IPPR reacts to the Chancellor’s mini budget

9 Jul 2020 09:59 AM

Progressive think tank warns that this is ‘more of a cut price deal than a new deal’

Following Chancellor Rishi Sunak’s ‘mini budget’ statement in the House of Commons, the Institute for Public Policy Research reacts to the major announcements and warns that despite some big steps in the right direction, more investment will likely be needed.

Carys Roberts, IPPR Executive Director, said:

“The Chancellor has listened to calls to invest in young people and in green homes. But as a package, this was more of a cut-price deal than a new deal. 

"We're facing a deep and uncertain recession that could leave 1 in 10 unemployed by the end of the year. But yesterday's announcements fall far short of the investment needed to both protect viable businesses and create new jobs. 

"The Chancellor also made some strange choices in his priorities. His £3.8 billion stamp duty holiday is good news for estate agents and homeowners looking to move, but will push up prices and amounts to more than all the support announced for young people today. 

“So too, £10 off a meal out will not turn around the fortunes of the economy and could have been spent ensuring families have enough to put food on the table by giving proper support to those who need it most. 

"We cannot muddle through the deepest economic recession in living memory, hoping at best to return to normal. The government needed to set out a plan to boost spending, protect jobs, and build the economy of the future. Instead, this was a mini-budget in every sense."

Sarah Longlands, IPPR North Director,  said:

"I welcome the Chancellors announcements particularly his focus on jobs which will be crucial for the many businesses across the North who are struggling at the current time. But given that we have one of the most centralised Government's in the developed world, I fear that he has too much confidence in the power of Whitehall to deliver this plan.

"Covid-19 has shown us the real value of devolved and local authorities working hard to support their communities. The Chancellor must now commit to working in partnership with them to deliver the economic recovery.

"Getting our economy back up and running cannot be achieved from Whitehall alone. The Chancellor talked about the value of endurance. In the North and across the regions of England, businesses, communities and local councils have had to endure years of centralised decision making, which has seen them become poorer, sicker and with fewer job opportunities. They have had to endure ten years of austerity which has seen the most vulnerable in society, our children, those living with disabilities and older people in care disproportionately affected".

Russell Gunson, Director of IPPR Scotland, said:

"It's disappointing that the amount of money spent on reducing stamp duty in England is more than the increases in spending proposed to tackle youth unemployment.

"When the Scottish Parliament decides its priorities we hope to see different choices that focus spending on the poorest and those most at risk of unemployment, rather than subsidies to those who can afford to own their own home.

"The new Kickstart Scheme is welcome and something we've called for in our own work. The damage that youth unemployment can do to young people and our economy means we must do everything we can to avoid it. But it's important that the Kickstart scheme provides local flexibility so that Scotland can make sure the scheme operates in line with fair work, offering fair pay and good quality jobs, fully linked into Scotland's education and skills system".

Luke Murphy, IPPR Associate Director and head of the Environmental Justice Commission, said:

On climate, energy and infrastructure:

“The confirmation of the investment in home energy efficiency is welcome but overall what the Chancellor announced falls well short of what’s needed with nothing of substance announced for sustainable public transport, nature schemes such as tree planting or low-carbon heat.

“The announcements yesterday will neither deliver the green recovery or the job creation that the UK desperately needs.”

On housing:  

“Time and again on housing, the government reaches for the wrong policies with the wrong priorities. The stamp duty holiday sounds positive but in reality, it will benefit existing homeowners the most as they benefit from higher prices.

“This policy will not build a single additional affordable home. These changes, combined with the loosening of planning restrictions which the government has announced, will do nothing to deliver the high-quality, secure and affordable homes that the country needs.”

On building a Green Recovery, IPPR North Research Fellow, Jack Hunter, said:             

"The Chancellor is right to highlight the importance of green jobs to the economy, but to create a long-term and sustainable recovery, he must do much, much more than what was announced yesterday.

"We need to see much higher levels of investment in green jobs, and we need funding devolved to local authorities who know their areas best.

"We need to put a Plan for Nature in the North of England at the heart of the post Covid-19 North, led by the North, with a £50bn investment from government. Unfortunately, these announcements fell some way short of this".

Clare McNeil, IPPR Associate Director who heads its Work and the Welfare State team, said:

On jobs:

“The £9.4bn 'job retention bonus' is a halfway house reform - not a proper wage subsidy and not enough to persuade an employer keep someone in work for six months if they are in financial distress. Instead the Job Retention Scheme should be reformed and extended to promote part-time working.

On Kickstart:

“It’s a very welcome first step. But we needed more measures to keep under-18 school leavers in education or training -  for example, the government could have extended maintenance support loans into FE to incentivise more young people to go to college rather than try to get a job, and could reform Universal Credit to encourage this.

“IPPR has called for £1.9bn to go into the apprenticeship levy fund and to subsidise the wages of apprentices. What the government has committed to apprenticeships is a fraction of this, which is disappointing given the strong evidence for their value in keeping young people 'earning and learning'.”

On the Chancellor's plans to "protect, retain and support jobs", IPPR North Researcher, Marcus Johns, said:             

"Aspects of the Chancellor's plans for jobs are welcome, including a focus on young people whose prospects have been hit hard. Decent work must be prioritised in economic policy and we heard some recognition of this. However, decent work is more than a soundbite. It requires real substance, including living wages and sustainable, secure employment for all workers.

"Wages, employment opportunities, and job quality are not experienced equally around the country. It is disappointing that the Chancellor claims to be 'doubling down on levelling up' in this speech, but announces one-size-fits-all national schemes which do not consider the different circumstances of the different communities across the country."

On the Chancellor's plans to "level up" the country, IPPR North Senior Research Fellow, Anna Round, said:             

"The Chancellor's focus on skills and sectors mean this investment can make a difference in the long-term, as well as in response to the immediate crisis. For maximum impact local leadership is key. That's how to make the most of the opportunities our regions offer – and to address the local impacts of Covid-19.

"But building infrastructure is not enough to support all people across the UK. Our regional divides are among the worst in the developed world. On life expectancy and health, low pay and poverty, education and public services, as has been thrown into sharp relief during this pandemic, these deep inequalities have terrible economic and human consequences. They have undermined our social and community resilience, leaving the North dangerously unprepared for serious challenges like this pandemic. Only large-scale and long-term investment in people and places can secure the recovery the country needs."

NOTES TO EDITORS

  1. IPPR is the UK’s pre-eminent progressive think tank. With more than 40 staff in offices in London, Manchester, Newcastle and Edinburgh, IPPR is the UK’s only national think tank with a truly national presence. www.ippr.org

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