The much-vaunted “Manchesterism” of our new Prime Minister is starting to take its national shape, with his early policy pledges and the appointment of his Cabinet. It’s a relentless focus on the cost of living – cuts to VAT on energy bills and a £2 cap on bus fares – paired with a jaunty wardrobe and a flair for social media. Burnham wants the public to see him as somehow more ‘real’ and more ‘in touch’ than his aloof predecessor.
But Burnham’s diagnosis of the ills of the nation – and the action needed to address them – amounts to a great deal more than just improving how the government communicates. His early statements include some fairly significant repudiations of not just the outgoing Starmer administration, but a great many of its predecessors. He specifically talks about the “wrong turn” of the 1980s.
His statements point to a very particular view of history – that the deindustrialisation of the 1980s, together with the centralisation of political power, undermined working class communities to such an extent that they have not recovered. The Burnham protocol references ‘reindustrialisation’ and ‘devolution’ as the answer for these communities. It’s a strikingly retrogressive view. Our pop culture Prime Minister would probably enjoy a Doctor Who comparison – he’s a Time Lord, travelling back to the 1980s to right a historic wrong and save the country from the Evil Neoliberals! – but being compared to a sci-fi fantasy isn’t perhaps as complimentary about Burnham as he would like.
But it is also a statement about geography. The implication is that the Cities of London and Westminster have jointly wreaked this damage on the rest of the country – specifically northern cities and towns – and that it is time for a reversal. I’m not the only Londoner who worries about what the Burnham view of the British economy and society mean for our city.
I know that many LDV readers will struggle to find much sympathy for privileged metropolitan snowflakes, weepingly forgoing their matcha lattes and gochujang popcorn to help fund a £2 bus fare cap that Londoners won’t even benefit from (because our bus fares are already only £1.75!). Many will share the Burnham diagnosis of the impact of Thatcherism on the UK’s social fabric and every good Liberal Democrat will welcome the warm words about devolution. As the party’s Business spokesperson, I’m enthusiastic about the prospect of growing our manufacturing base, especially for the career opportunities it would offer to our young people. Although we also need to see much more support for small and high street businesses, with policies that will boost employment, such as reversing the Employers’ NI increases, introduced by the now ex-Chancellor, Rachel Reeves.
The implicit and explicit hostility towards our capital city, however, does not inspire confidence. We wait to hear what the new top team have in store in their first budget, but loading more taxes onto higher earners, without wider reforms of the tax system, or a recognition of how those higher earnings get swallowed up by higher housing costs in the capital, will lead to a disproportionate tax burden on Londoners.
And priorities that skew towards the North will overlook the fact that rates of homelessness and child poverty are higher in the capital than in any other part of the country. If Andy Burnham is serious about ending rough sleeping, then he needs to start with those who find themselves on the streets of London – between a quarter and a third of all of the UK’s rough sleepers. Homelessness is a complex issue with many causes, but lack of affordable housing – an issue that is far greater in London than anywhere else – is one of the most significant. And more than half of all children living in temporary accommodation in the UK live in London. Inequality hits harder in London than anywhere else in the country. If Burnham wants to deliver real change to this country – that voters can really see and feel – then addressing the problems of the capital can make the greatest, fastest and most visible change.
For all of that, London is unique in the range of talent it attracts, in the breadth of economic sectors it supports and in the diversity of employment it offers. It is unrivalled in Europe for the opportunities it offers to entrepreneurs to find investment in their startups and for the number of world-class universities at which students can advance their learning. All these factors – and more – are the reason why London’s productivity per head is 75% greater than the UK average.
It’s a hackneyed argument that London needs investment because its economy generates the tax revenues that fund the rest of the country. We need policies that will help every region of the UK grow, not pit one part of the country against another. Boosting regional productivity will be harder if London’s economy is hit by a misplaced sense that it needs to ‘pay’ for past failures of policymaking. If London’s ability to spend and invest is weakened, it will reduce the economic output of every region.
Andy Burnham has a once-in-a-generation opportunity to transform the lives of Londoners. He has the opportunity to grow the sectors which set the city apart, to strengthen its position on the world stage. He has a choice: to seize this opportunity or to further ignite division within the country by demonising the city and not helping those in the capital who need it the most.
* Sarah Olney is the MP for Richmond Park. She joined the Liberal Democrats in 2015 and won a spectacular victory in the Richmond Park by-election in December 2016. She lost the seat by a heartbreaking 45 votes in the 2017 General Election, but then regained it resoundingly at the 2019 General Election.
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10 Comments
If Burnham’s government decides to hand over 2.5% of all income tax revenues equally regardless of location, then London’s Mayor would receive £2.3 billion, whilst the next largest recipients, the West Midlands and Greater Manchester Mayors would receive around £670 million each, as data in the i newspaper shows. The author’s special pleading for London, not surprising for a London MP, ignores the value of redistributive spending. We accept, as Liberals, that the rich should pay higher tax rates than the poor, so why should richer areas not receive proportionately less from the central state than poorer areas? Perhaps instead of the fixed 2.5%, we need a range from 1% for London (still twice what the Mayor already receives from central government) to 5% for the poorest areas.
Firstly, there’s a bit of a myth about London generating the tax for the rest of the country; where I live there are two sizable factories – most readers on this site buy goods made in them – but the head offices are in London. This is a pattern replicated by many companies.
Then we have the wonderful way in which major projects in London are frequently funded by central government – unlike most of the rest of the country. One could say that the rest of the country has been giving London a handout for a long time. The road networks – focused on London. The rail network – focused on London… this one was even stripped down to being London-centric by Beeching, when it had previously been a network that linked places needing to be linked.
A lot of it was started by Wilson’s National Plan. “Decongest” Birmingham – what was then a booming city, and direct the goodies to London. Thatcher making London the great money launderi… sorry, financial centre sped up the process.
You’re right about poverty in London – but London also has a large amount of wealth – maybe wealthy London should do a bit more to help out poor London? Richmond seems to be swimming in dosh from what I can see.
> Firstly, there’s a bit of a myth about London generating the tax for the rest of the country; … but the head offices are in London.
This is a very good point. Do you have pointers to reliable stats ? Government data?
The line about London/SE funding the regions is continually pushed by the likes of the BBC. When I tell people that the profits from their work appears in a London HQ it is as if a light goes on in their head. “Oh yes. I see.”
Nothing convincing here. Andy Burnham has said he will improve the lives of people in every postcode, is that not enough? I really don’t think people down South (where I am an economic migrant) get it.
Thank you Sarah – this needed saying. I run high-street small beauty businesses in London, and the “wealthy London” framing misses what operators actually see. My salons need a Special Treatment License that the identical business anywhere else in UK doesn’t – one of several costs that only exist inside London. And London’s headline incomes flatter the city: after housing costs, poverty here is the highest in the UK. The real divide isn’t London vs the North – it’s whether families and small firms anywhere can make the numbers work. Shouldn’t we be the party doing that arithmetic?
“Perhaps instead of the fixed 2.5%, we need a range from 1% for London (still twice what the Mayor already receives from central government) to 5% for the poorest areas.”
This would make sense.
In any one country, the central government has an obligation to ensure, by a process of fiscal equalisation, that the economic gap between the regions is minimised. It can’t be done exclusively by devolved Governments unless they negotiate a good deal with central government. Scotland has done better than Wales in this respect.
The parameters to be monitored include average incomes, house prices and rates of unemployment.
One problem for the less affluent in London is that they need a higher income to maintain the same standard of living as those with similar incomes in the regions. Prices are generally higher – with housing in particular being more expensive. They have to compete economically with others who have far more spending power.
A deliberate policy of fiscal equalisation would help reduce this but it will be a hard sell in London.
sarah; rebalancing our economy is a positive sum game both for london and the rest of the country. the south-east is short of water and electricity, and short of space for housing and development – like data centres. promoting growth in other regions benefits the country as a whole.
Why Andy Burnham would be foolish to turn his back on London
By Sarah Olney | Fri 31st July 2026 – 12:50 pm…
Why must Burnham’s promise to improve all areas be headlined in such emotive ‘either/or’ terms?
The American phrase that it is possible to “Walk and chew gum at the same time” comes to mind..
“For all of that, London is unique in the range of talent it attracts, in the breadth of economic sectors it supports and in the diversity of employment it offers”
We had 1 300 high quality jobs at a large HMRC office in Southend on Sea. It closed and the jobs moved – to London. The office block they used has laid empty ever since.
The Population of London has gone up by Half since the 1990s, did anyone vote for that ? Large parts of London are now dominated by huge tower blocks, did anyone vote for that ?
London does provide ice huge chunks of Income Tax , there are 7 London Boroughs that pay more tax than Edinburgh, The Capital of Scotland. Is that a good way to organise our Economy ?
If we could rebalance The Economy so that London didn’t constantly suck Money & People in then People who live in London might actually prefer it ?
I certainly would.