COMMENT The government’s domestic agenda has largely been on ice while resources have been trained on the immediate task of dealing with the economic, social and health impacts of the pandemic.
Thinking on climate change, R&D spending, planning reforms, devolution and energy has been in the slow lane and last autumn’s Budget was largely a further batch of sticking plasters for a battered economy.
It’s easy to see why, on balance, I feel the chancellor has done well to keep UK plc afloat during its most challenging period in centuries. But on 3 March we need to start thawing out the economy, and as well as continuing support through the immediate recovery we need to focus on a long-term strategic domestic agenda. Rishi Sunak must resist the temptation to kick the can down the road until October.
This does not come from a sense of renewed optimism, we have all probably been burnt by that this past year. (Though we should be hugely encouraged by the progress of the vaccine roll-out). Instead, it is precisely because of the profound impact of the pandemic on both the economy and society that we need to begin the long-term work of healing its scars now.
A warning to the government
Legal & General’s recent forecast of a possible “K-shaped” recovery is a warning to the government that it will find itself even further behind in its mission to level-up the UK’s regions before it has truly begun. No doubt that with an election due within three years, the government will want to deliver tangible evidence of this pledge that voters can see, such as transport infrastructure. This would be very welcome, especially given the fears that it is rowing back on some projects, such as HS2. But if it is serious about levelling up and creating a legacy beyond 2024 then it will also need to commit to tackling the much deeper roots of inequality in our society. In this sense, levelling up is not the North or Midlands versus London but a much more nuanced understanding of the consequences of economic inequality on health and educational aspirations.
A woman living in Manchester’s affluent suburb of Didsbury has a life expectancy of 81, but in Rochdale in Greater Manchester – just 17 miles away – this falls to 74. Even within London, which in the narrow discourse of levelling up is treated as a homogeneous land of plenty, the same inequalities exist across the city.
We have seen the impact of the UK’s poor public health, poor housing and poor working conditions combine to contribute to our staggering death toll from the pandemic. In research commissioned by United City, the Manchester business-led group focused on a safe economic recovery, the stark relationship between deprivation and the worst impacts of Covid were laid bare. Meanwhile, the closure of schools is likely to turn the gap between rich and poor children into a chasm.
This toxic mix of poverty, poor health and housing and educational inequality won’t be fixed merely by transport spending. And the high-value jobs the UK aims to create won’t have a workforce capable of delivering them – and especially not in the areas where we need them most.
It is our hope that the government will back up its encouraging rhetoric around supporting key growth sectors – such as life sciences and technology – in this Budget. We have been teased with pledges of new programmes to fund promising start-ups, something akin to a state-backed VC fund, as well as a UK-version of ARPA – the US institution credited with the development of transformational innovations such as the foundations of the internet.
Our spending on R&D is a drop in the ocean compared to other advanced economies. It is 40% less than in South Korea as a proportion of GDP and the government acknowledges this needs to increase.
Keep the chequebook out
If we are truly serious about building on Britain’s leadership position in science and technology, to secure all the economic benefits this creates, then the chancellor will need to keep his chequebook out for a bit longer yet. And it will also mean thinking more boldly about how to invest in innovation to ensure it reaches right into communities across the North and Midlands – creating rich ecosystems that connect the excellence of our universities to our industrial and manufacturing base and ensure people have the skills to take up the hundreds of thousands of jobs that could be created.
If this can be backed up by a proper attempt to tackle inequality over the long-term, then you have the foundations for a prosperous economy for all.
The chancellor pleasantly surprised many with his bold approach to tackling the pandemic in its early days. A little of that same spirit would be very welcome as we look towards the recovery too.
Jessica Bowles is director of strategy at Bruntwood
