Spending review: The chancellor has made some big promises – can he deliver?

By Luke Raikes | 01 December 2020

The chancellor’s ambition is laudable, says Luke Raikes, but it will take ‘time, massive investment and above all real devolution to see the difference’.

At last week’s Spending Review, the chancellor invited us to cast our minds forward, to the brighter future he promised to deliver for the country: ‘people want to be able to look around their towns and villages and say, yes: our community - this place - is better off than it was five years ago’. In doing so he has set himself a ‘levelling up’ test that, sadly, he is likely to fail.

People across the North, Midlands and South West of England are quite used to Westminster politicians popping up on the telly and making big promises about their region to a noisy House of Commons. And they’re quite used to pictures of government ministers on the front pages of local newspapers, standing in a muddy building site, in a Hi-Viz vest and a hardhat with bold words proclaiming thousands of jobs and millions of ‘new’ spending.

They’re also used to these promises being broken and, even if they are kept, seeing no improvement to their everyday life. Remember, we’ve heard about George Osborne’s Northern Powerhouse for six years now. While the new metro mayors and Transport for the North have been broadly successful, all central government has done is rebranded and recycled the same old funding pots.

But this chancellor’s promises, right now, look particularly ill-fated even by the usual standards – and it’s not just the pandemic and Brexit he has to worry about.

What ministers often forget is that they can’t just deliver their will from on high with a (still relatively small) pot of gold.

First, to actually see an improvement, these places need more money and more time. The German government invested €19bn in their lagging regions in 2018 alone, and they’ve invested more than 1.5 trillion over 30 years since reunification. This has made a difference – East Germany is now more prosperous than the North of England.

But the key ingredient that helps places adapt to economic change is exactly the opposite of the government’s current plans: devolution.

Predictably, the government doesn’t want to share credit for the big spending. That’s perhaps why, despite the devolution rhetoric, this government is centralising power with this Spending Review. The Treasury will hold the purse strings on the new £4 billion ‘levelling up’ fund.

This political gameplaying will come back to bite them. Central government simply can’t deliver the change they need without councils. They can’t command and control the high-streets of the ‘red wall’ from the Treasury, 200 miles away.

It is councils that actually do a lot of the legwork to bring forward the type of projects they want to fund. New train lines, bus routes, housing projects or high street development all need to be planned and delivered by highly-skilled professionals on the ground. Most people realise that councils deliver small but vital change to their local area. But councils also develop and plan some of the major infrastructure projects, ready to receive Treasury cash.

The people who do this work are the very people Conservative chancellors have spent the last 10 years making redundant by cutting council funding. This chancellor is trying to fill a bucket previous Tory chancellors have been busy riddling with holes.

The chancellor’s ambition is laudable. The towns that are struggling now can indeed prosper once again and similar places fare better in other countries.

But it will take time, massive investment and, above all, real devolution to see the difference. To date, the chancellor has shown he is unwilling to do what it takes.

So will people feel like their community is better off when they trudge to the polls in 2024? The chancellor has made some big promises. He has less than four years to deliver.

Luke Raikes is research director at the Fabian Society

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Local economies Devolution Spending Review Northern Powerhouse Coronavirus

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