Predicting how Andy Burnham as Prime Minister and HIs New Labour Party will affect the insurance industry.
New Labour, or Northern Labour as it should be called, is on the horizon. After Andy Burnham stormed the internal leadership election it seems a matter of formality before Andy will take over as the new Prime Minister of the United Kingdom. The ex-Manchester Mayor has been denoted a new title of ‘The King in the North’, with headline-grabbing plans of creating a Northern No.10 – a place from him and certain governmental offices to reside in Manchester.
A raft of policy changes are to be expected under Andy Burnham’s leadership. Changes involving tax and social welfare will have a knock on effect upon consumer spending and house prices. Indeed, the insurance industry and the economy are intrinsically tied – and if the economy is stifled, the insurance market is likely to harden. Experts suggest that borrowing, government spending, and investment are all necessary to soften the insurance markets – actions missing from the Labour manifesto when they won a landslide in 2024.
While Andy has grand plans, the new Northern Government is still expected to be a low spending ‘typically-Labour’ government. Any expansion plans Andy may have might be hamstrung by the reality of the budgets, and with defence spending almost certainly increasing, the new PM will need to find financial solutions.
Mortgages, business rates and defence spending all almost certainly will change. When the economy improves, and the people become wealthier, the insurance markets improve. For insurers, business owners and our partners, we hope to illuminate the path ahead, and predict what to expect of Burnham’s premiership.
What are Andy Burnham’s political policies
Replacing council tax
Andy has proposed reforming council tax, replacing it with property tax. This would change how local areas receive money from residents. Instead of using old house values, it would be a percentage based on the current housing market valuation. This would lower bills for many households, and likely increase tax for high value homes.
The changes to council tax would see new council tax bands, or even a system with no upper limit, making the wealthiest homeowners pay more.
Replace stamp duty
Burnham has also explored reforming stamp duty on property sales and adding a land value tax. This will have major ramifications for the housing market and on moving costs.
Pay-per-mile car tax
The Government has confirmed a new Electric Vehicle Excise Duty. Fully electric cars will have to pay 3p per mile – to come into effect in April 2028. Plug in hybrids will also need to pay 1.5p per mile, rising with inflation.
Capital gains tax
Andy wants to change the tax allocated to sold assets and second holes. Bringing the 18% and 24% rates currently paid on gains into line with income tax bands of 20%, 40% and 45%.
Cut to business rates for pubs and small businesses
Andy has always promised a cut to business rates, with a huge following in the hospitality and nightlife sector. Seen as a man of the people with an eclectic alternative music taste, nightclub owners have high hopes for a brighter future under his leadership. Keeping the highstreets alive is one of Andy’s longstanding promises, just as he has done with the flourishing Manchester scene. Lifting the threshold for rates will bring a welcome change to many small business owners.
The #VatstheProblem campaign by Tom Kerridge has put a lot of pressure on the government in recent times, and points to the financial pressure that many want alleviated.
Review the inheritance tax on farmers
Another longstanding issue, many farmers have complained they their livelihood cannot continue without drastic immediate change. Burnham has promised to The Telegraph he will review any inheritance tax increases for farmers. Family farms will benefit greatly from his leadership.
How will Andy Burnham impact the insurance landscape in the short term:
As we have seen in the past, changes to the prime minister’s position creates ripples throughout the financial markets. Burnham may well opt to bring in a new cabinet, and by far the biggest decision he will have to make is whether to keep on Rachel Reeves. The BBC understands Andy is likely to replace her, which would certainly shock the markets. Reeves has been a stable presence, and without her, regime change promotes uncertainty. Yet, Andy is likely to give Reeves a top position in another post.
An immediate challenge is defence spending, and it’s likely Burnham will have to borrow to offset the cost of an increase. Andy agreed the current planned increase falls short of what is required, and with Sir Kier Starmer signing a treaty with EU nations to block intercontinental missiles, defence spending will be costly.
Mortgage rates are not set by politicians, but political and economic uncertainty can influence financial markets. Andy’s policy shifts will create uncertainty, reducing the likelihood of investors spending. Also with the property tax changes, higher earners will be less likely to house swap. Therefore, the housing market is expected to shrink in the short term. The housing market has historically mirrored the economy. Less appetite from buyers and less investment in homes means the market struggles, leading to stifled growth.
How will Andy Burnham impact the insurance landscape in the long term:
Andy has promised “the biggest council house building programme since World War 2”. Andy’s long term housing policies will surely include a large-scale expansion of genuinely affordable social housing, tighter regulation of the private rented sector, and a fundamental reform of how property and land are taxed. The policies would discourage wealthy individuals and corporations from buying up all the property and ultimately encourage development. Development budgets, including the £39billion affordable housing programmes will go entirely towards socially affordable homes for the working class.
Changes to stamp duty may put off home movers. And landlords should expect tighter standards and more regulation. More power is expected to be given to renters. For first-time buyers, in the long term the market should become more accessible. Low earners will be able make use of government schemes to their advantage, offering opportunity. The housing market improving, with more sales finalising, is a good indication of a prospering economy. And as the housing market improves, so too will the insurance market, but only if the uncertainty around the leadership and taxation stabilises.
Business rates reform promises a huge benefit for the insurers. Healthier finances for small businesses and hospitality means more growth, more investment, more expansion and ultimately a need for more cover. Improving consumer spending is a must for a healthy economy, and a prospering hospitality scene will help the regeneration of highstreets and benefit tourism.
Ultimately, Andy Burnahm as Prime Minister will be tough in the short term for insurers, but offers hope for the long term
The market is likely to tighten as uncertainty and scrutiny spirals. Andy’s first few days where he hopes to lay out his plans for social housing, property tax and defence spending will be telling.
However in the long term, with a leader his party loves, and more fluidity in the housing market, and possible business rates reform, there is hope for growth. If Rachel Reeves long term vision for the economy bears fruit after a painful two years, then the country could be well on our way to a prosperous period. With investment and stability, insurers will place more cover and the market will soften.
Andy Burnham’s stance on war and defence spending
In 2003, Andy Burnham voted for the Iraq War, and then later against an inquiry into its legality. 20 years later he commented on the regretfulness of his poor decision. But in his new role, Burnham will have to discuss with NATO, tackle American security pressures, defend Ukraine, meet spending targets and decide whether to play a larger role in the Iran war.
Andy Burnham the man is not overly keen on war. As a non-practicing Catholic, he has a universalistic view of the world, believing in human dignity and social empathy. He will however not shy away from longstanding international promises, understanding the importance of national security and the UK’s role in defending allies.
Whatever Andy Burham’s stance on war is, the new PM will have to find £4.7billion regardless because of promises made by the outgoing Sir Kier Starmer. The BBC published that in the four years up to 2029-30 defence spending will rise by an average of £3.75bn each year.
To make up this shortfall, budget cuts or tax increases will need to be pledged. The freeze to fuel duty is the most likely to go, instead increasing it in line with inflation. The transport department will also likely see cuts, and land and assets owned by the Government could be sold.
War, particularly in Ukraine and the Gulf, has had immense impact on the global insurance markets. Energy costs peaked and companies are looking at safer alternative transport routes for shipping. If these wars are resolved during Andy’s premiership, and the energy prices continue to fall, then this will alleviate a huge pressure, allowing the new PM to follow through with his ambitious plans for the devolution of power, electoral reform and employment support.
Andy Burnahm’s influence upon the insurance markets could be profoud, yet it’s his impending impact upon the hospitality and nightlife sector which is turning heads. His promise for a rebalancing of power, a VAT cut, and perhaps a Minister for Nightlife sparks hope for many late night venues across the country. NDML insurance brokers assess which businesses are most likely to benefit from Andy Burnham as Prime Minister.