Burnham adviser calls for billions of pounds in borrowing for infrastructure | Andy Burnham

The man Andy Burnham appointed as his chief economic adviser has called for billions of pounds more borrowing for infrastructure investment in a sign of how Burnham may want to break with the policies pursued by Keir Starmer.

Economist and former minister Jim O’Neill said he wanted the government to create an independent body for infrastructure spending along the lines of the Office for Budget Responsibility (OBR), which could be freed up to spend significantly more on major projects.

The extra borrowing could raise tensions in bond markets over the prospect of a Burnham government, but O’Neill argued it would still comply with the government’s fiscal rules and provide enough transparency to reassure investors.

He said: “There is much more room to borrow for investment under current fiscal rules and the next chancellor should take advantage of this. We can do much more to boost infrastructure projects and that’s what we need to do.”

With Burnham almost certain to replace Starmer as prime minister, attention is turning to her possible policies, particularly on the economy, where she is seen as more left-wing than the current government.

The Makerfield MP will give a speech next week detailing more of his possible programme, including key devolution measures.

Over the past few weeks, Burnham has consulted three high-profile economists to detail his policy agenda: Andy Haldane, former economist at the Bank of England, Richard Hughes, former governor of the OBR, and O’Neill, former chief economist at Goldman Sachs.

He is also weighing up who to choose as chancellor, with energy secretary Ed Miliband and former health secretary Wes Streeting among the frontrunners.

Last year, Burnham was blamed for a rise in Britain’s borrowing costs by arguing that Britain should not “endanger” bond markets, leading to speculation that the government might abandon its fiscal targets if she became prime minister.

But during his campaign for the seat of Makerfield, Burnham said he would stick to existing fiscal rules and Labour’s manifesto not to increase income tax, VAT or national insurance.

The Guardian revealed on Monday that Burnham’s transition team had discussed O’Neill taking on a role in government, possibly as chief economic adviser at Downing Street.

Other potential roles could include a return to the Treasury, where he served as a minister in the Conservative government, or a job as Burnham’s devolution adviser.

O’Neill did not comment but said he thought Burnham needed to do much more within fiscal rules to increase infrastructure spending.

Burnham advocated for increased spending on transport projects in the north, such as a new tube station at Piccadilly in Manchester.

O’Neill previously chaired the Northern Powerhouse Partnership and was an advocate for the Northern Powerhouse rail proposals.

The extra borrowing will be included on the government’s balance sheet but could be offset by the assets it pays for, under Rachel Reeves’ changes to fiscal rules.

O’Neill added that bond markets would be more likely to accept additional debt if certain projects were undertaken by an independent organization that publishes its calculations of how much it would boost growth.

This could be achieved by transforming the National Infrastructure and Services Transformation Authority (Nista), an institution within the Treasury, into an independent organisation.

“We need Nista as a separate and much more transparent entity,” he said. “So the public, just like the financial markets, has a clearer idea of ​​what the multiplier affects [on growth] likely.”

One last interview For Sky News, O’Neill said: “One of the things Andy could explore is a much more publicly transparent entity – a sort of infrastructure version of the OBR – where the whole country could see on a regular basis, transparently, which major infrastructure projects would make a difference and which wouldn’t.”

Referring to the bitter political battle over the future of the high-speed rail line to Manchester, he added: “[That would] Move away from this very personal, subjective opinion: I love HS2, I hate HS2, etc.