The AIIP view: Could Andy Burnham fix British infrastructure?

“What they are missing is that it was not a case of public money or PFI – it was a case of PFI or no hospital.”
Andy Burnham responds to critics of the Royal Liverpool Hospital

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It would be easy to dismiss a Burnham administration as a left-wing project, given his comments on bond markets and the nationalisation of utilities. But that misses the level of pragmatism in his approach to political decision-making.

The appointment of James Purnell as Chief of Staff in No. 10 reflects their long history together as former flatmates and alumni of the famous Demon Eyes football team. It also indicates a preference for centrist politics in a Burnham government. It might mean that Burnham intends to appoint a less business-friendly set of ministers to appease the soft left in the PLP, but it is always foolish to predict reshuffles.

Although her days in No. 11 may be numbered, Burnham has made clear that he will not deviate from the fiscal rules set out by Rachel Reeves. But if he is to make major commitments on health, social care, defence and public ownership of utilities, he will need to identify substantial new sources of capital investment.

While some in his team will want to fill the gap with new wealth taxes, he may look to greater private investment to calm the markets.

While he has acknowledged "past mistakes" over PFI deals, Burnham has also continued to look at practical ways to encourage more private investment into the UK's creaking infrastructure.

As Health Secretary, he was in charge of 221 PFI projects and, while he was in office, gave the go-ahead to at least six new NHS hospital PFI developments worth close to £1.5 billion.

As he said at the time, before PFI many of those hospitals were "like a little bit of Eastern Europe". The investment transformed the patient experience: half of the beds at the new hospitals were in single rooms, marking a shift away from large public wards towards more private and personal accommodation. He also progressed the bid for the first ever NHS hospital to be operated by a private company, although that seems unlikely to be repeated.

However, there may be some concern about the fact that Burnham is on record as saying he would not defend every "pen stroke" of such contracts. Investment is a global market, and other jurisdictions may become more attractive if the perception of the UK's economic climate is negative, so the early signals to markets are critical. Many have been burned by the experience of adversarial contract management in the NHS, so NISTA's plans to develop a Conflict Avoidance Forum are to be welcomed.

In recent years, the story of Manchester's rise has demonstrated the importance of creating the right conditions for regeneration, as the city's growth has frequently outpaced London and other major UK urban areas.

Alongside direct public expenditure, Manchester's leaders sought to stimulate private-sector participation through targeted incentives such as subsidised land leases and preferential financing arrangements. The money from developers flowed in.

These interventions, supported by national and local revenue streams, helped facilitate major infrastructure projects, including the Metrolink tram system in Greater Manchester—an example of a modern public-private partnership. The system has undergone significant expansion and, since 2008, has added more route miles than any other urban rail network in the UK.

In the 19th century, "Manchesterism" was developed by radical Liberal economists such as Richard Cobden, who successfully campaigned to repeal the Corn Laws to the benefit of the textile industry.

While Burnham is no laissez-faire capitalist in the tradition of the original Manchester School, his vision of an active state could nevertheless provide a platform for stronger economic growth.

As he develops his business-friendly socialism, he is said to be advised by former Bank of England Chief Economist Andy Haldane, former Conservative Treasury Minister Jim O'Neill and former IPPR Executive Director Carys Roberts on economic matters to "add credibility to his policy platform". These are credible and serious figures who would help reassure some in the City who have, alongside the major trade unions, expressed concerns about the potential appointment of Ed Miliband to the Treasury.

What might modern Manchesterism mean in practice? In a recent interview with the i, Burnham gave some important hints. He proposed reviving the northern leg of HS2 between Birmingham and Manchester if he became Prime Minister.

He said he would fund the project with a Crossrail-style funding package—effectively a new form of PPP—but one explicitly linked to rising land values.

The multi-source financing model sees the costs of major infrastructure shared between central government, local authorities and the private sector, specifically through taxes on property development and business rate supplements.

The model is designed to ensure that those who benefit most from the new infrastructure, such as property owners and businesses near the route, contribute directly to its capital costs.

If that approach is any guide, a Burnham premiership would be less about ideological purity and more about using whatever tools are available to deliver visible improvements. The debate, then, may not be whether he believes in state intervention or private capital, but how he combines the two to unlock growth and rebuild public services.

Although his politics may sound interventionist, Burnham's emerging model appears to be one of pragmatic, business-friendly interventionism: an active state willing to partner with private capital where it serves a clear public purpose.