An outgoing cabinet minister has warned Andy Burnham he “can’t make funding fairer for the rest of England by making it unfair on Londoners”.
Steve Reed on Monday resigned as housing secretary as the new prime minister entered No 10.
The Streatham and Croydon North MP, who is an ally of Sir Keir Starmer, said he will "always fight to ensure London is treated fairly".
In his resignation letter, Mr Reed wrote: “I’m proud to be a London MP and I’ll always fight to ensure London is treated fairly as you explore new models of devolution, taxation and funding.
"I strengthened planning reforms to speed up housebuilding across the country, with a radical acceleration package for London where housebuilding had ground to a near-halt under the Conservatives. I’m proud we built more new council homes last year than in any other year for 40 years when records first began."
He added : "Serving as the secretary of state for housing, communities and local government has been the honour of my life and although I am disappointed to be leaving government now, I wish your new team every success.”
It comes after the leader of Westminster Council warned Mr Burnham must not “weaken the capital” the boost the rest of the country,
In a letter to the new PM, Paul Swaddle said “the route to a stronger national economy cannot be to diminish London”.
The borough is facing having to impose huge council tax increases on residents to plug a £100 million blackhole in its finances after a reevaluation of government funding.
Mr Burnham has also braced wealthier people in London for tax rises as he seeks to ease the burden on the less well off and has previously backed a new property tax, which if adopted would see a majority of households in the capital more paying more, according to analysis.
Chancellor Rachel Reeves last year also announced Labour will be implement a new “mansion tax” on properties valued at over £2 million.
“The UK does not have a London problem. It has a national growth problem. A stronger Manchester, Birmingham, Leeds, Liverpool, Newcastle, Cardiff, Glasgow and Belfast are essential to the country’s future,” Mr Swaddle said.
“So is a stronger London. Weakening the capital would not rebalance the economy; it would reduce the tax base, investment pull, visitor economy and global competitiveness on which the whole country depends.”
He argued that the government “should review existing policy areas that would cut across the growth mission”.
“One clear example is the proposed High Value Council Tax Surcharge,” he said.
“Westminster does not support the surcharge, either in principle or design It would fall especially heavily on Westminster, where high property values do not always translate into high household incomes, and it risks creating unfair outcomes for residents whose property value does not reflect their ability to pay, including long-standing residents in high-value homes, leaseholders, tenants who may see costs passed through rents, and homes that do not fit neatly into the Government’s assumed model of wealth.”
Mr Swaddle added: “Westminster wants Greater Manchester and every major city-region to succeed. But the route to a stronger national economy cannot be to diminish London.
“If the capital becomes less competitive, the whole country will feel the consequences through weaker tax receipts, lower investment, reduced visitor spending and a smaller global platform for UK business.”
Mr Burnham is set to become Britain’s sixth prime minister in a decade on Monday.
The former Manchester mayor has faced accusations that he is pro-north at the expense of London and the south.
However, in his speech accepting the Labour leadership on Friday he pledged to be a leader for all of Britain.
“I will be a leader for the north, the south, the east, and the west, for Scotland, Wales, and for Northern Ireland,” he said.
“Yes, the north of England has given me so much, everything, in fact. And in return, I have sought to give it the strongest voice I could.
“That was my job, but now I do the same for everywhere, because I see the same challenges everywhere I look.”
