At a reception in Parliament last week for London Labour politicians, one guest’s appearance spoke volumes.
Andy Burnham, the new MP for Makerfield and the next Prime Minister, popped in to mingle with guests.
Having hailed London as the world’s greatest capital city in his first major speech after the by-election, Burnham seems eager to convince Londoners that his brand of Manchesterism will benefit them just as much as other parts of the country.
Many of the business leaders I have spoken to across the capital remain, unsurprisingly, nervous about reports they have seen of investment moving out of London, greater state intervention, and the cost of his public spending plans.
On the flip side, Burnham’s pledge to raise living standards in every postcode, bring down the cost of essentials for households and employers, and deliver a more pragmatic form of politics in Westminster forms part of a vision that businesses can get behind.
But this can only become reality through economic growth, and London, as the UK’s economic engine and front door for foreign investment, will be central to delivering it. In an open, global economy like Britain, growth is not a zero-sum game that pits one region against another: supply chains, jobs and investment flow across the UK.
It’s also worth remembering that just because much of the machinery of Government is in London doesn’t mean it works for London. Burnham’s deep commitment to and experience of devolution promised the transfer of greater powers and resources to regional government to better meet local needs.
So far, so good. What needs to happen now to make sure that the fresh energy, positivity and optimism that reverberated from his Manchester speech translates into people in London postcodes feeling better off?
For starters, we need to guard against devolution becoming a cover for ‘levelling down’ if funding allocations tilt away from London towards other regions.
Second, the new Government needs to double down on growth. While devolution, when done well, can improve local service provision and support growth, it is not a silver bullet. So we also need to improve our tax competitiveness to incentivise investment, including on issues like business rates and stamp duty.
Third, we need to cut the regulatory burdens that hold back private-sector investment. Let’s take planning, which is critical to the housebuilding that Burnham is championing. Getting regulation right and attracting more private-sector investment has huge potential for better public services – given that London councils are spending £5.5m a day on poor-quality temporary accommodation, how about we use private capital to build more, higher-quality homes to cut the public rental bill?
Finally, in the transition to a new administration, we must avoid needless uncertainty creeping in and investments being put on hold. London and the UK benefit hugely from foreign direct investment in infrastructure and technology. Early commitments that it’s full steam ahead on projects like Heathrow expansion, which matter not just to London but to the whole country, will send a powerful message to domestic and foreign investors.
So, the real test of Manchesterism is whether every postcode is better off – that means in London too. There’s much we can learn from the pragmatic politics that have seen annual economic growth in Manchester outstrip London’s. If we get this right, Manchesterism can become a growth story for the whole country – where London and the regions grow together.