Lord O'Neill, a close ally of Andy Burnham and former Treasury minister, has voiced strong criticism of Burnham's "growth in every postcode" slogan, warning that the approach is impractical and likely to result in wasted taxpayer money.
O'Neill, who has advised the Prime Minister and previously served in David Cameron's administration, stated he is "not a huge fan" of the mantra. He suggested that the most effective way to stimulate growth across the country would be to lower mortgage rates by convincing financial markets of the government's commitment to controlling public spending. He also urged Burnham to adopt a more pragmatic stance on issues like welfare and state pensions.
Speaking at a Centre for Cities event, O'Neill elaborated on his concerns. "Let's just say good luck with that strategy if that is it because I think it would almost definitely result in some wasted taxpayers' money, and with it create political questions that they might not want to face," he said, referring to the idea of direct government intervention in every area.
He drew parallels between Burnham's slogan and Boris Johnson's "levelling up" agenda, describing it as a "weird cousin" and expressing a wish that the government would not use it. O'Neill, who was involved in the Northern Powerhouse project, suggested the pledge lacks credibility with investors. Plans for similar initiatives are expected to be detailed in an upcoming white paper, with the October Budget anticipated to offer further clarity.
O'Neill highlighted the significant economic contribution of London, noting that its output is equivalent to the next eight largest metropolitan boroughs combined. He argued that for national GDP figures to improve, London's economic slowdown must be halted. He also pointed out that even with significant growth, other major regions like Greater Manchester, West Yorkshire, and the West Midlands would need to expand by 5% annually for many years to make a substantial impact on national figures.
He stressed the need for the government's economic strategy to be communicated with extreme care and transparency, acknowledging the human and social challenges intertwined with economic realities. O'Neill called for an honest and direct approach to regional economic disparities, rather than broad, national initiatives. He also advocated for an end to politicians consistently over-promising and under-delivering.
Regarding devolution, O'Neill acknowledged that it represents a core belief for the current Prime Minister and his team. However, he cautioned that many areas currently lack the necessary capabilities and progress to effectively manage increased responsibilities. He predicted significant constitutional change, potentially devolving powers on a scale not previously conceived in the UK, but emphasized that this would be a long-term process dependent on demonstrable capability and accountability.
O'Neill expressed concern about specific devolutionary powers being granted in the immediate budget, arguing that such powers should be given to regions with clear, accountable plans. He warned against simply distributing taxpayer money without a defined purpose, suggesting it could lead to requests for further funding from the Treasury. He advocated for introducing competitiveness among regions rather than treating them uniformly, which he likened to a "weird communist state."
Additionally, O'Neill called for the establishment of an "Office of Budget Responsibility for infrastructure" to provide evidence-based support for public investment decisions. He concluded that the country needs an independent body to demonstrate how borrowing for long-term supply-side investments can drive economic growth, regardless of the governing party.