Reed Warns Burnham: 'You Can't Make The Rest Richer By Making London Poorer'

Steve Reed, a close ally of Sir Keir Starmer, has warned Prime Minister Andy Burnham that efforts to rebalance the UK economy should not come at London's expense. Writing in The Times, Reed argued that weakening the capital will not automatically make other regions richer and urged the government to address concerns from southern and London Labour MPs.

Reed — who was removed from his government role when Burnham moved into Number 10 — stressed London's central role in the national economy. "London's economy drives the national economy – it's bigger than the next eight biggest cities combined," he wrote, adding:

"You can't make the rest of the country richer by making London poorer."

Steve Reed, the former housing secretary, was sacked by Mr Burnham when he ascended to Number 10 - Jonathan Brady

Devolution: Potential Benefits and Political Risks

Reed welcomed devolution in principle but warned it carried political risks. He cautioned that transferring powers to local authorities could unintentionally boost opposition figures: "Many Labour MPs told me they feared devolution means handing power from a Labour government to Reform and Green mayors."

He also warned that a rapid shift of decision-making to ministers drawn mainly from the north could leave London "overlooked or misunderstood" and cause unrest among southern and London-based Labour MPs, some of whom backed Burnham's leadership bid.

Sir James Cleverly said Burnham was 'blaming London for London's own success' - The Times Future of London Summit/Naomi Gabrielle

Reactions and Political Fallout

Conservative figures have seized on the debate. Sir James Cleverly accused Mr Burnham of "blaming London for London's own success" as he launched his campaign for London mayor, saying the capital needs someone to "fight its corner."

Economic Forecasts

Separately, recruitment firm Robert Walters has forecast that as many as 90,000 bankers and lawyers could leave London by 2031 as firms and workers relocate to other major UK cities. The recruiter cited London's high cost of living and the government's push to boost regional economies as key drivers.

According to those projections, Manchester, Leeds and Birmingham would capture more than half of the relocated white-collar roles, a shift that analysts estimate could deliver about a £9bn boost to regional economies by 2031 — increasing local spending on everything from office space to retail and hospitality.

Mr Burnham has proposed strengthening the powers of Britain’s regional mayors and giving them a share of income tax revenues as part of his devolution agenda. Reed's warning underscores the challenge of pursuing regional rebalancing while managing political and economic risks tied to London's outsized role.