A Budget for a Post-COVID Economy
Every year we Economic Development Officers sit and watch the budget statement and/or Comprehensive Spending Review and pick out some of the priorities for our profession and the economies that we support. This year I had the pleasure of doing so whilst the dog barked at the window cleaner and a plumber noisily installed a replacement shower unit. But enough about the joys of working from home in Lincolnshire, what were the highlights that occurred to me in the budget statement ?
Firstly, I was struck by policy shifts. As with every budget, some of the debate will be focused on what’s new money and what is existing pledges and indeed when the funding will become available. In a way I don’t think that debate matters as much as the overall policy direction, and the date of 2022 when the OBR estimate we will have returned to pre-Covid (but not pre-Brexit) levels was a bit of a surprise to me.
So, for example, as a supporter of the Further Education sector I was delighted to see a recognition of the need for investment. FE Colleges provide vocational skills that are critical to our local economies, and are often major employers in the towns where they are located. Let’s hope that the budget is the start of a sustained investment in the FE sector. Will these investments be enough to move us to The Chancellor’s intended high wage low immigration economy? Let’s see, but I do think that our profession will have an important role to play in that transition.
Secondly, the investment in transport for mayoral combined authority areas was instructive for two reasons. Firstly, the emphasis on Combined Authority areas could give a clear indication of the direction of travel if and when we see the Levelling Up white paper, and secondly a recognition that a properly functioning public transport system is essential for successful city economies. Within CEDOS, we represent city and rural areas, and I would hope that in the longer term similar levels of investment in public transport in our rural areas can be made. Hopefully some of the DWP training programmes that have recently been repurposed to deliver driver training can be extended into the future to overcome any long term recruitment pressures in that sector.
Thirdly, it’s been interesting to see the government’s approach to business support. Are we likely to see reductions to BEIS’s business support programmes? I don’t know, but it does feel as though there is some duplication in the various programmes that now exist: Scale-Up, Help to Grow, Peer Networks, etc. Maybe this will be an area where we get more detail Post LEP Review.
It’s interesting to see a couple of smaller announcements within the budget which are directly relevant to economic development. An investment budget to attract foreign investor businesses to the country, and an increase to the British Business Bank’s budgets for Dragon’s Den type programmes. One of the challenges for us in the economic development community will be to build a strong relationship with the teams who are charged with delivering these programmes. It is important that they are properly connected to the local issues and opportunities that we know exist.
Fourthly, Levelling Up. In the days before the budget the new Secretary of State for Levelling Up, Housing, and Communities, Michael Gove, said that he felt that the Community Renewal Fund and Shared Prosperity Fund were not moving as quickly as he had hoped. Before I comment on the various funds associated with Levelling Up, it is notable that the budget has had a focus on raising people’s salaries: I do wonder if the Chancellor of the Exchequer expects that a market correction, with some government intervention, will keep price inflation in check. Otherwise any benefits accrued will be quickly eroded.
A total of £1.7bn of the previously announced £4bn of Levelling Up Fund (LUF) has now been allocated, and the Chancellor spoke about ramping up the UK Shared Prosperity Fund to match EU grant receipts (note the use of the words “ramp up”). I’d be interested to hear from CEDOS colleagues about the distribution of LUF schemes in their area, certainly here in Lincolnshire no Town Deal areas also received LUF which felt like a recognition that last year’s Tier 1, 2, and 3 categories were a very blunt instrument. Clearly there will be more detail in the coming days and weeks, but hopefully the budget has kick-started some of the UK SPF processes which our profession has been waiting for. It will be important for us to play a strong role in shaping UK SPF, I noted in the budget paperwork that the national numeracy programme that was announced yesterday has been top sliced from the UK SPF.
Fifthly, there were a few smaller announcements that I would identify as really important. Lorry park facility improvements which will make the freight sector more attractive, extended childcare which can overcome a key barrier to employment, mentions of broadband which I hope will lead to BDUK’s procurement programme in hard to reach areas being accelerated, and much more regular re-evaluation of business rates. Clearly all of these are opportunities if government bodies and the economic development community can work together to deliver them.
Sixth, the 50% business rate discount for retail and hospitality and the draught relief tax support for pubs will be greatly welcome and necessary for that sector. They have struggled significantly through the adjustments to the high street and subsequently through COVID. For those of us working in local government, we’ll hope that there is a subsequent payment to local government to make up for the reduction in business rates being paid to the Exchequer and subsequently to councils.
Finally, what was missing……? Three words: Community Renewal Fund. Will it become a revenue programme that provides a bridge to UK SPF, potentially with a longer timespan, or simply a figment of our collective memories?? Some of the announcements came with target dates that are still two or three years away and they depend upon the OBR’s growth projections. And I was expecting to see more on helping businesses to automate and innovate, the £20bn Research and Development budget in addition to R&D tax relief goes part way but does it go far enough? And the week before COP starts, the financial support necessary for businesses to go green was modest to say the least. Only time will tell.
But ultimately, for economic development professionals this budget creates a policy shift that makes our profession very relevant for the years to come.
Justin Brown, Assistant Director – Growth, Lincolnshire County Council and Chair of CEDOS