation but in privatization. Burnham believes that as essential services in Britain moved into private hands, shareholder dividends and high financing costs were passed on as bill burdens. The British government currently pays housing benefits and energy subsidies with taxes. Those taxes then flow back to private landlords and privatized service corporations, creating a vicious cycle. In the Burnham camp, this structure is called the "privatization premium."
The Guardian, a British progressive outlet, reported on the 22nd that Mainstream, a group that advised Burnham within the Labor Party, proposed acquiring privatized essential-service corporations with poor governance through administration procedures and securing equity by giving Government Bonds instead of cash. It was also reported that creating new public corporations to compete with private corporations is under consideration.
Still, there is considerable criticism asking why the state should buy troubled private corporations with public money. Thames Water, cited as the top candidate for nationalization, is the largest private corporation responsible for water and sewage services in London and surrounding areas since 1609, for more than 400 years. Since its privatization in 1989, the corporation has supplied water to a quarter of London's population. Based on this, it engaged in lax management, leaving borrowing fund of about £20 billion (about 41 trillion won). City A.M., a British financial outlet, noted, "Even if the state takes over, corporate debt does not disappear," and added, "Manchesterism is not cost savings; it merely shifts who pays from corporations to the taxpayer."
Burnham said he would not raise income tax, employee National Insurance contributions, or value-added taxes. The three account for most of the British government's tax revenue. At the same time, Burnham said he would maintain the "triple lock," which raises pensions each year by the highest of the inflation rate, wage growth rate, or 2.5%. He also outlined plans to increase social housing and spend on public control of water and energy and on social care reform.
If the state is to expand its role while holding major taxes steady, it must shift the burden elsewhere or increase government borrowing. Reuters said, "Burnham prefers to stick to existing fiscal rules while strengthening taxes on real estate, assets, and investment income." Experts widely expect that, as Burnham drafts his first budget, high-value dwellings and land, capital gains tax, dividend income, inheritance tax, and additional levies on financial firms are likely to become key issues.