Andy Burnham, the mayor of Greater Manchester and potential future prime minister, has outlined a vision to reindustrialise Britain, breaking from 40 years of neoliberalism. His analysis echoes criticisms of the Thatcher-era policies that led to manufacturing decline, a permanent trade deficit, and stagnant living standards since the 2008 banking crisis. However, to succeed where Liz Truss failed, Burnham must embrace radical state-led strategies, not just tweak the status quo, according to economist Larry Elliott.
Burnham's Economic Diagnosis and the Failure of Neoliberalism
Burnham argues that the economy has become dominated by the City of London, with manufacturing's share of output shrinking. This has resulted in a reliance on gig-economy workers and rentier capitalists, particularly affecting former industrial heartlands like Scotland, Wales, and northern England. He aims to remedy this geographical bias, a goal shared by Keir Starmer after his 2024 landslide victory, but Burnham needs a bolder approach.
According to Elliott, writing in a forthcoming book titled Reindustrialise Britain with Costas Lapavitsas and Doug Nicholls, the real problem is not distribution but production. New planning laws or a wealth tax are insufficient. Instead, a state-led strategy of reindustrialisation is essential, focusing on foundational industries like steel, advanced engineering, automation, digital technology, and clean energy. This would restore economic sovereignty and genuine prosperity.
Public Investment Through a National Investment Bank
To finance this, Burnham should establish a properly funded national investment bank providing long-term, patient capital for transport, energy, and industrial supply chains. A 10-year investment programme would include public equity stakes, rebuilding public wealth and crowding in private investment. Burnham has demonstrated this model as mayor of Greater Manchester, identifying cluster locations with infrastructure backing to attract high-value jobs.
However, obstacles include a loss of technical knowhow due to decades of manufacturing decline. Britain urgently needs technicians and engineers, requiring investment in skills and technical training. Unions should be seen as part of the solution, not the problem, marking a break from neoliberal dogma.
Navigating Market Pressures and Fiscal Rules
Burnham must also prepare for backlash from financial markets. Already, Starmer has left him to find full funding for defence investment, sparking speculation of tax hikes to avoid breaking fiscal rules and alarming bond markets. If Burnham bows to this pressure, he risks perpetuating a doom loop: weak growth increases deficits, leading to spending cuts or tax rises that slow the economy further, prompting more austerity demands.
To break this cycle, Elliott suggests broadening the Bank of England's mandate to provide low-cost, patient capital for reindustrialisation. The Netherlands has shown that borrowing for public corporations is feasible if backed by reliable revenue streams. Ultimately, targeted controls may be needed to protect manufacturing from footloose capital.
Elliott concludes that while none of this will be easy, the alternative is continued managed decline—or more precisely, mismanaged decline. Burnham's radicalism is necessary to avoid Truss's fate and deliver a reindustrialised Britain.
