Sir Keir Starmer has launched a blistering attack on Andy Burnham’s radical economic plans, warning the Manchester mayor’s £40 billion borrowing spree could trigger a Liz Truss-style market catastrophe that would devastate working families across Britain.
The Prime Minister’s extraordinary intervention comes as Labour descends into open civil war on the eve of its Liverpool conference, with Burnham revealing that MPs are privately urging him to mount a leadership challenge against the beleaguered Starmer. The Greater Manchester mayor has positioned himself as champion of the party’s left wing with demands for massive public spending increases and a scrap of the two-child benefit cap.
In his most damning rebuke yet, Sir Keir invoked the spectre of Truss’s disastrous 2022 mini-budget that sent markets into freefall and forced her resignation after just 49 days in office. Speaking to ITV Granada, the Prime Minister delivered a stark warning about abandoning fiscal discipline that appeared directly aimed at his potential rival.
It was three years ago this week that Liz Truss shows what happens if you abandon fiscal rules,” Sir Keir said, his voice carrying unmistakable steel. “Now, in her case, she did that for tax cuts. But the same would happen if it was spending.”
The Prime Minister added pointedly: “We saw what happened to working people three years ago, the infliction of harm on them. I’m not prepared to let a Labour government ever inflict that harm on working people.”
A Cabinet Minister, speaking on condition of anonymity, was even more brutal in their assessment of Burnham’s economic credentials. “Who the f*** does he think he is? He’s acting like the Messiah, but he’s a very naughty boy. And has exposed himself as a bit of a joker with this bond market nonsense,” they told The Sun.
The clash centres on Burnham’s radical economic manifesto, laid out in high-profile interviews with The Telegraph and New Statesman, where he dismissed concerns about bond market reactions as being “in hock” to financial institutions. The mayor has called for a £40 billion borrowing programme for council house construction, higher taxes on expensive London properties, and the immediate scrapping of the two-child benefit cap at a cost of £3.2 billion annually.
His economic vision represents a dramatic lurch leftward that government sources warn could crash the economy. Andy’s economic plan is to crash the economy and push up mortgage rates,” one Downing Street insider said bluntly. “It’s not serious and the Blairite Burnham from the 2000s knows it.”
The comparison with Truss’s catastrophic tenure carries particular weight given the market turmoil her unfunded £45 billion tax cuts triggered in September 2022. The pound crashed to historic lows against the dollar, gilt yields soared, mortgage rates spiked, and the Bank of England was forced into emergency interventions to prevent pension fund collapses. Within weeks, she was forced from office in humiliation.
Chancellor Rachel Reeves will use her conference speech on Monday to reinforce the message that Labour can only deliver its promises if markets maintain confidence in the government’s fiscal plans, a direct rebuke to Burnham’s cavalier approach to borrowing.
The Manchester mayor has made no secret of his ambitions, telling The Telegraph that MPs “contacted me throughout the summer” about mounting a leadership challenge. Though he insisted any decision was “more for other people in Westminster to make”, he pointedly refused to rule out a bid before May’s local elections.
“Life seems to be changing, and I don’t know what is the will of people in Westminster,” Burnham said, adding he was “at the prime minister’s disposal to help” in a comment dripping with barely concealed ambition.
His intervention on the two-child benefit cap has particularly inflamed tensions. Calling the policy “abhorrent” and “the worst of Westminster”, Burnham argued it “cannot be justified” as it arbitrarily punishes children for their parents’ choices. The policy, introduced by George Osborne, prevents parents claiming benefits for any third or subsequent child born after April 2017.
“My parents always said to me something that has definitely guided me in my life; you can never visit the sins of the parents on the kids,” Burnham told The Guardian, positioning himself as defender of Labour values against what supporters see as Starmer’s rightward drift.
The mayor’s economic proposals extend far beyond welfare reform. He wants a new 50p tax rate for high earners whilst cutting income tax for lower earners, effectively reversing the party’s current fiscal stance. His call for massive state intervention includes bringing all utilities back into public ownership and introducing proportional representation.
Housing Secretary Steve Reed attempted to dismiss the growing speculation as “tittle tattle”, drawing parallels with similar rumours about Starmer when in opposition. “I’ve seen this movie before,” Reed told Times Radio. That was before he picked this party up off the floor and led us into a record-breaking general election victory.
But the dismissals ring hollow as Labour trails Reform UK by eight points in recent polling, with Starmer’s approval ratings in freefall and questions mounting about his leadership following the resignations of Angela Rayner as deputy prime minister and controversy over Peter Mandelson’s appointment as US ambassador.
Any leadership bid would represent Burnham’s third attempt at the top job, having lost to Ed Miliband in 2010 and Jeremy Corbyn in 2015. However, supporters believe the current crisis makes him uniquely positioned to unite the party’s warring factions and counter Nigel Farage’s populist threat.
The path to Westminster remains fraught with obstacles. Burnham would need an MP to stand down, secure approval from Labour’s National Executive Committee, win a by-election likely contested fiercely by Reform UK, and then secure nominations from 80 MPs to trigger a leadership contest.
Yet most observers believe he could now secure those nominations, drawing support from welfare rebels, frustrated backbenchers and those alarmed by Labour’s plummeting poll numbers. “He has the welfare rebels and the frustrated backbenchers,” one minister observed, though questioned whether he could “reach out beyond the obvious and build a surprising coalition”.
The timing of this eruption could not be worse for Starmer as delegates prepare to gather in Liverpool for what was meant to be a conference celebrating Labour’s return to power. Instead, it threatens to become a showcase for internal divisions and leadership speculation.
Burnham’s claim that Downing Street has created a “climate of fear” and spread “alienation and demoralisation” among MPs has resonated with backbenchers increasingly frustrated by what they see as heavy-handed party management and a lack of radical ambition.
As one Labour MP put it anonymously: “This is the first time I have ever heard a corpse deliver its own eulogy”, referring to Starmer’s recent attempts to steady his premiership.
With Reform UK surging in polls and local elections looming in May that could prove terminal for Starmer’s leadership, Burnham has positioned himself as the authentic voice of Labour values against both the Conservatives and his own party’s leadership.
Whether his economic plans represent bold vision or reckless fantasy may soon be tested if Labour’s crisis deepens further. For now, the spectre of Liz Truss hangs over this bitter battle for Labour’s soul, a warning from history about the perils of abandoning fiscal discipline that Starmer hopes will resonate with a party facing existential questions about its future.
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