Fuel surge; adviser backs Miliband
Households face the sharpest fuel-price rise since 2022 as Burnham inherits a £4.7bn defence gap, and his own Treasury adviser wants Ed Miliband running the economy instead.
Andy Burnham becomes prime minister on 17 July owing a £4.7bn defence bill, with inflation at 3.3%, and his own Treasury adviser wants Ed Miliband to run the economy instead of him.
UK inflation rose from 3% to 3.3% in the year to April, driven by an 8.7% monthly jump in motor-fuel costs, the sharpest rise since the summer of 2022. Burnham has responded with a platform built for that squeeze: a £1 bus-fare cap, tax cuts on food and drink, water renationalisation, and a council housebuilding programme redirecting £39bn of funding toward social rent. He has also pledged to stick to Rachel Reeves’s fiscal rules and to the 2024 manifesto promise not to raise taxes on work.
The bill for a war Britain helped fight
Those fiscal rules are under pressure because of a £4.7bn hole in the defence budget that Keir Starmer left unfunded when he resigned, part of a wider defence uplift partly financed by scrapping and postponing energy, infrastructure and military-housing projects. Defence secretary John Healey and armed forces minister Al Carns resigned on 11 June over the same squeeze.
The Guardian’s account of Burnham’s inheritance credits him with a stroke of luck: oil prices, which spiked when the US and Israel bombed Iran from 28 February, have since fallen back to around $72 a barrel, cutting the estimated hit to the Treasury’s fiscal headroom from roughly £10bn to £4.6bn. That framing treats the war as a market event that happened to Britain. It leaves out that Britain hosted the bombers, at RAF Fairford and Diego Garcia, and that satellite data examined by Declassified UK shows a UK reconnaissance satellite made an unprecedented number of passes over Iran in the weeks around the strikes, some shortly before targets were hit. It leaves out that a US Tomahawk missile struck the Shajareh Tayyebeh girls’ school in Minab on the war’s opening day, killing at least 165 people, most of them girls aged seven to twelve, according to investigations by the New York Times, Human Rights Watch and Amnesty International. Families of those children joined a funeral in Tehran on 5 July. The falling oil price the Treasury is banking is a ceasefire dividend from a war Britain helped enable. The £4.7bn defence gap is a separate, earlier commitment, not a product of that oil swing, but both sit on the same balance sheet Burnham now inherits.
A Treasury that never changes hands
Nicholas Stern, who was chief economic adviser to the Treasury under Gordon Brown and later chief economist at the World Bank, told the Guardian that Burnham should make Ed Miliband chancellor, calling him “competent and strategic” and “bold.” Stern wants investment raised by two to three percentage points of national income for clean energy, cities and transport. Labour’s deputy leader, Lucy Powell, has already said Miliband would make “a good chancellor.” UCL economist Josh Ryan-Collins puts the blame for stalled net-zero investment on “the absence of willingness from the Treasury to mobilise resources,” not on Miliband’s record at the energy department.
The same Treasury that found bases, satellites and billions for a war did not find the money for council housing or bus fares without a change of government. Burnham says he wants a new direction. The rules he has promised to keep are the ones that produced the old one.
