Labour civil war intensifies as Burnham pitches leadership and Starmer likens rival to Liz Truss

Andy Burnham triggered a Labour Party civil war on Thursday after a brash leadership pitch that prompted Prime Minister Keir Starmer to liken him to former Tory prime minister Liz Truss. The Manchester mayor accused the government of creating alienation and demoralisation within the party as he laid out what looked like policy plans ahead of Labour's annual conference in Liverpool. He said he would not speak in code as he set out his vision, signaling a potential tilt for the top job that has already stoked intra-party fury.

A core element of Burnham's pitch was a bold tax-and-spend agenda, including about £40 billion of borrowing to fund nationalising housebuilding. He argued that Britain must move beyond a regime in which it is "in hock" to bond markets, asserting that borrowing more could be justified to deliver affordable housing and growth. The assertion drew an immediate backlash from investors and prompted Sir Keir to respond with a stark comparison to Liz Truss, citing the three-year anniversary of Truss's fiscal rule breach and warning that abandoning fiscal rules would harm working people. Burnham’s allies and opponents alike sharpened their public rhetoric in the hours after the remarks.

Responding to the clash, an ally of Starmer told a newspaper that Burnham’s comments were “like telling someone on a ledge not to worry about gravity.” The remarks unsettled the party’s financial wing, with economists and market watchers warning that a Burnham-led government could trigger a gilt sell-off if markets priced in higher borrowing. Mark Dowding of RBC BlueBay Asset Management told the Financial Times the prospect indicated “financial naivety,” warning that yields would rise and the pound could come under pressure. He and others stressed that bond markets are sensitive to changes in fiscal stance, and that pre-election pledges carry substantial risks.

On the Labour side, senior figures sought to tamp down the rhetoric. Housing Secretary Steve Reed urged Burnham to focus on his Manchester mandate, while Chancellor Rachel Reeves emphasized that Labour would deliver change by staying grounded in fiscal discipline. Reeves, in particular, stressed that there is a line between ambition and borrowing beyond what markets can sustain. Burnham insisted on Thursday that he loves his mayoral role and would serve his full term, adding that he was not “in the business of answering hypotheticals” about a potential parliamentary bid.

To take on the prime minister, Burnham would need to win a parliamentary seat in a by-election and secure support from 80 MPs. Polling by More in Common suggested that Labour could overtake Reform UK if Burnham were its leader, a prospect that would complicate the party’s path to the next general election. As Labour’s conference in Liverpool approaches, the party faces questions about unity, leadership, and how far it is willing to move on fiscal and housing policy to win back voters while avoiding market disruption.

Prime Minister Starmer’s aides and allies have sought to frame the wider debate around responsible economics and delivering tangible policy at scale. Conservative reaction framed the rift as a leadership contestary within Labour rather than a measured policy debate, with party leader Kemi Badenoch arguing that Starmer is in office but not in power, while Burnham’s candidacy is seen as a direct challenge to the current leadership. The week’s events underscore how much is riding on Labour’s ability to reconcile internal factions ahead of a conference that could set the tone for the party’s electoral strategy in the near term.