‘Growth in every postcode’, ‘levelling up’ – whatever you call it, it is easier to sympathise with the general aim of raising living standards in downtrodden areas to match those in better-off places than it is to come up with workable policies to achieve it. I really wonder if Andy Burnham has thought through his big idea for the geographical equalisation of wealth, because at first sight it appears as if he is creating an engine to achieve the exact opposite.

Besides aiming to transfer power and responsibility from Whitehall to the regions, the Prime Minister will announce today that he intends to change the tax system so that mayors of local authorities get to keep a share of income tax and business rates revenues raised in their areas. The idea is that ‘communities directly benefit when their economy grows’. We will have to wait for the Budget for further details but today’s proposals make it clear that councils won’t be granted the right to vary rates of income tax or business rates – as the Scottish government has. But the public money which will be advanced to them in future will come less in the form of grants and more in the form of a share of tax revenues.

Whatever policies you dream up, they are going to have to work against a very strong tide of human instinct

There is something to be said for this system. It ought to make councils more business-friendly, as they will benefit financially from businesses relocating to their areas. They will also have an interest in attracting jobs and wealthy individuals to live within their boundaries. But how does it help to equalise wealth between council areas? If you are going to reward councils which attract businesses and high taxpayers, the corollary is that you will end up punishing councils which fail to attract them. If your town loses a major employer – which may be no fault of the council but purely down to wider economic forces – then you will receive lower revenue, which means less money to invest in, say, a new business park or a new road. That, in turn, could make it harder to attract new businesses to relocate to your area.

Surely, the whole point of pooling business rates revenue was to try to help struggling areas. It meant that revenue collected from City banks could be redistributed to declining industrial areas. Burnham now seems to want to dismantle that system and replace it with one which will benefit the City and diminish the coffers of areas in decline. Maybe the system will be tweaked so that this doesn’t happen, but in that case the policy will be meaningless. You simply can’t have a system of distributing public funds which benefits areas of growth without it causing relative poverty to places which are not economically doing well.

I do wonder whether the whole aim of trying to level-up areas is not doomed from the start. Whatever policies you dream up, they are going to have to work against a very strong tide of human instinct. Successful people and successful businesses tend to want to gather in the same places. If a town starts to attract wealthy, aspirational people, others are likely to follow. Conversely, if an area starts to decline, people who can leave will. You get once-in-generation shifts as decaying places suddenly start to attract gentrification, but it tends to happen in places which are particularly well-located.

Burnham must know this more than anyone, as a gulf has opened up between the wealthy centre of Manchester and some of the dowdier parts of the conurbation which surround it. If you want to try to level up, say, Oldham, good luck. But in office, Burnham continued to pour money into Manchester city centre in the form of grants to private developers. Within Manchester, he fuelled the inequality between its constituent parts. I can’t see him achieving a much different outcome for the rest of the country.