While the arrival of three proven vaccines may augur well for the UK’s battle against COVID, the outlook for the economy is the bleakest it has been in living memory.
During the single-year Spending Review, chancellor Rishi Sunak could not have been clearer when he said the ‘economic emergency has only just begun’ – and that his immediate priority ‘is to protect people’s lives and livelihoods’.
He unveiled a number of mostly well-trailed measures. These include a new infrastructure bank based in the north of England, a £4bn levelling up fund to which areas can bid for funding for local projects with ‘real impact’, a ‘refreshed’ Green Book to shift the bias away from investment in the South East and a UK Shared Prosperity Fund (UKSPF) that will reach around £1.5bn a year on average and would eventually ‘at least match current EU receipts’.
He announced a three-year £2.9m ‘Restart programme’ to help more than one million people out of work for more than a year to find employment. The settlement also included £1.6bn next year for the Kickstart scheme to provide a quarter of a million fully-funded six-month job placements for under-25s claiming out-of-work benefits.
Ahead of the Spending Review, the Centre for Progressive Policy (CPP) think-tank held a debate chaired by The MJ editor Heather Jameson to ask questions about what longer-term investment is needed to level up the country, and how to ‘reboot’ the Spending Review ‘away from a top-down technocratic exercise into an opportunity to frame a shared vision for building back better’.
One speaker, FutureGov CEO Dominic Campbell, said: ‘I think there’s a real question around what are we levelling up. Obviously it’s been geographically determined up until this point. Not viewing the economy as a system and actually trying to target it in that piecemeal way, whether it’s through funding or governance or political positioning feels like it isn’t necessarily a strategic play at the moment that any of us can feel is adding up to a national response to the future economy we’re striving towards.’
What worries him the most, he added, is capacity – within regional government, in private sector organisations looking to deliver regeneration and change, ‘but also in our communities around the skills base’.
He added: ‘Are we set up for this transition? Do we have the capacities and capabilities that we need in order to do place-shaping, to really grasp the opportunities of devolution – and equally do our communities have the support that they need in order to reskill and move forwards? My biggest fear in all of this is that we are under-baking our response and overbaking our aspirations, and risk falling in a gap directly between the two.’
Director of the CPP Charlotte Alldritt told the debate that work it has done shows that healthy life expectancy is ‘basically the ultimate proxy indicator for how inclusive a local economy is’.
She continued: ‘[Mayor] Andy Burham has done great things for Greater Manchester, but is still has one of the lowest levels of healthy life expectancy in the country. So that says to me that’s where I would be digging deeper.
‘The interplay between economic opportunity, economic outcomes and health is well known now. Our work shows that if leaders focus on that I think they will be doing the integration – that holistic, whole system, one public service, Total Place, call it what you will – approach, because so many aspects of our political and social infrastructure and our economic mechanism be it local or national will have to come into play. So that’s what I would be encouraging them to focus on.’
With the Spending Review out of the box, does she believe it will enable the country to emerge successfully out of a decade of austerity into a post-COVID future? She told The MJ she was ‘really quite underwhelmed by the speech’.
She pointed to ‘huge public borrowing figures and large public sector investment figures in “tackling COVID”, although it’s not clear quite where the boundaries between what constitutes public services spending on tackling COVID and then public services spending that would happen anyway and that should be happening anyway’.
There was ‘a potential that we’re actually going to decrease “non COVID” spending, whatever that means - spending on public services’.
Her conclusion was that the mini Budget was ‘light on intervention...it could have done a lot more’.
She added: ‘If you compare the levelling up fund, the jobs package around Restart and all of that – that gets to just about £9bn. We spent £12bn on test and trace. It pales into insignificance in terms of order of magnitude.’
According to Ms Alldritt, in the case of the UKSPF, ‘there could have been a real opportunity to rebadge that as an inclusive recovery fund that was really linked to COVID, and you could legitimise all of that extra COVID spending if you’d thought about that longer term economic vision around how you’d channel that investment’.
And what’s her final verdict on the chancellor’s package of measures? ‘There’s no holistic strategic approach about how you’re going to get places out of this, as Mr Sunak said, economic emergency’.
