Andy Burnham must tackle the state pension triple lock, control welfare spending, stop runaway growth in the NHS budget, according to Jim O’Neill.
The former Goldman Sachs chief economist, who sits as a crossbench peer in the House of Lords, is advising the MP for Makerfield.
He called on the former mayor of Greater Manchester to “get real” on the economy and mount a campaign of radical reform to Britain’s ever-more expensive welfare state.
“Andy has got the same challenge that everybody else seems to avoid, and that is doing something about welfare, stop this never-ending spectacular rise in spending on the NHS, dare I say it – emphasising I’m a cross-bench independent peer – do something about the triple lock,” said Lord O’Neill.
The result would be a major shift in Britain’s economic fortunes, and a financial reward from investors in financial markets who would stop treating the UK as an unreliable basket case.
“The reward for doing that is a significant drop in the UK long-dated interest rate premium, and importantly, in my view, probably a significant revaluation of our equity market which is very cheap relative to others,” the peer told BBC Radio 4’s Today Programme.
Investors currently charge the UK a higher rate of interest on its debt than any other G7 nation, despite having lower debts, as a share of GDP, than most of those similar economies.
Regaining investors’ confidence and slashing borrowing costs could deliver a multi-billion pound windfall to the public finances by reducing the rate of interest paid on the near-£3 trillion national debt.
Lord O’Neill said it would also deliver a boost to the wider economy by raising business confidence.
“I am trying to persuade Andy that if we have a leader that actually makes it clear in a credible way that we are going to deal with these sacred cows, there would be a reward, in my opinion – a modern version of the same thing that happened to Blair and Brown when they unexpectedly announced the Bank of England being made independent on the first day they came into office,” he said.
“That transformed the whole image among business people and investors. Andy has the opportunity to do that now.”
