Andy Burnham’s long-awaited devolution reforms will benefit London by discouraging people from moving south and pushing up house prices, the communities secretary has declared — a defence of the incoming prime minister’s agenda as critics warn against an “anti-London” bias.
Steve Reed, the MP for Streatham and Croydon North, told Sky News that channelling billions more into regional infrastructure and handing mayors new tax powers would ease pressure on the capital. “It doesn’t help London if London is the only place where people see opportunities for jobs and economic growth, because people from all over the country come to London,” he said. “It pushes up our housing costs and pushes up housing demand. It benefits the South East if the rest of the country does well.”
“Andy Burnham’s devolution plan will ease London’s housing crisis by reducing migration from the North, says Steve Reed.”
Burnham, who will take over as prime minister in mid-July after Keir Starmer’s resignation following a huge Labour revolt, is expected to unveil the plan on Monday. He is said to be considering carving up the Treasury itself — creating a new economic ministry focused on growth in Darlington while a finance ministry remains in Whitehall. The former Greater Manchester mayor has also backed replacing council tax and stamp duty with a new property tax that could hit Londoners with a £7.5 billion higher bill.
But the plan has already drawn fire from London mayor Sadiq Khan, who warned Burnham not to cut investment in the capital. Reed stressed that boosting the North and the Midlands would help London in the long run, arguing that “grotesque regional economic inequality” has left Britain with some of the poorest regions in Europe despite being one of the biggest economies on the planet.
The choice of chancellor will be the clearest signal of Burnham’s direction — and, as one close ally put it, he wants someone “completely aligned” to avoid friction between No 10 and No 11. The economy is stuck in the doldrums, weighed down by low growth, record borrowing, high taxes and big spending bills. Donald Trump’s war in Iran threatens to push up energy prices and force the Bank of England to keep rates higher, crimping growth further. Contenders for the top Treasury job include Burnham ally Ed Miliband, home secretary Shabana Mahmood, work and pensions secretary Pat McFadden, and former leadership rival Wes Streeting.
Whoever takes the role will have to jumpstart the economy fast while facing the cold reality of the bond market. Britain is deeply in hock to creditors, and any misstep could spook investors. As one analyst noted, the government is desperate for money but businesses and taxpayers cannot stomach higher taxes, and borrowing more risks alarming the markets. Burnham, a keen lover of poetry, will have to address the country in the driest prose — because the democratic will alone cannot overcome the constraints of decades of deferred costs that are now suddenly upon us.