Andy Burnham’s devolution reforms will benefit London by reducing migration from England’s regions to the capital which is fuelling house prices, says Communities Secretary Steve Reed.
Mr Reed, MP for Streatham and Croydon North, defended channelling billions more pounds into infrastructure in the regions and giving more powers to regional mayors including over some taxes.
The plan, expected to be unveiled by Prime Minister-in-waiting Mr Burnham on Monday, has sparked a warning from London Mayor Sadiq Khan not to cut investment in the capital.
There are also concerns that former Greater Manchester Mayor Mr Burnham will adopt an “anti-London” agenda.
But Mr Reed stressed that boosting the North, the Midlands and other regions would benefit the capital.
He told Sky News’ Sunday Morning with Trevor Phillips: “What Andy is saying is that this is one of the biggest economies on the planet, and yet we have some of the poorest regions in Europe in this country, and that is because of the grotesque regional economic inequality we have in this country.
“If we can invest in the infrastructure and support to allow our regions to grow, it actually helps the South East of England.”
Mr Reed, former leader of Lambeth Council, explained further: “It doesn't help London if London is the only place where people see opportunities for jobs and economic growth, because people from all over the country come to London.
“It pushes up our housing costs and pushes up housing demand.
“It benefits the South East if the rest of the country does well.”
He also played down the prospects of a general election if as expected Mr Burnham takes over as Prime Minister in mid-July after Sir Keir Starmer’s resignation and embarks on landmark devolution reforms, with tens of thousands of jobs expected to be moved from Whitehall to the regions.
Mr Burnham is said to be considering carving up the Treasury, to create a new economic ministry focusing on growth in Darlington, and a finance ministry remaining in Whitehall.
He has previously backed replacing council tax and stamp duty with a new property tax which could hit Londoners with a £7.5 billion higher bill.
Mr Burnham also faces a difficult decision over who to appoint as Chancellor, with Rachel Reeves widely expected to leave the post.
Net Zero Secretary Ed Miliband is politically close to Mr Burnham, who stormed towards No10 after winning the Makerfield by-election.
There are concerns, though, within Labour ranks that he is too hardline on net zero measures, despite the heatwaves already blighting Britain, and that he may struggle to retain the confidence of the markets.
But Labour’s Deputy Leader Lucy Powell, a close ally of Mr Burnham, backed Mr Miliband taking over at the Treasury.
Asked whether she thought he would be good at running the Treasury, she told the BBC’s Sunday With Laura Kuenssberg: “Yes I do actually, but actually I think this is a slightly distracting conversation, because I think we’ve all got a really important job to do.”
