When Labour was preparing for power in 2024, Keir Starmer’s then chief of staff Sue Gray compiled what one Labour official called her “shit list” – a dossier of immediate fires the government would have to put out. Now Gray is back, advising Starmer’s successor, Andy Burnham, in an unofficial capacity on how to tackle a number of immediate political problems in his first few weeks as prime minister.
The most pressing headache is the cost of living. Burnham has said the government needs to be “serious about putting more money back in people’s pockets”, while his policy adviser Miatta Fahnbulleh says the prime minister will be focused on “dealing with the cost of living in the short term”. Ideas floating around Burnham’s team include a year-long rent freeze for the private sector, a reduced cap on bus fares, and removing green levies from energy bills, funding them through tax instead. While some in his team are urging him to tax wealth to pay for these commitments, he signalled earlier this week this would not be something he would pursue in the immediate term.
“Andy Burnham faces cost of living, defence black hole and Thames Water crisis as Sue Gray returns to advise.”
Starmer left Burnham with a £4.7bn black hole in his defence investment plans. Downing Street and Treasury officials suggest that the incoming prime minister funds this through increasing borrowing, given there is still headroom against the government’s debt targets. But Burnham will already see that headroom depleted by inflation triggered by the Iran war, and also needs to find money for his cost of living measures and the possible de-privatisation of the utilities sector.
The creditors of the stricken water company are trying to negotiate a £10bn rescue package. Emma Reynolds, the environment secretary under Starmer, recently wrote to regulators spelling out her opposition to such a deal, saying it would represent poor value for taxpayers. Burnham will have to decide whether to go further and ask the high court to put the company into special administration, which could be a first step towards nationalisation.
Before recess, the government postponed the next stage of the elections bill to make space to pass the Hillsborough law instead.
Meanwhile, Burnham is planning to bring back Jonathan Reynolds as business secretary when he unveils his cabinet this week. Reynolds served as business secretary until last September before becoming chief whip. The move is seen as part of Burnham’s effort to deliver on his pledge to lead a “pro-business” government.
How Burnham will juggle these competing pressures – cost of living relief, defence funding, Thames Water, and a pro-business agenda – remains the central question of his opening weeks.
