Mel Stride: UK taxpayers face £5.4bn ‘Burnham penalty’ over increased borrowing costs, Tories claim
Shadow Chancellor Sir Mel Stride will claim taxpayers are already facing a “Burnham penalty” as speculation around the Labor leadership has increased the government’s borrowing costs.
Political turmoil in Westminster fueled by Greater Manchester Mayor Andy Burnham’s potential return to Parliament and a possible challenge from Sir Keir Starmer for the party’s top job has also been reflected in movements in bond markets.
Gilt yields, which represent the interest rate on government borrowing, have surged since Labour’s last election results cast doubt on Sir Keir’s leadership.
This uncertainty has reportedly emboldened rivals including Mr Burnham and former health secretary Wes Streeting.
In an upcoming speech in Westminster, Sir Mel is expected to highlight that the 10-year gold yield has now consistently exceeded 5 per cent. He will describe it as “a damning verdict by the markets on the current Government”.
New analysis published by the Conservatives suggests that if the rise in yields observed last Friday, following reports of Mr Burnham’s potential route back to Westminster via the Makerfield by-election, were to continue over a five-year period, it could lead to a total estimated cost of £5.4bn.
This equates to around £300 for every working family across the country.
Yields rose again on Monday, then fell below levels seen on Friday.
In an interview with the New Statesman last year, Mr Burnham said the Government needed to “get beyond the issue of being hostage to bond markets”, raising his uneasiness about the City’s potential approach to public finances.
“Andy Burnham costs us all money anyway,” Sir Mel will say, adding: “Markets don’t care about personalities; they care about fundamentals.”
One of the main problems is that “a new prime minister may come up with a plan to borrow more, to raise anti-growth taxes even higher than current plans, and there is a poor understanding of the link between these actions and market movements.”
Speaking at a center for a Policy Studies event, Sir Mel will say: “Even if Keir Starmer is struggling, it is clear that his government cannot control the financial aspect of travel.”
He will argue that the weakened Prime Minister’s ability to act is now shaped by background pressure to spend more and raise taxes.
“This is a government that is increasingly unable to make tough decisions and is moving to the left, a recipe for more debt, more taxes and higher inflation,” Sir Mel will say.
A spokesman for Mr Burnham said: “The Conservatives and Reform represent the failed economy that has sucked wealth and power from places like Makerfield for 40 years.”
The spokesman said Mr Burnham was standing in the by-election to show communities in Makerfield a “different way” to “make life’s basic needs more affordable, re-industrialise with good jobs and build council housing”.
In an interview with ITV News at the weekend, Mr Burnham insisted “there needs to be fiscal discipline” and bond markets cannot be ignored.
But he noted its record in Greater Manchester, where there are “very solid public finances” but also an economy growing by 3%, bucking the national trend.
