The Chancellor delivered his Spending Review speech against a grim economic outlook. The Office of Budgetary Responsibility (OBR) forecasts show that GDP will shrink by up to 11.3% in 2020, as we experience the deepest recession for 300 years. Unemployment is due to rise to a peak of 7.5% – or 2.6million people – in the second quarter of next year.
Protecting people’s lives and livelihoods during the pandemic has required an unprecedented public spending package (with an additional £55bn allocated to tackle the virus next year). The Chancellor used his speech to warn of the long-term scarring to our economy.
Some key areas of public spending were curtailed which will have a huge impact on peoples’ lives. Public sector pay increases are being paused (with the exception of NHS workers) amounting to a real term pay cut for many in the public sector. The £20 uplift to Universal Credit introduced in March to provide vital extra cash is being reversed from spring next year, despite the fact that these households will be struggling still.
International Aid is also being cut to 0.5% of GDP, against the opposition of many in parliament and international development charities. We have signed this statement to #SaveUKAid
Levelling Up Fund
There were also massive public spending commitments to some public services and infrastructure, including a £100bn capital spending programme. One potentially significant announcement was for a £4bn Levelling Up Fund, with the Chancellor saying that “for many people, the most powerful barometer of economic success is the change they see and the pride they feel in the places they call home”.
The £4bn Fund could be an opportunity for the government to match its rhetoric on ‘left behind places’ with hard investment. But we are concerned that this Fund looks set to be a Whitehall controlled pot, which won’t actually hand the reins to communities and local governments themselves to determine the best investment needed for their places to thrive.
UK Shared Prosperity Fund
The Spending Review contained some details on the UK Shared Prosperity Fund – but still more questions than answers in terms of how it is going to be structured and rolled out. Some positive indications however that the SPF will include investment in community assets within its priorities, which have the potential to drive forward local community economic development.
A notable omission however in the Spending Review was the Community Ownership Fund – which was committed to in the Conservative Party Manifesto, but has now been significantly delayed.
You can also download our full member briefing (.pdf) with all you need to know about the Spending Review, the impact on Locality members and communities.
The full implications of the spending review are still being digested, and many of the announcements are waiting for further detail. Locality’s policy team will keep you updated in the weeks and months ahead.
In particular we will be scrutinising the details of the Levelling Up Fund and UK Shared Prosperity Fund as they are announced, and continuing to make the case for putting Communities in Charge.
If you have any questions or comments about this briefing, you can get in touch with firstname.lastname@example.org