Andy Burnham’s Waspi compensation stance raises UK fiscal concerns

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Burnham Waspi compensation concerns

Highlights

Andy Burnham pledges support for compensation to 3.5 million Waspi women, defying Starmer’s team who cite £10.5 billion fiscal concerns.
Burnham’s commitments on Waspi compensation and possible off-balance-sheet spending raise investor worries about UK government borrowing and new bond issuance.
UK 10-year government borrowing costs remain near 5 percent, with markets sensitive to fiscal signals amid inflation, political risk, and heightened spending debate.

Leadership bid intensifies spending debate

As reported by Financial Times, Burnham tells a hustings event in Makerfield that he will support “some recompense” for the 3.5 million Waspi women, a group of 1950s-born campaigners who say they were not properly informed about increases to the state pension age. He says politicians who drop their preferred causes after taking power make him “uncomfortable” and adds that he will “stick by the Waspi women” because they deserve compensation for unfair treatment.

His intervention triggers a sharp reaction from Labour MPs and officials, with Starmer’s administration continuing to reject compensation claims because of fears the cost could reach £10.5 billion. One government figure describes Burnham’s move as “pathetic”, while a Starmer ally compares his economic approach to that of former Labour leader Jeremy Corbyn and argues it could damage his chances in a leadership challenge.

Burnham’s remarks come as he makes clear that, if he wins the Makerfield by-election next week as polls and betting markets suggest, he will challenge Starmer for the Labour leadership. Allies of the prime minister say Starmer is prepared to fight any contest rather than allow Burnham a clear path to the top job.

Market and policy risks draw attention

Investors in UK government bonds are watching Burnham’s spending signals closely because additional public commitments could mean higher borrowing and more bond issuance in the coming years. That concern grows after his recent comments about taking some spending outside the UK’s self-imposed borrowing limits, although his team later softens those remarks.

Gordon Shannon, a fund manager at TwentyFour Asset Management, says the Waspi issue is a cause Burnham has backed for some time but still sends a negative signal about fiscal discipline at a moment when markets want selective spending decisions. The UK bond market remains sensitive to any development that could weaken the fiscal outlook, with 10-year borrowing costs near 5 per cent after rising in recent years because of inflation, higher borrowing and political risk.

Burnham also points to student loans as another area requiring attention, saying young people have carried too much of the burden from past cuts and that graduates often see loan balances rise rather than fall. A 2024 report by the Parliamentary and Health Service Ombudsman recommends payments of between £1,000 and £2,950 for affected Waspi women, while Burnham’s spokesperson says on Wednesday only that he is committed to examining the case for compensation.

In our earlier coverage of Andy Burnham’s Waspi compensation stance, we outlined how his backing for payments to 1950s-born women revived a potentially multibillion-pound commitment that Labour’s leadership has so far resisted. We also noted that the issue was sharpening internal tensions ahead of the Makerfield by-election, with Burnham’s allies weighing a fast leadership challenge to Keir Starmer and markets watching the added political and fiscal uncertainty.

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