One of Prime Minister Andy Burnham’s closest economic advisers has expressed skepticism about the viability of the government’s ambition to deliver “good growth to every postcode,” warning that the approach could lead to inefficient use of public funds. Lord O’Neill of Gatley, who previously worked with Burnham during his tenure as mayor of Greater Manchester and continues to offer informal guidance, cautioned that focusing growth efforts on every locality across the country is unlikely to be successful.

Speaking at the Centre for Cities think tank, O’Neill suggested the government should concentrate on fostering economic growth in key metropolitan areas such as London and the Northern Powerhouse cities — Manchester, Liverpool, Leeds, and Sheffield — rather than spreading resources thinly. He emphasized that regional governments and mayors differ widely in their capacity to effectively manage and allocate taxpayers’ money, and policymakers should tailor devolution powers accordingly.

“I’m not a huge fan personally of the growth in every postcode,” O’Neill said, noting that attempting to support every area could lead to significant waste. He characterized the reality as a “horrible inconvenient truth” that prioritizing London would be necessary to raise the United Kingdom’s overall gross domestic product (GDP).

O’Neill also cautioned Burnham against over-promising on devolution and growth, noting that unmet expectations could result in voter backlash. He cited former Prime Minister Boris Johnson’s levelling-up agenda, which initially rallied support in historically Labour-leaning northern constituencies but ultimately lost credibility due to an apparent lack of tangible outcomes.

The adviser further underscored the importance of reducing the country’s borrowing costs as a fundamental strategy for enabling growth nationwide. UK borrowing costs on ten-year government bonds recently reached 5.1 percent — the highest since 2007, he pointed out — and a hypothetical 1.5 percentage point reduction could have a broad positive effect, including on mortgage rates.

O’Neill’s remarks come amid rising government borrowing, which reached £18.3 billion in August, exceeding forecasts from financial markets and the Office for Budget Responsibility. This upward trend follows weeks before Chancellor John Healey is expected to deliver his first budget, adding pressure on the administration’s fiscal plans.

Regarding Labour’s manifesto commitments, O’Neill urged Burnham to reconsider pledges not to increase VAT, income tax, or national insurance and not to scrap the triple lock on state pensions. He described these promises as potential “gold opportunities” to improve the UK’s fiscal position and gain favor with foreign creditors if adjusted.

In summary, while supportive of the broader goal of regional economic empowerment, O’Neill’s assessment calls for a more pragmatic and targeted approach to growth and devolution, emphasizing fiscal realism and regional capabilities as critical factors for success.