Part 1 of 3: The London Plan is an early test of Burnham’s Leadership

Andy Burnham became Britain’s seventh Prime Minister since 2016 last week, acknowledging that his generation of politicians had “not been good enough” and promising to act as a “circuit breaker for Britain”.

Burnham says he wants to correct 40 years of failed politics, move beyond a model in which power and prosperity have been concentrated in London and the South East and demonstrate that government can once again make a visible difference to people’s lives. 

At the heart of this governing project is devolution, moving power out of Whitehall to create “good growth in every postcode”.

No. 10 North is intended to be much more than a symbolic second headquarters in Manchester. Burnham has described it as the engine room of devolution and a new “situation room” for growth, bringing mayors, ministers and Whitehall departments together to overcome institutional blockages and make decisions more quickly.

Strategic responsibility for devolution and local growth is being brought into No. 10 North from MHCLG and the Treasury. This places regional growth at the centre of government directly answerable to the Prime Minister, reducing the ability of individual departments to treat devolution as somebody else’s responsibility.

Yet Burnham is not proposing a retreating or passive central state. Alongside devolution, he is asserting the power of national government through a series of highly visible interventions intended to “bring back hope” and give people immediate “breathing space” on the cost of living.

These include the restoration of the £2 bus fare cap, the removal of VAT from domestic electricity bills and business-rate relief for pubs, social clubs and live-music venues. His proposed National Care Service is a longer-term expression of the same belief in a more active and preventative state.

Burnham’s model is therefore not simply about transferring responsibility downwards. It combines stronger local and regional government with an active central state setting national priorities and intervening where markets or institutions are failing.

Devolution now has greater financial substance

The Cabinet Office’s Rewiring the State programme has provided more detail about how this model is intended to work. Regional mayors are expected to receive a share of income-tax receipts from 2028, alongside a greater financial interest in locally generated business-rate growth. This is not yet a power for English mayors to set their own income-tax rates. It is intended to give regional administrations a more direct financial stake in expanding employment, wages and economic activity.

Mayors are also promised a stronger role in coordinating housing, transport, local energy, skills, innovation and cultural investment. National bodies will increasingly be expected to align their activities with agreed regional priorities rather than operating through disconnected Whitehall programmes. These are potentially profound changes that would allow regional leaders to direct many of the policies that determine where and how growth and development can happen.

Additional powers will bring additional responsibilities. Mayoral authorities will be expected to produce regional growth strategies aligned with national priorities. The English Devolution and Community Empowerment Act strengthens the framework for mayoral powers over strategic planning, housing and regeneration, although its provisions apply differently to London’s existing settlement.

This approach is particularly relevant for housebuilding. Burnham has promised to build more council homes and to treat secure, affordable housing as part of a preventative state: reducing homelessness, improving health and easing the long-term pressure on welfare and other public services.

Angela Rayner has been re-appointed as the Secretary of State for Housing, Communities and Local Government to deliver that agenda. She has confirmed that the Government’s target of 1.5m homes during this Parliament remains in place, whilst acknowledging it will be extremely difficult to meet. Rayner’s message remains that local communities should have a meaningful say over how development takes place, but not whether the homes the country needs are built. The pressure to deliver will intensify.

Matthew Pennycook’s continuation as Housing Minister reinforces the message that the Government does not intend to row back on its planning reforms. Mandatory housing targets, intervention in areas without up-to-date local plans, brownfield development and selective grey-belt release all remain part of the direction of travel.

These will involve difficult decisions. They will test Burnham’s popularity, the Labour Party’s internal discipline and the practical limits of devolution. One of the first such tests is already sitting on the Government’s desk.

London plans for only two-thirds of its assessed housing need

Four days before Burnham became Prime Minister, Sadiq Khan published the draft London Plan. Described by the Mayor as a blueprint for a “fairer, greener and more prosperous London”, the plan proposes to build 558,000 homes during the decade to 2037.

That is 292,000 fewer homes than the 850,000 the Government assesses London to need over the same period. In other words, the draft Plan provides for just under two-thirds of assessed need and falls approximately 34% below the national figure. This is not a minor disagreement over methodology. It is a direct challenge to the proposition that nationally assessed housing requirements are mandatory.

City Hall’s explanation is that 850,000 homes are not currently deliverable. The Mayor and his Deputy Mayor for Planning, Jules Pipe, argue that even the lower target of 558,000 homes would require a substantial recovery in the development market, increased affordable-housing grant and major investment in transport infrastructure.

The Mayor has cited a “perfect storm” of high interest rates, rising construction and material costs, skills shortages, the continuing effects of Brexit and the pandemic, and serious viability problems across the development sector.

City Hall is right about the scale of the immediate challenge. London delivered around 32,700 net additional homes in 2024–25. Reaching 55,800 homes a year would therefore require a substantial increase from recent delivery. Reaching 85,000 would require output to increase to more than two and a half times the latest annual figure.

It is also true that planning targets alone do not build homes. Development requires viable land transactions, finance, builders, buyers, affordable housing subsidy and adequate transport and social infrastructure.

However, the Plan does more than acknowledge practical delivery constraints. It effectively asks the Government to accept that assessed need can be deferred because the conditions required to meet it do not presently exist, even after 8 years of Khan’s mayoralty.

That raises an obvious question: if London can plan for 34% fewer homes because its requirement is considered undeliverable, why should other authorities not make the same case?

Burnham’s answer now appears to be that places should receive more control over the policies and resources needed to deliver growth. In turn, local leaders will also be expected to take greater responsibility for the results.

In Part 2, I will examine how City Hall’s own policies have contributed to the viability crisis and why Manchester provides Burnham with a very different model of development.