Measuring the Chancellor’s Spending Review against five key tests
#SR20 – @RishiSunak’s words ring hollow as less is spent on #LevellingUp, say the Joseph Rowntree Foundation (@jrf_uk)
The Chancellor used this Spending Review to stress that the economic emergency facing our country has only just begun. Public concern about poverty is rising. Yet this Spending Review lacked bold action to tackle the threat of a rising tide of poverty. Our analysis looks at the steps taken in the spending review and how they measure up to the challenges faced by the UK amid surging unemployment and an urgent need to level up the economy
3 Key Points:
- Our new modelling shows that if the lifeline of the £20 uplift to Universal Credit is whipped away in April, 6.2 million families will see an overnight loss of £1,040 next year and around half a million more people, including 200,000 children, will be pulled into poverty.
- Instead of levelling up, the Government’s failure to maintain spending on local growth at current levels means that weaker local economies will receive less money.
- The government’s new £2.9 billion Restart employment support programme is a significant intervention and recognises the economic and employment challenge facing the UK. But committing just £400m to the programme next year risks underinvesting in the early stages and the £375m adult skills announcement falls far short of the £600m a year the government promised at the 2019 general election.
Measuring the Spending Review against five tests, JRF ask has the Chancellor done enough to…
1. Give people on Universal Credit certainty about their income after April?
The Chancellor chose to stay silent on whether the temporary £20 uplift to Universal Credit – a lifeline for millions of people – will be whipped away in April. Our modelling shows that if it is, 6.2 million families will see an overnight loss of £1,040 next year and around half a million more people, including 200,000 children, will be pulled into poverty.
The Government also seems to have definitively decided not to help disabled people and carers on legacy benefits, meaning 1.6m families will continue to miss out.
The Government should do the right thing and make the uplift permanent. The Government should also extend this lifeline to people on legacy benefits who are currently excluded from this help.
People claiming these benefits are mainly sick or disabled people or carers, for whom heightened health risks, challenges associated with social distancing and loss of essential services has made life even more difficult.
2. Help the weakest economies to level up?
Instead of levelling up, the Government’s failure to maintain spending on local growth at current levels means that weaker local economies will receive less money. The problems faced by those areas have only worsened since the pandemic hit. But the people who live in these communities will now have to wait even longer to see improvements to their job prospects and standard of living.
The new UK Shared Prosperity Fund needed to at least match the £2.4bn a year provided up to now by the EU Structural Funds and UK Government match funding. However, we think a government committed to levelling up and supporting weaker economies to respond to the pandemic should double this amount.
We’ve called for the UKSPF to be worth £14bn over a three year spending review period. This should be administered locally via mayors, devolved administrations and local authorities.
3. Help the people who lose their jobs improve their skills to find work?
The £375m adult skills announcement falls far short of the £600m a year National Skills Fund the government promised at the 2019 general election. The government’s new £2.9 billion Restart employment support programme is a significant and welcome intervention at scale, and recognises the scale of the economic and employment challenge facing the UK in the months ahead. But committing just £400m to the programme next year risks underinvesting in the early stages.
The Government needed to come good on its manifesto commitment of a ‘right to retrain’ with a new deal for adult education which is properly funded, and to deliver on the ‘tailored and personalised’ employment support promised in the Plan for Jobs this Summer.
The Government’s lifelong learning commitment announced in September focused on level 3 qualifications, but there is a need to help people access funded level 2 qualifications as well. Employment support programmes must include targeted and personalised help for groups including BAME communities, disabled people, lone parents, long-term unemployed and adults with fewer formal qualifications.
4. Create sustainable, good quality jobs?
Government is pinning its job creation hopes on the £100bn capital investment programme, but without accompanied employment and skills support, jobs that are created will be out of reach for many people already in poverty or at risk of being pulled under. It is also unlikely that all of the investments will be as ‘jobs rich’ as the Government promises.
The Government should make sure that jobs created from government investment are secure, offer the flexibility for those with childcare responsibilities and crucially are directed towards those hit hardest by job losses, including the lowest paid, women, people with a work-limiting disability, young workers and some ethnic minorities.
It should invest in social care to create thousands of sustainable jobs paid the real living wage of £10.85 in London and £9.50 in other parts of the UK.
5. Keep housing costs under control?
Despite its positive rhetoric on ending homelessness, the Government plans to cut housing costs support, even though millions of renters are already worried about paying the rent over winter and many risk eviction.
No action was taken to invest in social housing to tackle homelessness, despite the cost of borrowing to do so being at a historic low.
To properly fix the housing crisis the government needed to increase the supply of social housing, with a particular focus on homes for social rent: 145,000 affordable homes a year (inc. 90,000 for social rent) for the next five years. This kind of investment would also act as a significant fiscal stimulus, kickstarting our post-Covid economic recovery and answers the government’s call for ‘shovel-ready’ projects.
The government must also take swift action to address the growing problem of rent arrears. Recent JRF polling found that 700,000 households are already behind on rent, with 2.5 million households worried about paying rent over the next three months. We need a watertight ban on evictions, together with targeted support for rent arrears, to prevent a surge of evictions in the spring.
The Chancellor’s word’s ring hollow as weaker local economies will be getting less money
Remarkably for a much-hyped statement on levelling up opportunity across the country, the Chancellor’s word’s ring hollow as weaker local economies will be getting less money than previously[1] in the aftermath of the pandemic.
The growing numbers of people in or at risk of being pulled into poverty in our country will have taken little solace from the plans laid out by the Chancellor today. The latest economic forecasts are stark and deeply troubling.
Behind the figures there are real families wondering how they will get through this winter and beyond. The Chancellor has not risen to the challenge facing the nation. In the here and now families need to know how they will pay for food, childcare and keep a roof over their heads.
The Chancellor has failed to live up to their manifesto commitment to invest significantly in skills around the UK[2] and allow the funds to be administered locally via mayors, devolved administrations and local authorities. The additional funding for employment support is eye catching and necessary because of the anticipated wave of long-term unemployment in the coming months.
There is mounting concern in the UK about tackling poverty and inequality[3], and the time to tackle these issues is now, as we recover from a crisis which has already hit the worst off hardest. This was a moment when the Chancellor could have taken action to solve poverty – instead many families will now be preparing for still harder times ahead.
The failure to guarantee that the government won’t cut the lifeline for people on Universal Credit
It is deeply disappointing that the Chancellor is leaving millions to wait out the winter in fear and uncertainty with no reassurance forthcoming that he would not cut Universal Credit as planned in April. There is no conceivable scenario in which this support will not be needed, and inaction risks a sharp rise in poverty.
The Government also seems to have definitively decided not to help disabled people and carers on legacy benefits who are now facing another year of higher costs and an even greater struggle to get work with no extra help.
It’s not too late for the Chancellor to do the right thing. We urge the Government in the strongest terms to correct its course and commit to making the £20 uplift permanent and extend it to legacy benefits at the earliest opportunity.
The Chancellor’s plans for housing
The decision to freeze help with housing costs risks pushing families into poverty and takes away the link to real rents when calculating uplifts. To properly fix the housing crisis the Chancellor could have committed to increase the supply of social housing, with a particular focus on homes for social rent over the next five years.
Helen Barnard, Director, Joseph Rowntree Foundation
References:
[1] The combined value of the Levelling Up Fund (£600m), UK Shared Prosperity Fund (£220m) and Local Growth Fund extensions for 2021-22 is less than the combined annual value of EU Structural Funds (£1.2bn) and the Local Growth Fund (£2bn).
[2] The Conservative’s 2019 General Election Manifesto committed to a National Skills Fund worth £600m per year. Today’s announcements only set out £375m for National Skills Fund in 2021/22.
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