Kemi Badenoch has warned that Britain will pay a ‘Burnham premium’ if the mayor of Greater Manchester becomes Prime Minister.

The Conservative leader said Andy Burnham‘s proposals would increase government borrowing and add billions of pounds to the national debt.

Mr Burnham has suggested he would renationalise water and energy firms, start a new council house building programme and subsidise more public transport.

He also suggested that Britain borrow outside its strict fiscal rules to boost defence spending, drawing criticism when he claimed the UK should stop being ‘in hock to the bond markets’.

Mrs Badenoch’s comments come after the financial markets took fright at the possibility of the Left-winger ousting Sir Keir Starmer when a route back to Westminster opened up last week.

The pound tumbled and the cost of borrowing soared, with economists warning this could increase if Mr Burnham triggers a Labour leadership contest.

There are fears a government led by the mayor would cost taxpayers billions of pounds more in higher borrowing and spending. 

Mrs Badenoch said: ‘Andy Burnham is talking about increasing borrowing – that’s going to hit everybody’s mortgages, that’s going to hit borrowing costs.

‘It’s going to put billions on debt interest. You’ll be paying a Burnham premium. I do not think that’s going to make him popular at all.’

The Conservative Party leader told Sky News that polls showing Mr Burnham as being popular among Labour Party backers was ‘because he hasn’t had to do anything’.

She added: ‘As soon as he comes in and realises there’s no money to throw about, he’s going to become unpopular. 

‘The problem is not just Keir Starmer or Andy Burnham or Wes Streeting – they’re all as bad as each other. 

‘They have the same problem – they don’t know why they’re there. They’ve got no plan for the country.’

Labour MP Josh Simons, who announced last week that he would give up his Makerfield seat to make way for Mr Burnham to stand in a by-election, told the BBC yesterday that one of the mayor’s interests is the price of basic needs such as energy, water and social housing.

He claimed one of the reasons why they are so expensive is the ‘privatisation of a lot of them’, with bills often going to ‘shareholders of some private equity fund’.

Mr Burnham said to the New Statesman last year that the government had to get beyond ‘being in hock to the bond markets’, but has since insisted he was misrepresented, and last week tried to reassure the markets by saying he supports the fiscal rules as well as ‘a plan to get debt down’.

A spokesman said: ‘Andy recognises the realities of the UK’s fiscal position and that debt is high, and the government needs to show the markets it has a plan to get it down. He supports the fiscal rules.

‘Andy wants to see an enhanced growth plan and lower inflation.’