An Andy Burnham premiership could pave the way for the pensions triple lock to be scrapped, as a result of opposition to the policy from some of his key economic advisers.
The triple lock ensures that the state pension rises by the highest of average weekly earnings, inflation or 2.5 per cent.
The MP for Makerfield, who was sworn in on Monday, has recruited a number of respected economists to his team as part of an attempt to reassure the markets, including former Treasury minister Lord O’Neill, former Bank of England chief economist Andy Haldane and former OBR Chief Richard Hughes.
According to The Times, the advisers believe that scrapping the expensive triple lock, which is due to cost taxpayers billions, is a “no brainer” amid growing pressure on the public finances.
Mr Burnham – who is under pressure to prove that he can be trusted with the economy – has previously said he will keep the triple lock for the duration of this parliament. However, it is not yet clear whether he would commit to it going into the next election.
Earlier this year, Lord O’Neill dubbed the triple lock “bonkers”, warning chancellor Rachel Reeves that sticking to it risks hobbling the government’s ability to manage the economy.
“Keeping the triple lock is just bonkers – at least they could means-test it”, he said, accusing Sir Keir’s government of having “hemmed themselves in because of the manifesto commitments and compounded that by announcing such large increases in areas such as health and school buildings the first time around.”
He has also urged the government to borrow billions of pounds more to pay for investment in infrastructure, telling the Guardian: “There is a lot more room under the existing fiscal rules to borrow for investment, and the next chancellor should take advantage of that. We can do way more to boost infrastructure projects, and that is what we should be doing.”
On Wednesday morning, senior minister Darren Jones urged Mr Burnham to set out more of his economic policies after ruling himself out of the race for the Labour leadership – removing yet another obstacle on Mr Burnham’s route to Number 10.
In an interview with Sky News on Wednesday morning, Mr Jones said he would have had the backing of enough MPs to take on Mr Burnham, but suggested a contest would not give the eventual winner enough time to prepare a budget for the autumn.
Mr Jones said he had had a “reassuring” conversation with Mr Burnham about the Makerfield MP’s economic policy before making his decision. But he said the Makerfield MP should set out more details for the “upwards of 100 MPs” who were concerned about his plans or were “feeling pretty depressed” by Sir Keir’s resignation.
Asked about the possibility of Mr Burnham increasing borrowing to fund his spending priorities, Mr Jones said there was “room to borrow a little bit more” within the existing fiscal rules.
But he stressed that there were other routes to achieve the former mayor’s objectives “without broad brush borrowing and spending”.
Mr Jones also appeared to warn Mr Burnham against making Ed Miliband the next chancellor, declining to give his support to the current energy secretary when setting out a series of “tests” to determine the next occupant of Number 11.
He said the next chancellor should not try to “control” the prime minister, and also “reassure” the markets, trade unions, Labour MPs and the public.
Asked whether Mr Miliband “falls short” of his tests, Mr Jones said: “I will let you mark those tests, but those are the tests I think need to be met.”
He also denied he had been offered a job in Mr Burnham’s future cabinet.
Former defence minister Al Carns, who resigned earlier this month in a row over defence spending, remains a possible contender for a leadership race, telling the BBC on Tuesday he was “pretty serious” about launching a bid but wanted to see what policies Mr Burnham was going to champion.
If no other candidate secures the 81 nominations necessary to get on to the ballot for the Labour leadership, Mr Burnham is expected to enter Downing Street by July 18, giving Britain its fifth prime minister in four years.
The current prime miinister has already authorised “access talks” between leadership contenders and the Civil Service, meaning Mr Burnham and his team can receive government briefings once he demonstrates he has the support of 81 Labour MPs.
Talks are also continuing about who might serve in a Burnham cabinet, and who might advise the former Greater Manchester mayor behind the scenes.
Senior Labour figures – including former transport secretary Louise Haigh, Energy Secretary Ed Miliband, Home Secretary Shabana Mahmood, and former health secretary Wes Streeting – have all been tipped for top jobs in a government led by Mr Burnham.
