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Andy Burnham has been bluntly warned by one of his key economic advisers that he must focus on London to boost economic growth.
Lord O’Neill of Gatley said the new Prime Minister would have to rethink his flagship pledge to deliver “growth in every postcode” given limited resources.
The peer argued for a focus on parts of Britain that could ramp up economic growth such as the capital, the West Midlands and the Northern Powerhouse region of Manchester, Liverpool, Sheffield and Leeds.
“You’ve got to focus on London,” he said in an interview in The Times. “London is still as big as the next eight most important urban places put together,” he said.
“So if London were to continue showing trend-softening you can’t get the GDP numbers to rise.”
Lord O’Neill served as a Labour Treasury minister and has been an adviser to Mr Burnham since he was heading to No10 but has declined a role in his Government as the Prime Minister’s economic adviser.
He believes the Northern Powerhouse could be a “national game-changer”.
He admitted: “No doubt Cornwall and a lot of other places will moan. That’s going to be tricky for them politically, not least because Andy said we want to have growth in every postcode. He’s got to think about the reality and hard choices.”
His call to focus on growth in London comes amid concerns thousands, if not tens of thousands, of Civil Service jobs are set to be moved from Whitehall to the regions after the PM pledged the biggest “devolution of power in modern times”. There are also fears a number of tax policies could hurt London.
Mr Burnham this week refused to rule out tax rises.
Lord O’Neill warned against raising capital gains tax, saying it would be a “stupid” thing to do.
He said raising taxes in the Budget on October 28 would demonstrate ministers are not “thinking about growth as sincerely as they claim they are”.
