Blain’s Morning Porridge July 31st, 2026 – What Chance Burnham of fixing Broken Britain
“Judge me by how many times I fell down and got right back up again.”
Fifty years of political dither leaves the UK looking broken. Faced with massive constrains from taxation and bond markets, there are limited choices from tinkering with spending while trying to look good enough ahead of the next election. Britain needs something more radical – and a complete reform of the system and process.
LINK TO PODCAST
Key Takeaways
- The steepness of yield curves reflects not only inflation concerns, but rising doubts on political stability.
- Long-term sustainability of bond markets relies on political credibility.
- The UK’s major problem is not political policy – but the bureaucracy and process around it.
- Lubricate the wheels of the economy by fixing the process and it will work better.
- Housing could be a great example of how to boost the economy.
Editorial Note:
Apologies to readers and listeners to the Morning Porridge this week for service being intermittent this week. That was due to travel and some “stuff” that once again challenged my faith in the system. Next week will be a bit muddled – but for a good reason. It’s the 200th Cowes Week sailing regatta so definitely no Porridge Monday/Tuesday… Through August things will quieten down and there a host of topics to discuss that will impact global markets, growth and the economy. In terms of the day job, forget August being a quiet month. It’s going to be phenomenally busy.
Where goes the UK?
Thus far I have resisted the temptation to comment on the new Andy Burnham UK premiership. New initiatives have been rolling in – Burnham setting out how he’s going to address some the UK’s multiple economic choke points. These include a broadbrush change in education goals to make technical apprenticeships socially equivalent to a university degree, and he’s promised to fix the broken care sector. It looks like he will reopen the UK’s oilfields, but the reality is it will take years to get many projects through the institutionalised planning process.
Naturally the hostile right-wing press say Burnhams’ fiscal numbers don’t add up. Even the FT carries a headline about “saving Britain from Burnhamism.” I guess the truth will be expressed in Gilt Yields.
In the short-term the numbers won’t add up. Total economic transformations don’t come cheap. And as Liz Truss taught us – its all about credibility to deliver that matters. She had none. Andy Burnham is a better communicator than Truss or Starmer – but what’s the plan?
In this small nation at the cold dank unfashionable tip of Europe, the numbers to deliver a stronger economy and solve its problems are never going to add up unless the UK can show that it can make massive changes to the infrastructure of the economy, its institutions, but critically in the way it operates. That is the key – process and systems.
National transformations are long-term, but markets are acutely aware that political cycles are short-term – politicians are fixated on the next election. For a market to lend a government cash via 30-year Long Bonds or Gilts buyers have to be confident in the continuation of existing political structures to ensure these bonds are repaid. It’s no secret Government bond management agencies are shortening the maturity of the debt they issue to account for slowing demand for longer-debt, meaning they have to refinance debt more frequently just to stand still.
Take a look at yield curves. Normally the steepness of a normal yield curve tells you about inflation threats – investors demanding a higher return to compensate. There are also structural shifts as investors move away from safe bonds to more attractive private capital markets and structured products. (Moths attracted to the flame… just saying.) But, the steepness of both UK (230 bp 2-30 curve) and US yield curves (197 bp 2-30 curve), and the increased focus on the quantum of burgeoning National Debt loads, confirms there is growing concern about the sustainability of the bond markets – which is the political problem.
Investors are increasingly concerned about what comes next in political terms, and how that will raise the instability around yields. If Labour fail, the UK will throw its misjudged confidence behind the populist Reform. When Trump is finally gone, it will not end the polarisation of US politics. Does anyone think either scenario will end well?
If investors lose confidence in bonds – then we really are in trouble…
And we may well be heading that way. Last week I referred to (for about the billionth time this year) the US Debt Clock. It was only $39.6 trillion last week. Now it is $39.7 trillion. UK Debt is slightly more controlled as the government sticks to its lending rules…
There are only two ways to reform and reset the UK economy. Either completely revamp spending within the current fiscal parameters – meaning massive cuts to health, welfare and other spending to re-invest in solutions, or to convince markets the UK can spend its way out of crisis. Given that resets take decades and politicians never think beyond elections, markets are very aware long-term plans are unlikely to be delivered. Which neatly explains why debt quantums have got so high, yet nothing has really changed. (Interestingly, the only time doubts about spending plans are removed is during periods of conflict when bond markets tend to take the view their best chance of being repaid is to go all-in buying bonds to support the nation.)
The good news is transforming nations is possible… in the past both the UK and USA have cut debt/GDP. It needs growth to happen – where higher taxes willingly paid by a resilient economy replace debt. Cutting spending in recessions – Austerity – has proven a disastrous anti-policy. Government policies designed to stimulate growth get the TV slots and column inches but seldom achieve much – drops of water into a leaking bucket.
Building resiliency is key to transforming Broken Britain.
That means being honest about why Britain is broken. There is an element of “broken windows” syndrome to the problem. (If you leave a couple of unrepaired broken windows on an empty house, within days every window will be broken.) Britain’s high-streets remain bleak strips of boarded-up premises, “convenience stores” fronting for drugs, and Pound-stretchers. When even Oxford St in London is going that way, its little wonder visitors think the UK is in terminal decline.
Yet, the UK remains a proud, inventive and innovative nation… So why have our politics allowed the emergence of the Broken Britain meme? We know what the problems are – the question is – does the will to fix it exist.
Let’s start with the high-street issue.
Town centres are full of derelict shops and are no longer destinations. But most jobs remain in towns. A major problem for the economy is housing: young people lack access to affordable, secure accommodation, so they stay at home, don’t work and, critically, don’t start forming families. They have little confidence in the future. The results are an acceleration of the demographic crisis, increased welfare costs, and a lost generation.
If the government were to deliver on building literally millions of secure, safe, affordable social or for sale flats in the inner cities, the results could be stupendous – local economies (as we see in parts of London) of local shops, café culture, gastropubs then new life would emerge swiftly, leading to young families and a new economy. Humanity is just another form of life – chuck a rock in the ocean and within a year it will be festooned in plans and animals competing to live on it. Build flats in inner cities and in a year the streets will be vibrant with competition to offer the best breakfast.
Fixing Broken Britain requires a massive re-invention and recapitalisation of the pillars of UK society to reflect the realities of the economy today and tomorrow. Sadly, politics is a “blame-game” – most politicians care more about avoiding responsibility for the mistakes of the past, thus they merely tinker with improvements for the future. Politics need to move forwards.
Burnham has identified that Broken Britain suffers from 40-50 years of hamstrung policy decisions that just aren’t fit for purpose anymore. At least he is talking about the problems – Starmer was a hopeless communicator, caught in the headlights of fiscal rectitude. It’s maybe time that Burnham took a leaf out the Donald Trump “Art of the Presidency”, by being disruptive, shaking up the state, and quashing some of sacred cows that hold Britain back.
Burnham talks about mistakes of the past. But what of the future? They are unlikely to happen. They will be too dangerous to the future of the Party at the next election.
Attempts to reform the civil service, to make public services affordable and efficient, reform the NHS before it consumes the whole nation, or cut the welfare bill… will terrify Labour MPs and trigger industrial action to ensure state employees continue to consume the resources of the state. Interestingly the State Pension paid to everyone in the UK consumes about 15% of total government tax receipts, but public sector pension liabilities are about 16% of the tax take – not an entirely fair measure as government employees do now make some contributions.
Burnham may not be to everyone’s taste but identifying the problem is the first stage in finding a cure. The issues around fixing Broken Britain will be multiple – not least in how financially bust Britain can afford the changes that will be necessary to change the economy, how “courageous” (i.e. career-ending) political decisions must be taken to redirect spending priorities, identifying policies to solve the consequential complexity of the economy, and how to overcome the inertia that lies of the heart of Britain’s bureaucratic hostility to change.
Of course, there is much more to solve about spending choices between welfare, defence, health, education, etc. But even more important is to stop the slow strangulation of the economy through bureaucracy and “process” – a very broad descriptor of over-regulation, tax complexity, rules, the institutionalisation of the civil service, services and local government.
As I was writing my recent book, The Battle For Hamble, I realised that the decision to allow a gravel quarry to be dug in the middle of prosperous village putting the local economy, jobs, prosperity and the environment made no sense, but happened because the “process” could be manipulated to allow it to happen. Bureaucracy failed.
Twice this month I’ve been hit by Bureaucracy in action. I reported a crime. It took the police 10 days to follow up, where they announced they were dropping the investigation because they could not identify the suspects from the photos we supplied. They didn’t speak to other witnesses. I tried to follow up with a call – took an hour to be picked up. I then had to use their website to send further details – but it seems to have been deliberated engineered to be as unhelpful as possible. Bad IT and “high volumes” of calls are a great way to ration government services.
Later I had a hospital appointment. I waited in an empty reception room for an hour after checking in. I eventually went back to reception. The lady told me: “the system isn’t working”. I asked what I was supposed to do… she told me again with great condescension: “the system isn’t working.” I managed to make a phone call and discovered the cardio office was literally three steps away… where a nurse had been waiting an hour to do a simple 5 min test. That is why Britain is Broken.
Bureaucracy is a broad term. It is the sand in the engine of the economy, the grit in the eye of growth. How do we fix it? That’s the hard yards that Burnham, and whoever will inevitably succeed him in three year’s time, will have to address.
Out of time and back to the day job… have a great weekend…
Bill Blain
Author of the Morning Porridge
CEO Windshift Capital
Advisor – Spitfire Strategic Capital
Meanwhile, don’t forget about my new book:
You can read a review on the Society of Professional Economist’s website here.
The Battle For Hamble is a proper grown-up examination of how economies fail: a tale of Greedy Corporates, Bad Planning and Economic Illiteracy. It uses a wholly unnecessary Gravel Quarry in the middle of a prosperous village to illustrate the multiple failings and abdications of responsibility that have created Broken Britain. It’s about bureaucracy, money, exploitation and shareholders vs stakeholders. It’s about social injustice – asking why it’s ok to put 6000 jobs at risk so corporate bosses can reap bigger bonuses! Whether is the Hamble Quarry, HS2 or the abysmal state of UK armed forces due to bad procurement, read the book to understand how its broken process and bureaucratic indifference that is sinking Britain.
Blain’s Morning Porridge July 31st, 2026 – What Chance Burnham of fixing Broken Britain
“Judge me by how many times I fell down and got right back up again.”
Fifty years of political dither leaves the UK looking broken. Faced with massive constrains from taxation and bond markets, there are limited choices from tinkering with spending while trying to look good enough ahead of the next election. Britain needs something more radical – and a complete reform of the system and process.
LINK TO PODCAST
Key Takeaways
Editorial Note:
Apologies to readers and listeners to the Morning Porridge this week for service being intermittent this week. That was due to travel and some “stuff” that once again challenged my faith in the system. Next week will be a bit muddled – but for a good reason. It’s the 200th Cowes Week sailing regatta so definitely no Porridge Monday/Tuesday… Through August things will quieten down and there a host of topics to discuss that will impact global markets, growth and the economy. In terms of the day job, forget August being a quiet month. It’s going to be phenomenally busy.
Where goes the UK?
Thus far I have resisted the temptation to comment on the new Andy Burnham UK premiership. New initiatives have been rolling in – Burnham setting out how he’s going to address some the UK’s multiple economic choke points. These include a broadbrush change in education goals to make technical apprenticeships socially equivalent to a university degree, and he’s promised to fix the broken care sector. It looks like he will reopen the UK’s oilfields, but the reality is it will take years to get many projects through the institutionalised planning process.
Naturally the hostile right-wing press say Burnhams’ fiscal numbers don’t add up. Even the FT carries a headline about “saving Britain from Burnhamism.” I guess the truth will be expressed in Gilt Yields.
In the short-term the numbers won’t add up. Total economic transformations don’t come cheap. And as Liz Truss taught us – its all about credibility to deliver that matters. She had none. Andy Burnham is a better communicator than Truss or Starmer – but what’s the plan?
In this small nation at the cold dank unfashionable tip of Europe, the numbers to deliver a stronger economy and solve its problems are never going to add up unless the UK can show that it can make massive changes to the infrastructure of the economy, its institutions, but critically in the way it operates. That is the key – process and systems.
National transformations are long-term, but markets are acutely aware that political cycles are short-term – politicians are fixated on the next election. For a market to lend a government cash via 30-year Long Bonds or Gilts buyers have to be confident in the continuation of existing political structures to ensure these bonds are repaid. It’s no secret Government bond management agencies are shortening the maturity of the debt they issue to account for slowing demand for longer-debt, meaning they have to refinance debt more frequently just to stand still.
Take a look at yield curves. Normally the steepness of a normal yield curve tells you about inflation threats – investors demanding a higher return to compensate. There are also structural shifts as investors move away from safe bonds to more attractive private capital markets and structured products. (Moths attracted to the flame… just saying.) But, the steepness of both UK (230 bp 2-30 curve) and US yield curves (197 bp 2-30 curve), and the increased focus on the quantum of burgeoning National Debt loads, confirms there is growing concern about the sustainability of the bond markets – which is the political problem.
Investors are increasingly concerned about what comes next in political terms, and how that will raise the instability around yields. If Labour fail, the UK will throw its misjudged confidence behind the populist Reform. When Trump is finally gone, it will not end the polarisation of US politics. Does anyone think either scenario will end well?
If investors lose confidence in bonds – then we really are in trouble…
And we may well be heading that way. Last week I referred to (for about the billionth time this year) the US Debt Clock. It was only $39.6 trillion last week. Now it is $39.7 trillion. UK Debt is slightly more controlled as the government sticks to its lending rules…
There are only two ways to reform and reset the UK economy. Either completely revamp spending within the current fiscal parameters – meaning massive cuts to health, welfare and other spending to re-invest in solutions, or to convince markets the UK can spend its way out of crisis. Given that resets take decades and politicians never think beyond elections, markets are very aware long-term plans are unlikely to be delivered. Which neatly explains why debt quantums have got so high, yet nothing has really changed. (Interestingly, the only time doubts about spending plans are removed is during periods of conflict when bond markets tend to take the view their best chance of being repaid is to go all-in buying bonds to support the nation.)
The good news is transforming nations is possible… in the past both the UK and USA have cut debt/GDP. It needs growth to happen – where higher taxes willingly paid by a resilient economy replace debt. Cutting spending in recessions – Austerity – has proven a disastrous anti-policy. Government policies designed to stimulate growth get the TV slots and column inches but seldom achieve much – drops of water into a leaking bucket.
Building resiliency is key to transforming Broken Britain.
That means being honest about why Britain is broken. There is an element of “broken windows” syndrome to the problem. (If you leave a couple of unrepaired broken windows on an empty house, within days every window will be broken.) Britain’s high-streets remain bleak strips of boarded-up premises, “convenience stores” fronting for drugs, and Pound-stretchers. When even Oxford St in London is going that way, its little wonder visitors think the UK is in terminal decline.
Yet, the UK remains a proud, inventive and innovative nation… So why have our politics allowed the emergence of the Broken Britain meme? We know what the problems are – the question is – does the will to fix it exist.
Let’s start with the high-street issue.
Town centres are full of derelict shops and are no longer destinations. But most jobs remain in towns. A major problem for the economy is housing: young people lack access to affordable, secure accommodation, so they stay at home, don’t work and, critically, don’t start forming families. They have little confidence in the future. The results are an acceleration of the demographic crisis, increased welfare costs, and a lost generation.
If the government were to deliver on building literally millions of secure, safe, affordable social or for sale flats in the inner cities, the results could be stupendous – local economies (as we see in parts of London) of local shops, café culture, gastropubs then new life would emerge swiftly, leading to young families and a new economy. Humanity is just another form of life – chuck a rock in the ocean and within a year it will be festooned in plans and animals competing to live on it. Build flats in inner cities and in a year the streets will be vibrant with competition to offer the best breakfast.
Fixing Broken Britain requires a massive re-invention and recapitalisation of the pillars of UK society to reflect the realities of the economy today and tomorrow. Sadly, politics is a “blame-game” – most politicians care more about avoiding responsibility for the mistakes of the past, thus they merely tinker with improvements for the future. Politics need to move forwards.
Burnham has identified that Broken Britain suffers from 40-50 years of hamstrung policy decisions that just aren’t fit for purpose anymore. At least he is talking about the problems – Starmer was a hopeless communicator, caught in the headlights of fiscal rectitude. It’s maybe time that Burnham took a leaf out the Donald Trump “Art of the Presidency”, by being disruptive, shaking up the state, and quashing some of sacred cows that hold Britain back.
Burnham talks about mistakes of the past. But what of the future? They are unlikely to happen. They will be too dangerous to the future of the Party at the next election.
Attempts to reform the civil service, to make public services affordable and efficient, reform the NHS before it consumes the whole nation, or cut the welfare bill… will terrify Labour MPs and trigger industrial action to ensure state employees continue to consume the resources of the state. Interestingly the State Pension paid to everyone in the UK consumes about 15% of total government tax receipts, but public sector pension liabilities are about 16% of the tax take – not an entirely fair measure as government employees do now make some contributions.
Burnham may not be to everyone’s taste but identifying the problem is the first stage in finding a cure. The issues around fixing Broken Britain will be multiple – not least in how financially bust Britain can afford the changes that will be necessary to change the economy, how “courageous” (i.e. career-ending) political decisions must be taken to redirect spending priorities, identifying policies to solve the consequential complexity of the economy, and how to overcome the inertia that lies of the heart of Britain’s bureaucratic hostility to change.
Of course, there is much more to solve about spending choices between welfare, defence, health, education, etc. But even more important is to stop the slow strangulation of the economy through bureaucracy and “process” – a very broad descriptor of over-regulation, tax complexity, rules, the institutionalisation of the civil service, services and local government.
As I was writing my recent book, The Battle For Hamble, I realised that the decision to allow a gravel quarry to be dug in the middle of prosperous village putting the local economy, jobs, prosperity and the environment made no sense, but happened because the “process” could be manipulated to allow it to happen. Bureaucracy failed.
Twice this month I’ve been hit by Bureaucracy in action. I reported a crime. It took the police 10 days to follow up, where they announced they were dropping the investigation because they could not identify the suspects from the photos we supplied. They didn’t speak to other witnesses. I tried to follow up with a call – took an hour to be picked up. I then had to use their website to send further details – but it seems to have been deliberated engineered to be as unhelpful as possible. Bad IT and “high volumes” of calls are a great way to ration government services.
Later I had a hospital appointment. I waited in an empty reception room for an hour after checking in. I eventually went back to reception. The lady told me: “the system isn’t working”. I asked what I was supposed to do… she told me again with great condescension: “the system isn’t working.” I managed to make a phone call and discovered the cardio office was literally three steps away… where a nurse had been waiting an hour to do a simple 5 min test. That is why Britain is Broken.
Bureaucracy is a broad term. It is the sand in the engine of the economy, the grit in the eye of growth. How do we fix it? That’s the hard yards that Burnham, and whoever will inevitably succeed him in three year’s time, will have to address.
Out of time and back to the day job… have a great weekend…
Bill Blain
Author of the Morning Porridge
CEO Windshift Capital
Advisor – Spitfire Strategic Capital
Meanwhile, don’t forget about my new book:
You can read a review on the Society of Professional Economist’s website here.
The Battle For Hamble is a proper grown-up examination of how economies fail: a tale of Greedy Corporates, Bad Planning and Economic Illiteracy. It uses a wholly unnecessary Gravel Quarry in the middle of a prosperous village to illustrate the multiple failings and abdications of responsibility that have created Broken Britain. It’s about bureaucracy, money, exploitation and shareholders vs stakeholders. It’s about social injustice – asking why it’s ok to put 6000 jobs at risk so corporate bosses can reap bigger bonuses! Whether is the Hamble Quarry, HS2 or the abysmal state of UK armed forces due to bad procurement, read the book to understand how its broken process and bureaucratic indifference that is sinking Britain.
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