Why the Autumn Budget 2021 will fail to deliver on Levelling-Up and Net Zero

PROCOL UK Europe

Professor Henrietta L. Moore

15 November 2021

The Autumn Budget delivered in the last week of October failed to make significant headway and investments towards ‘Levelling-Up’ and achieving the UK’s Net Zero commitments. By focusing too much on GDP and growth, the Budget fell short of the real reform needed to address the urgent and most pressing challenges of the 21st century.

While the Chancellor spent a considerable amount of time reforming alcohol duty and business rates, he missed the opportunity to modernise the UK’s taxation system to reach Net Zero. A bold announcement on tax reform would have given the Prime Minister and COP26 President Alok Sharma the impetus they arguably needed ahead of the Glasgow summit.

Meeting the UK’s Net Zero commitments will require a properly funded levelling-up programme, not tinkering around the edges with beer and passenger duties. The UK should have been creating and leading the agenda for COP26 through reforms that will generate public support for a fairer transition to address the urgent challenges of the 21st century in ways that build social solidarity and reciprocity.

Unfortunately, the Government is still focusing on GDP and growth. In his budget speech, the Chancellor mentioned ‘prosperity’ a modest total of three times, ‘GDP’ was referred to eight times, ‘growth’ was stated twelve times, while ‘climate change’ was remarkably not mentioned at all. We will not achieve a “post-Covid” era with the “Prime Minister’s economy of higher wages, higher skills, and rising productivity” if we continue to ignore what prosperity means for citizens and communities, but also if we exclude them from policy-making processes and exacerbate the ‘democratic deficit’ through a lack of collaboration in policy formulation. Here at the IGP, our citizen science initiatives such as the recent launch of a Citizen Science Academy, the Good Life Euston project and our previous work in east London demonstrate how citizens can actively shape place-based policy-making and social action.

At the same time, some aspects of the Budget are welcomed such as new funding for local government equating to £4.8bn in the next three years and a rise in the National Living Wage. This will help local government who understand the fabric of their communities best, to tackle the deep-seated inequalities and implement the necessary interventions to transform the pockets of destitution and deprivation in their respective areas to thriving, prosperous places.

Empowering local government and greater devolution that is enacted as progressive localism would help to shift the focus of the levelling-up agenda to deliver what is best for society rather than for boosting economic growth figures. Only then the poorest, left-behind communities will start to benefit. By opening new spaces for action on place-based prosperity through understanding what secure livelihoods means to people, we can fundamentally shift not only the spheres within which local government operates, but the way the economy is understood. Localising funding is a step in the right direction as it gives local government the powers and resources to meet the needs of their communities.

The OBR forecasts growth to reach 6.5% and 6% in 2021 and 2022 respectively, yet the UK economy will face low growth in the next three years that follow. In any case, these figures will be meaningless to the people in left-behind communities and neighbourhoods if it does not tackle the barriers to their prosperity that they themselves identify. Levelling-up must be local and citizen-led. This is not just what the IGP is calling for but what people in priority areas for levelling-up are saying. The Law Family Commission on Civil Society had commissioned some polling that found two-thirds of people wanted levelling-up to be led locally.

Unleashing the “awesome power of opportunity” requires a new modern safety net that secures livelihoods, supports productivity and shares prosperity. The change in the Universal Credit taper rate is welcomed for our low-income families, in light of the rise in the cost of living, easing pressures on 1.9 million households according to Treasury figures. However, this is only a temporary solution and still leaves millions of people in a precarious position including those out of work. Our vision for 21st Century Universal Basic Services enables access to economic and civic participation for all through a shared infrastructure of public services which includes food, digital and transport. The UK’s “world class public services” must reflect the lived experiences of people in left behind communities. That means involving them in measuring local prosperity as well as, the approaches to improving it.

I am pleased that the Chancellor's statement mentioned that levelling-up requires investment in the "infrastructure of everyday life". Our citizen-led research in east London found that this infrastructure is known as ‘secure livelihoods’ which consists of the following factors: secure income and jobs; affordable and secure housing; having access to key public services; and inclusion in the economic and social life of a city including financial and digital inclusion. These are the foundations of prosperity that enable people to lead prosperous and fulfilling lives, not large-scale infrastructure projects. Clearly, we don't just need an "infrastructure revolution", we need a 'social infrastructure' revolution which has also been called for by the former Chief Economist of the Bank of England, Andy Haldane and The Law Family Commission on Civil Society , in order to properly level up the UK while bearing in mind the scale of the challenge in some areas.

The measure of whether - as the Chancellor said - “The Conservatives are the real party of public services”, will be the effectiveness of their policies to repair our public services, reach net zero and level up. “Its success will be measured not by the billions we spend but by the outcomes we achieve and the difference we make to people’s lives” says the Chancellor. The IGP’s citizen-led prosperity indices represents a clear measurement tool for citizens and communities to hold the Government to account as to whether they feel their quality of life have improved or not.

For all the Chancellors positive outlook, the current situation is and will be bleak for many households with one of the toughest winters approaching. The Governments ‘gold standard’ measure of prosperity, growth is estimated to be low from 2023 to 2026 with the impacts of Brexit outweighing that of the pandemic. Equally, higher taxes through the rise in National Insurance Contributions (NICs) which kicks in at the start of the new tax year, rising energy bills and prices fuelling higher inflation and cost of living will mean many households will not be sharing the same optimism as the Chancellor.

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