The tax reductions at the heart of the government’s pro-growth agenda have undermined the country’s economic stability. This morning (17 October) Jeremy Hunt, who took over Kwasi Kwarteng as Chancellor last week, made it clear that cuts to public spending remain on the table as he confirmed that “all departments will need to re-double their efforts to find savings”. Last week the government failed to top up public services to take account of soaring inflation, equivalent to an £18 billion real-terms cut. Welfare is expected to be squeezed too; the Home Secretary, Suella Braverman, has claimed that there is an endemic “Benefits Street culture” in Britain.
Across the board public services are on their knees, yet the government’s approach to growth is blind to the crisis engulfing local government.
The mini-Budget last month caused rapid rises interest rates. Inflation in contracts is paralysing regeneration schemes across Britain’s town centres, with Barnsley Council reviewing its entire capital programme. There is a bitter irony in the government’s ambition to speed up major infrastructure projects, outlined in its Growth Plan, while it is forcing local authorities to pause, scale back or scrap their own.
Services are under threat. In Devon transport provision for people with special educational needs is under review, and there are proposals to scrap free public transport for young people in Edinburgh. Edinburgh Council only introduced the service in January, but now it is forecasting a £63m deficit by the end of this financial year.
Voluntary redundancies are also in the pipeline, despite the total local government workforce falling by 31 per cent since 2010; at Havering Council 51 employees are heading for the door. Local authorities are aware this approach is short-sighted, but they have little choice if they are to meet their legal obligation to balance their books. Redundancies will hollow out the sector further, depriving authorities of the expertise necessary to provide essential services.
Is this really the pro-growth agenda the government envisions? Without access to good-quality social care families will be forced to step in where local government cannot. More will have to put their lives on hold to join the legion of unpaid carers. Emergency services will be put under further strain as a result.
Scrapping public transport incentives for young people not only makes commuting more expensive, but risks pricing out those on the lowest incomes in training or education. Indebted families are at greater risk of homelessness if debt and money management services are scaled back, as the District Councils’ Network has suggested. The economy will suffer, and so too will our social fabric. The engines of growth are multiple in kind. Boris Johnson, for his faults, understood this. The levelling up white paper signalled a broader approach to economic growth than the narrow focus of tax cutting.
[See also: How long can Liz Truss survive?]
The evidence is clear. Recent history suggests that too much fiscal restraint has negative consequences on productivity in the medium-term, can lead to slow recovery post-crisis and makes countries less attractive destinations for businesses to invest in. Research from the University of Glasgow published last week also found that significantly higher mortality rates in the last decade were a result of “austerity-related health effects”. The risk was most acute for men and women living in areas with high levels of deprivation. Scaling back public services and exacerbating inequalities go together.
Growth need not be a dirty word, but it need not require hollowing out the services our communities depend on either. And there are alternative visions for tackling sluggish economic growth.
Take the levelling up white paper’s emphasis on boosting health, civic pride and well-being. A report by the Bennett Institute for Public Policy this summer highlighted the relationship between our social and economic fabrics. Public spaces and the interactions that take place within them foster social capital, trust and participation which can help to create the “seed capital” for economic growth.
Protecting libraries, regenerating high streets and promoting heritage requires the government to invest more, not less. This brand of economic growth goes by various names, but the principles which underpin it are the same. It’s a vision that puts communities at the centre of growth, enabled by local authorities. It appeals to sections of the Conservative Party and thoughtful work on “social capitalism” led by the MP Danny Kruger is noteworthy in this respect.
Access to the same local spaces that are at risk of closing their doors can insulate communities – quite literally, given that some have been given over to warm banks – from the economic troubles of this winter. That cannot happen if local authorities are forced to shut up shop and it’s why the Bennett Institute is calling for a Universal Basic Infrastructure that sets out an agreed minimum standard for public services.
Though the government has articulated a vision for growth, growth, growth, the way to achieve it is less certain. The principle of a local government that is well resourced and that supports the social and economic fabrics of its communities has been vacated by the government over the last fortnight. It’s a principle that promotes growth and should be reclaimed. The alternative is a “new era of permanent austerity”.
[See also: Liz Truss is a morbid symptom of British capitalism’s long crisis]
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