New UK PM Burnham considers capital gains hike, rent freeze

Andy Burnham has taken over as British prime minister after Keir Starmer lasted just eighteen months in the job. The transition follows Starmer's admitted struggles with the pace of government and a widespread voter impatience for tangible economic change.

For investors and businesses, Burnham's arrival signals a potential departure from Starmer's cautious, procedural approach to the economy. Advisers close to the new prime minister are already circulating aggressive plans for rapid, disruptive market interventions aimed directly at lowering living costs.

Michael Jacobs, a political economist in Burnham's informal brains trust, has proposed subsidising household energy unit prices up to a level well below average. He estimates this would roughly halve the cost of energy for consumers, funded by raising capital gains tax to match income tax rates. Unlike the unfunded energy intervention of Liz Truss, this would directly transfer wealth from capital-holders to the broader public.

Jacobs has also floated a temporary rent freeze to alleviate housing costs. If landlords sell properties in response to lower returns, he recommends the state purchase those homes for social housing stock. He envisions accelerating this through mass council house building organised by nationwide development corporations, capturing the uplift in land prices for the public rather than established owners.

Complementary proposals from Tim Leunig, the pro-competition economist who designed the pandemic furlough scheme, target corporate monopolies. Leunig suggests forcing Virgin Media to open its cable network to rivals and abolishing ground rents for leaseholders. He also wants to allow generic drug manufacturers to explicitly compare their products to branded equivalents like Nurofen and Clarityn.

These concrete interventions contrast sharply with the outgoing administration. Francis Fukuyama recently observed that Starmer was a leader who "just didn’t want to take any of the risks" required for effective governance. Starmer's tenure was instead marked by procedural delays, such as outsourcing social care reform to an independent commission that will not report back until 2028.

The urgency for Burnham stems from deep public scepticism about whether politics can deliver meaningful improvements. Pollster Julian Gallie notes voters have been "crying out for change for a decade", viewing recent elections as desperate attempts to break a stagnant status quo. However, Burnham's ability to finance these rapid interventions remains uncertain, given his own recent public concerns about the tax rises imposed by former chancellor Rachel Reeves on employers and pensioners.