One Saturday a couple of years ago, my company ran an on-street survey in a town near Sheffield. We were researching the economic impact of a nearby investment and how to communicate about it for a client.
The town once had a thriving economy from coal and steel but had clearly seen better days.
Guarding the shopping centre were mercenary-like private security guards hired by the council. The daytime fighting and mob-looting had become so rough, they were there to keep the peace. And they were brutal.
An older woman we surveyed talked about how the men in the area once felt a sense of pride that has vanished.
"Back then, a man who worked in the pit earned enough to take his wife out on a Saturday night, and they both dressed up to do it."
That kind of thing wasn't happening any more, she said. The young men were angry and didn't have opportunities so they caused trouble instead.
It was very sad.
The UK has around 1,300 towns, depending on where you draw the line between a town and a village. Many of them are struggling with no local economy to feed jobs.
So the drive behind Andy Burnham's "growth in every postcode" makes sense. He is trying to shine a light on forgotten communities with his first few moves.
English mayors are to retain a share of income tax and business rates revenue, No 10 North is open in Manchester as the government's situation room for growth and the National Economic Council has been relaunched with the mayors sitting at the table.
And he has sent some direct messages to London, the South and Whitehall.
But...
It is ideology before practicality.
It is trying to deliver the value proposition before you have created safety and productivity.
Growth in every postcode sits in a long line of similar initiatives, such as levelling up, the northern powerhouse and the mission for the highest sustained growth in the G7.
No prime minister in ten years has laid out where the growth actually comes from.
Andy Burnham still has to do that or he will become Keir 2.0 very fast.
He has communicated how he intends to distribute money. Where the money is coming from, he has not.
Burnham's problem is far more commercial than he would perhaps like it to be.
Debt interest ran at roughly £109bn across 2025/26, about 3.6 per cent of GDP and close to 8 per cent of all public spending.
Too many creditors, not enough income, and the value of the product is falling while the cost of servicing the debt climbs.
Burnham has perhaps a year to show he can fix it and he has had two months already. You can understand the rumours of an early snap election to win the mandate of the people while this problem remains unsolved.
Aside from all the social media marketing, the PM is going to have to trade his way out of trouble. He is going to have to shift from 'Marketing Andy' to 'Selling the UK'.
Do brand people make good sales operators?
What is the UK going to sell to the rest of the world to create enough income to drive significant growth?
Let's look at the facts.
- The government borrows by selling gilts, which are IOUs bought by pension funds, insurers, banks and overseas investors, and the yield is the annual interest those buyers demand for holding one.
- In September the ten-year gilt yield climbed above 5.3 per cent, a level last seen in August 2007, with 30-year gilts at 5.89 per cent, the highest in 28 years, and those rates apply to all new borrowing including the borrowing taken on to repay old loans struck when money was cheap.
- The debt itself stands at £2,984.9bn, or 94.1 per cent of everything the UK economy produces in a year.
- Servicing that debt cost around £109bn last year, which is 8p out of every £1 the state spends on anything at all.
- Headroom is the margin by which the Chancellor is forecast to scrape past his own borrowing rules. Pantheon Macroeconomics put it at roughly £13bn, down from £23.6bn at the Spring Statement, with about £11bn a year to find simply to get back to where he stood in March.
- On a balance sheet approaching £3 trillion, £13bn is small change, but it is the distance between this government and a fight with the bond market.
Trading out of debt
Since Brexit, the word 'trade' let alone the term 'balance of payments' has been lost in conversation. How many news features have you seen about trade recently?
Yet it has never been more important to focus on simple business principles for the country.
The balance of payments is the full set of books between Britain and the rest of the world. It has two halves.
The first is the current account, which works like a profit and loss account, recording what UK plc earns from customers abroad against what it pays out to them.
The second records how any shortfall gets funded, through borrowing from people abroad or through selling them assets.
The two halves always balance, because a loss on the trading side has to be paid for somewhere.
In the first quarter of this year, the current account was £22.1bn in deficit, or 2.8 per cent of GDP, with a goods deficit of £59.5bn set against a services surplus of £51.8bn.
That's a huge services surplus and goods deficit. Remember that.
In business terms, we sell less to our customers than we buy from them and we cover the difference by borrowing and by selling assets.
Investors don't like this.
You may struggle to remember a minister mentioning the balance of payments.
The balance of payments was the dashboard British politics ran on through the 1950s, 1960s and 1970s - yet it was Margaret Thatcher's chancellor who retired it.
Nigel Lawson argued that a current account deficit only matters when it comes alongside a public sector deficit, because a privately generated one reflects the investment decisions of firms and households and is therefore benign and self-correcting.
In other words, it was irrelevant to look at the balance of payments as long as the government's own books were in order.
The UK no longer meets that condition.
The balance of payments is back in play
The state is borrowing heavily at the same time as the country is trading at a loss, so the gap is being funded by foreigners lending to the government rather than by companies investing in themselves.
That is when the balance of payments would matter, Nigel Lawson said.
Burnham has inherited a nasty invoice and needs to tune into the balance of payments dashboard if he is to trade through this mess.
He needs to be asking:
"What needs to be true to attract investors?"
Labour is currently ignoring this - and it will be to its detriment.
Foreign direct investment into the UK fell 14 per cent last year to 730 projects while Europe as a whole fell 7 per cent.
Energy investment fell by half, to its lowest level since 2013, with investors telling EY that the cost of British power is a consistent concern.
A company choosing where to put a plant, a headquarters or a data centre compares the price of electricity, the cost of hiring and the speed of a planning decision across a dozen countries before it picks one, and last year fewer of them picked the UK.
What would move the needle?
When a government claims a policy will grow the economy, the Office for Budget Responsibility (OBR) decides whether the claim is solid enough to go into the official forecast.
Most claims never make it.
The biggest it has ever accepted came in March last year, when the OBR judged the planning reforms worth 0.2 per cent of GDP by 2029/30, or about £6.8bn.
But that is tiny compared to moves that have been made in the past.
Edward Heath took Britain into the European Economic Community in 1973, against opposition in his own party and in the country, on the argument that a trading nation belongs inside the largest market on its doorstep.
The Institute for Fiscal Studies has valued single market membership at around 4 per cent of GDP against trading on WTO terms, which in today's money is roughly £120bn a year, or nearly 20 times the planning reforms.
The Treasury's estimate before the Brexit referendum in 2016 was that a Canada-style deal would leave GDP 6.2 per cent lower and receipts £36bn a year short.
North Sea oil also had a huge impact. It absorbed between 10 and 20 per cent of all British industrial investment for two decades and has produced approaching £200bn in tax, most of it in real terms during the 1980s.
The UK has made good headway in renewables since then, but nothing has yet replaced oil as a source of national income on that scale.
Margaret Thatcher made a big call
She said Britain would not win on heavy industry or manufacturing and bet the economy on services, abolishing exchange controls within months of taking office and deregulating the City in 1986.
Britain is now the world's largest net exporter of financial services, with a surplus of $127bn in 2024 that puts it ahead of the United States, and adding legal work, accountancy and consulting increases that number.
But as we saw earlier, the cost for that bet was paid in towns like the one I mentioned. It left a lot of people without hope.
Burnham is right that those places cannot build a replacement economy on their own, but that investment has to come from somewhere - just not borrowed money. In fact, if it is borrowed money, he has serious trouble.
And if he taxes people or businesses significantly more, he also has trouble because that's still not growth.
He has to get sales moving - and the fastest way is through the services economy.
London and services matter. He needs to stop talking them down and drive growth by pointing at how he will help the winning UK export class grow further.
But it will need to be packaged with cheaper energy, compute and easier ways to trade with the rest of the world.
Change requirements
1 - Cheaper energy.
British firms pay around 81 per cent more per kilowatt hour than their French competitors, the widest gap since 2006, and UK industrial electricity prices were 46 per cent above the international median in 2023, the highest in the G7.
That gap has to close before any manufacturer will build here. Every other industrial ambition depends on it, and a government promising to reindustrialise the towns while leaving power prices where they are is making a speech rather than a plan.
Energy pricing is critical.
2 - Cheaper compute.
A 500MW data centre costs around £167m a year to run in Britain against £92m in France, and data centres are excluded from the industrial energy relief scheme.
The UK has to be attractive for data and tech services.
The world is deciding where to build the infrastructure behind AI over the next three or four years, and Britain has the grid connections, the land and the engineers to take a share of it.
But it is priced out on energy costs.
3 - Europe.
The OBR's position is that current arrangements have cut long-run productivity by 4 per cent, with trade in both directions roughly 15 per cent below where it would otherwise be.
Almost all of that damage lands on the goods side of the account, which is the side losing £59.5bn a quarter. That goods deficit I mentioned earlier - that is Brexit.
But what about people?
None of this is an argument against compassion. Many towns in the UK are owed far more than they have had.
Local regeneration and national trade are not alternatives. Burnham needs both engines running at once and he currently has one, which he has not been kind about.
And there is an irony in this.
He arrived as the answer to Thatcherism, but her work is the reason Britain has any performance on the balance of payments at all.
Burnham must learn how to sell like Thatcher and market the UK to the rest of the world.
Unless he becomes pro trade and pro investment, the money going into those towns will be borrowed - and that's just kicking the can down the road.
Those young men and women in forgotten towns deserve better.
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