Autumn Statement 2016: the local economic and people perspective
What does the Autumn Statement mean for local economies and people in our communities? Matthew Jackson, Deputy Chief Executive of CLES, explains…
The new Chancellor delivered much of what I anticipated in his first Autumn Statement:
- a realisation that financial and growth forecasts in the last Parliament were over-inflated;
- an understanding that national debt was on the rise;
- a commitment to continuing cuts detailed in the 2015 spending review across Government Departments and subsequently local government;
- some taxation and pay benefits for those in work;
- a shift in the taper rates for Universal Credit and a commitment for no further welfare savings;
- and a whole host of investment in infrastructure including housing and transport including already allocation Local Growth Fund monies.
All this macro level policy and financial change begs the question of what does the Autumn Statement mean for local economies and people in our communities? I would argue very little for three core reasons.
1. Misplaced faith in failed ‘trickle down’ economics persists
First, the investment in infrastructure will follow the tried and tested and failing economic model. Over the last 30 years infrastructure investment whether it be in transport, housing, or physical regeneration schemes has been undertaken with ‘trickle down’ economics in mind. Invest in a building or other pieces of infrastructure and the benefits will flow to communities – it does not work, as people in surrounding areas remain unemployed and low skilled, and local businesses and their supply chains do not benefit anywhere near the amount they should do.
2. Low wage workers continue to lose out
Second, the taxation and pay benefits for those in work do not go far enough. The increase of the National Living Wage to £7.50 per hour is significantly below the levels required to live comfortably and the Living Wage Foundation’s rates – over six million people who are in poverty have at least one member of their family in work. The changes also do not reflect the wider array of challenges people in work and on low pay face including uncertainty, zero hour contracts, and the scope for progression.
3. Changes to Universal Credit too little, too late
Third, whilst the changes to the Universal Credit taper rates and the plan for no further welfare savings are welcome, the damage has already been done. The introduction of Universal Credit, the work capability and disability assessments, the ‘bedroom tax’, and the Work Programme have all had profound effects on individuals, communities and organisations which look to provide support.
What CLES proposes
We need to change the economic model in the UK so that it brings greater benefits for local economies and communities.
- Infrastructure investment can no longer be undertaken with the sole view of economic growth in mind. Instead, it needs to be framed by places and deliver a ‘torrent’ of benefits including jobs, skills development, SME development and sustainability, and in a way that addresses environmental concerns.
- There is a need for a realisation that places already have an array of wealth in the form of anchor and other institutions. The key is understanding this wealth in the form of procurement and employee spend and asset and land ownership and harnessing the potential of that wealth for the benefit of local businesses and people. Realising this wealth potentially negates the need to follow a growth focused infrastructure and other form of investment approach.
- The mindset of business needs to shift so that they are not just contributors to the national economy in taxation terms and the local economy in employment terms; but instead citizens in the places in which they are based bringing an array of benefits for their employees through terms and conditions and for the wider place through support for the voluntary and community sector, for example.
The Autumn Statement 2016 was devoid of any focus upon supporting places to deliver greater benefit for their local economies and communities. I would argue that the time is ripe for places to plough their own furrow and harness their own potential without the intervention of Government.
Matthew Jackson is the Deputy Chief Executive of the Centre for Local Economic Strategies (CLES). This article was written for, and first appeared in, New Start magazine.