In tomorrow's Budget, the Chancellor and the government will rightly want to lay out how the economy deals with COVID-19 (Coronavirus). On that specific point, we at the Centre For Towns have produced extensive research showing the geographical distribution of an ageing population (towns getting older, cities getting younger). So, given that we know older people are most at risk from COVID-19, the issue of geography is likely to be important. That said, dealing with COVID-19 is obviously a priority for the Chancellor and the country and we hope the issue is covered well and in detail.
This is the first Budget since the government won a significant majority at the general election in December. In almost every post-war election where the winning party has won a majority, the incoming government has more often than not used that majority to deliver.....significant tax rises. Given the government's own fiscal rules, and the billions already committed in previous Budget's, the Chancellor certainly has less room to splash the cash. That said, it will be interesting to note the over-arching strategy behind this Budget.
There has obviously been much discussion about "levelling up"; short-hand for reducing inequality between the regions of England. The government have made this an obvious priority, and given the seats they won from Labour in the Midlands and North the Chancellor will want to demonstrate the government's intent. There are a number of ways the government is either already committed to this strategy, and some new one's which the Chancellor could announce tomorrow.
The Conservative manifesto promised £100 billion in additional infrastructure spending. We should expect to see some of this money being committed tomorrow, although the National Infrastructure Strategy has again been delayed - it was originally slated to be announced alongside the Budget. So it remains to be seen what the government will announce, if anything. There are a number of projects the government could signal further support for: Crossrail for the North; Northern Powerhouse Rail; Midlands Rail Hub; East Anglian and South West rail; roads and potholes; restoring the Beeching lines; further announcements related to the National Bus Strategy.
Clearly, we're supportive of efforts to re-balance the economy so that all our regions and nations receive adequate investment. However, we are as concerned about emerging within-region inequalities. Last week for example, household incomes data revealed increases in incomes for many of our cities and largest towns and decreases in smaller towns, ex-industrial towns and coastal towns. New Conservative MPs in seats like Leigh, Grimsby and Workington should be concerned about how their nearest cities tend to be doing better than their towns are. We want cities AND towns to do well. However, we worry that addressing regional inequality will simply mean our regional cities are expected to do all the lifting whilst surrounding towns flatline.
Another key part of the Conservative and Labour manifesto's was their commitment to skills training. In our work with Ernst & Young looking at the foreign investment, it was clear that investors value access to a skilled local workforce. However, for example, the digital sector is still far too dominated by London and the South East. These "jobs of the future" don't appear to be growing in many of our towns. We recognise the government's wish to do something about skills training, but it can start by recognizing the geographical imbalances in many of the higher skilled tech jobs it wants to create.
It seems clear that the Chancellor will announce a review of the Treasury Green Book tomorrow. The Green Book uses Benefit Cost Ratios (BCRs), amongst other things, to calculate the viability of infrastructure investments. The calculation has been criticized by economists and metro mayors for favouring those places where development has already happened. In other words, in cities like London, it's easier for the criteria to be met and thus the investment to be authorized. In addition, even when BCRs have appeared to suggest the investment should take place, on occasion the investment has still not happened. As Coyle and Sensier (2020) stated, the government's contribution to an OECD report on regional inequality was telling. In it they said "the productivity and growth performance of lagging regions can only be improved at the expense of the capital (London).” This is part of the problem. We intend to play a full part in discussions on the Green Book, and we do support this initiative. However, we think a review of the Green Book misses the point entirely
Instead, as we have forcefully stated over and over again, power and money should be devolved down to local communities so that they themselves can decide their own priorities. There are as many solutions to the challenges our towns face as there are towns themselves. The belief which appears to underlie the Green Book announcement is that power and money is going to continue to be held in the Treasury, but that they want to do a better job. Frankly, the Treasury have had decades to put this right and have failed. So, instead of continuing to hold on to the purse strings and deciding they know best, the government would surely be much better advised to build capacity at the local level so that money can be handed to them in confidence that it will be spent responsibly.
The government promised in its Manifesto to cut business rates for "live music venue's, pubs and cinema's". This is of course welcome, but we don't need to wait for the review of business rates to get cracking on more widespread business rate cuts. High streets in towns have been telling the government for the best part of a decade to deal with this. We will wait to hear what the Chancellor has to say but in short, our approach would be "Get on with it!". At the same time, we would very much like to see the government address the closures of bank branches, ATMS, and post offices. We want to see much more transparency regarding the decisions taken to close banks and post offices. What metrics are banks and post offices using? Do they stack up? It ought to be possible to open this up for public inspection, and to help banks and the Post Office make better decisions. These are vital community assets in towns, and closing one bank in a small town with a handful of banks is very different to closing one in a city with dozens of them.
So an interesting Budget for towns in many respects. We'll be looking for an over-arching strategy and hope the government gets it right. We're of course pleased that towns are getting the attentkion of all the political parties, so it's incumbent on all of us to work collaboratively where required whilst also challenging the status quo when appropriate.