Andy Burnham's Manchesterism: Challenging Thatcher's Legacy

Margaret Thatcher's tenure as Prime Minister from 1979 to 1990 fundamentally reshaped Britain, moving it away from an era marked by strikes, high inflation, and weak growth. Her policies, often dubbed "Thatcherism," involved dismantling powerful trade unions, privatizing state-owned industries, and fostering a free-market environment, particularly for the City of London. While her legacy remains contentious, many of her reforms are still in place today.

The Genesis of Thatcherism

Before Thatcher, Britain was perceived as being in significant decline. The 1970s were characterized by high inflation, powerful trade unions, and frequent industrial disputes, with nearly 30 million working days lost in 1979 alone. The country even required an IMF bailout, leading to a sense of ungovernability. Thatcher believed Britain was beholden to unions and aimed to challenge the notion of government as a "universal provider."

Upon entering Downing Street, Thatcher embarked on an 11-year economic overhaul that deeply divided the nation. Her radical blueprint included:

• Monetarism: Controlling inflation by reducing the money supply.
• Taxation: Reducing the top rate of taxes.
• Centralization of Power: Increasing the power of central government while diminishing local government and decision-making.
• De-industrialization: This led to the collapse of the Northern manufacturing belt and many high street businesses, shifting the economy towards finance and the City of London. This period saw a widening gap between the prosperous Southeast and other regions.

Privatization: A Cornerstone of Thatcherism

A central tenet of Thatcher's vision was the large-scale privatization of Britain's public sector. When she took office, nationalized industries accounted for up to 10% of the economy and employed nearly two million people, with the public sector employing 7.9 million overall. Key privatizations included BT, British Gas, and electricity networks. The aim was to transform ordinary citizens into "micro-capitalists" by encouraging share ownership, famously exemplified by the "Tell Sid" campaign for British Gas shares.

Initially, privatization generated significant revenue for the Treasury and injected private sector capital into what were often rundown public services. However, over time, this has led to:

• Higher bills and prices for consumers.
• Insufficient investment in infrastructure.
• Public backlash against private sector managers in utilities earning substantial profits, particularly evident in the water industry with issues like sewage spills.

Britain's Current Fiscal Challenges

Today, Britain faces new economic headwinds. Long-term government borrowing costs have surged to their highest levels since 1998, significantly higher than other major economies. This is partly due to the UK's substantial national debt, which has risen from around 44% of GDP in 1979 to between 94% and 96% today. Debt interest alone now costs roughly 1.5 times the entire defense budget, largely due to spending during the COVID-19 pandemic. This means tens of billions of pounds are spent servicing debt rather than on public services like trains or healthcare.

The Rise of "Manchesterism" and Andy Burnham

Against this backdrop, Prime Minister Andy Burnham is advocating for a significant departure from four decades of free-market orthodoxy, challenging the legacy of Thatcherism. Burnham, who gained prominence as the mayor of Manchester, has built his political brand on local control and a more "normal human presence" in politics, often contrasting with London-centric governance. During his nine-year tenure as mayor, Manchester's economy grew at twice the national rate.

Burnham's political strategy, dubbed "Manchesterism," is rooted in:

• Devolution of Power: Shifting power from Westminster to local leaders who understand their areas best. He argues that Britain will not be "at peace with itself" until more power is devolved, particularly to a "Number 10 of the north" headquartered in Manchester.
• Local Control of Essential Services: He successfully brought Manchester's bus network back into public control.
• Re-industrialization: A more activist role for government in the economy, including a domestic industrial strategy.
• Public Control of Utilities: He advocates for greater public control of utilities like water, where services are delivered at cost, and profits are reinvested for public benefit through lower prices and increased investment.

The Feasibility of Burnham's Vision

Burnham's proposals for greater public control could manifest as tougher regulation, public stakes in private companies, or outright public ownership. While he has spoken about re-industrialization and potential nationalization (e.g., British Steel), the significant challenge lies in funding these ambitions. Given Britain's high national debt, there isn't a large "pot of money" available.

Nationalizing industries like water would be extraordinarily expensive. Even acquiring a company like Thames Water for free would still require billions in government investment to cover necessary upgrades currently provided by private investors. Such borrowing could lead to bond markets charging higher interest rates if perceived as irresponsible.

However, some forms of nationalization, like that of rail, are simpler as they involve taking over service contracts rather than purchasing infrastructure. Burnham's success will depend on his ability to make tough decisions, including bringing debt levels and spending under control.

Ultimately, Andy Burnham's vision for Britain is likely to involve greater control and regulation of utilities and industries, increased devolution, social care reform, potentially higher taxes for the wealthy, and possibly a re-evaluation of Brexit. The success of "Manchesterism" hinges on whether it can offer a new vision for the state, allowing for more active government intervention in certain areas, rather than simply rolling back to the 1970s.