Short-Termism Won’t Stop Us from Paying for Failure
Common Sense Policy Group
published 28th October 2026 by Evie Gibbon
At Labour Party Conference, Andy Burnham put to words what the British public has been suffering for decades: a rapid decline in living standards as a result of privatisation. He set out a vision of a ‘new social contract’ where a decent home and stable income can once again be attainable to all.
Unfortunately, Healey’s announcements, bound by the fiscal constraints of his predecessor, are not enough to break the cycle of crises that have come to define successive Autumn Budgets. Whilst taking some welcome steps towards fiscal devolution, this budget will ultimately fail to guarantee British people the security they sorely need.
Our recent research reaffirms what we set out in 2025: public investment is a powerful driver of long-term growth, chronically undervalued by politicians and economic institutions alike. To truly establish a ‘new social contract’ the Chancellor must invest in crucial infrastructure, tax wealth fairly, and commit to nationalising utilities in full. There is no time to waste.
‘Breathing space’ only goes so far
Addressing household energy bills was unavoidable at this Budget. The £100 Household Energy Payment for 20 million households and the planned removal of gas standing charges will bring welcome relief, but they are the latest in a long line of one-off discounts and crisis relief payments. It is not difficult to see that a constant struggle at the mercy of fossil fuel markets is not a sustainable energy policy. Short-term measures like this will continue to cost the Government dearly until we take full control of our energy supplies and work faster towards self-sufficiency, grounded in the necessity of decarbonisation.
Raising the bank surcharge to 6% is also reactive in nature, as enormous profits at the expense of mortgage holders and businesses became too big to ignore. Tweaks and ‘quick wins’ like this fall short of the comprehensive action needed to prevent growing inequality. No one can deny that British households need ‘breathing space’ from economic shocks, but the Government’s own MPs and cabinet members know that we cannot do this without taxing wealth fairly.
Starmer and Reeves legacies
It is clear that keeping Reeves’ fiscal rules severely limited Healey’s capacity to deliver meaningful change at this budget. Headroom of £15bn in 2029/30 leaves little room for the investment the Government’s own ambitions require. Besides some important steps to devolve fiscal powers, many of Burnham’s wider ambitions appear impossible within these self-imposed restraints. New economic rules, that challenge flawed economic orthodoxy and properly account for the long-term impacts of Government spending, are essential to delivering Government goals on council housing, utilities, and keeping the NHS from collapse.
During the ‘Burnham bounce’ the Chancellor had a unique opportunity to challenge austerity ideology and put forward a new narrative of fiscal responsibility that is evidence-based and grounded in progressive values. Apprehensions over the response of bond markets and mainstream media are understandable, but we must now see a concerted effort to demonstrate the power of public investment in transforming living standards.
Public spending to grow the economy
Our latest calculations provide further evidence that increasing public investment is crucial to long-term economic growth. Based on 1996-2019 data from 23 advanced economies, we find that a sustained increase in capital spending[1] equal to 1% of GDP leads to a permanent increase in total GDP of just under 4% after 12 years. Moreover, contrary to Treasury modelling and Office for Budget Responsibility (OBR) frameworks, capital spending has a peak multiplier effect[2] of 2.99 in year 9.
Large-scale investment in our schools, hospitals, transport, and innovation is therefore essential to boost productivity and create growth with a noticeable impact on day-to-day life. The positive effects of increasing infrastructure spending extend long beyond the five-year horizon considered by the OBR. Squeezing the investment that keeps our services running will only lead to greater current spending for those departments down the line.
Properly targeted, and combined with the mayoral fiscal powers announced today, capital spending will be integral to equalising growth and living standards across the UK. The Government’s reform of the triple lock from 2030 is to be commended but further cuts to welfare spending or public sector wages would only serve to undermine and limit this ambition.
Moving forward
Common Sense Policy Group’s body of research can give the Government hope that reversing the harms of privatisation is not only possible but affordable, popular and politically feasible. Whilst the budget itself leaves much to be desired, we can find some hope in the fact the UK has a Government, at least in rhetoric, willing confront the flawed neoliberal consensus and the disaster that was austerity.
But it is now time to turn words into action. With the ten-year plan due in November, it must be radical enough to address decades of decline, and it must deliver big improvements to people’s material conditions before the next election. We must move away from short-termism and start building a new economic model that puts public wellbeing above private interests. Nationalising utilities, taxing wealth fairly and ending perpetual household insecurity cannot be a distant goal, it must be the first step. We may only be three months into the Burnham Era, but the British people have waited long enough.
[1] Capital Spending refers to Government spending on long-term projects (e.g. on infrastructure, research and development, schools and hospitals).
[2] A multiplier effect is an economic effect where a change in spending stimulates an increase in national income, here measured by GDP.
For all media enquiries please contact Anna Thew at anna.thew@northumbria.ac.uk