Burnham adviser slams ‘growth in every postcode’ pledge
Andy Burnham’s pledge to deliver “growth in every postcode” will result in “wasted taxpayer money and create political problems”, according to one the PM’s most valued economic advisers.
Jim O’Neill, who was tipped to take an official role in Burnham’s government, said the Prime Minister should focus on getting gilt yields to fall by 150 basis points in order to reduce mortgage rates rather than pushing to improve growth prospects around the country.
Speaking to the Centre for Cities, a think tank favoured by the former Manchester mayor, O’Neill suggested Burnham was at risk of “overpromising” and creating problems for himself.
“I am not a huge fan of ‘growth in every postcode’,” O’Neill said at the beginning of the conversation.
“The best way of getting growth in every postcode is to get 10-year UK gilt yields down by 150 basis points, which would be reflected in, obviously, mortgage rates.”
He said that most people would take the slogan to believe that Burnham would look to focus on “directly” improving growth in every postcode, adding “good luck with that strategy”.
“It would almost definitely result in some wasted taxpayers’ money and with it create political questions that they might want to face.”
The 10-year gilt yield, the benchmark for government borrowing costs, has jumped from a low of around 4.65 per cent in April to over 5.2 per cent this month.
The rise in borrowing costs has resulted in fears that the Chancellor could have no choice but to raise taxes in order to restore a £23.6bn fiscal buffer, which could further dampen growth prospects according to the government’s critics.
O’Neill urges Burnham to back London
O’Neill was trumpeted as a top adviser to Burnham during his Makerfield by-election campaign. City AM revealed he was in talks to take an official role but he later declined to join Burnham’s team.
Since his announcement, the former Goldman Sachs Asset Management chairman has warned the government against raising capital gains taxes due to its possible impact on risk-taking.
During his interview with the devolution-focused think tank, O’Neill also said he wanted to see London continue to grow at a high pace despite concerns over the split between the capital and other major cities.
He added that London had to “be given some kind of priority” to boost national growth which was “quite ironic” given Burnham’s bid to improve regional growth across the North of England.