Even without the coronavirus situation, this would have been one of the most remarkable Budgets in post-war history on the basis of its immediate political context as well as era-defining content.
Paradoxically, it is also a Budget that leaves precious little to political chance. Much of what was outlined in the course of the chancellor’s ‘get it done’ spiel has been parked to July’s Spending Review and a fair bit of contentious tax-raising has been quietly parked for at least a year. Certainly, there’s nothing at first glance as potentially foot-shooting as paying extra for heating pasties.
However, given the imminence of the escalation in coronavirus spread there is for hard-pressed social care a promised share of the £5bn response fund and a restatement of the £1bn extra funding from last year’s one-year spending round. All that and health and social care secretary Matt Hancock’s recently publicised moves to build cross-party consensus on doing something about funding social care.
So let’s start with the headline catching £640bn in gross capital investment promised over the next five years and the promise to triple the long-term average in one fell swoop.
Infrastructure is seen as the best opportunity to enhance, improve and deliver a new level of prosperity and there’s a lot of morsels to pick from. These range from an extra £9.5bn for affordable homes to achieve the 300,000 new homes target by mid-decade, £27bn for roads and an additional £4.2bn in transport upgrades for eight Mayoral combined authorities and some £5bn to extend gigabit broadband in areas of market failure.
The detail of capital allocations will be set out in July and before then the government will issue the long-awaited and ever so slightly delayed ‘landmark’ National Infrastructure Strategy this spring setting out plans for a ‘once in a generation transformation of the UK’s economic infrastructure’. But this is the blueprint for levelling up.
Ditto we will learn in July more about how the UK Shared Prosperity Fund will allocate previous EU structural funds – matched to at least current funding levels - and just how they match the government’s domestic priorities and focus on social investment.
This seems like the first Budget or fiscal event that comes along with all the trimmings of a juicy devolution deal – and West Yorkshire has come up trumps this time of asking with a Mayoral Combined Authority and a £1.1bn funding settlement spread across 30 years.
Andy Street’s prospects at the next West Midlands mayoral election also seem to have been done a few good turns, not least a share of the £4.2bn funding settlement for urban transport and a nod for help with brownfield funds and £160m to speed up the Eastside Metro Extension.
More tried and trusted methods of local government borrowing will be seen in the promise to review the terms of lending from the Public Works Loan Board to ensure local authorities can invest in housing, infrastructure and frontline services. Whether this is a response to the success of the first Municipal Bonds Agency issue to Lancashire and what it might portend will be interesting to see.
Similarly, as part of the £30bn stimulus package to assuage the impact of COVID-19, business rates exemptions are being extended like they are going out of fashion. Beyond this we know what we know – that the existing retention pilot areas get to have what they hold and London will receive 67% retention in 2020-21, in line with the 2017/18 Greater London Authority funding agreement. Beyond this, and again kicking a can a bit further down a road, terms of reference are issued for a Business Rates Review ahead of a call for evidence. Will this see fundamental change and the possible introduction of a land value tax?
Finally Rishi Sunak began his Budget statement with a vow to fulfil the promise to affect a ‘change in our economic geography’.
Whether it is possible to change the entire mindset of Whitehall by reviewing the operation of the Treasury Green Book – setting out what return on investment should mean for areas outside London and the South East is one thing. The money should do the talking. As to actually relocating 22,000 civil servants from central London, this is a return to the Lyons Review of relocation from 2003, not to be confused with local government finance - which was similarly shelved during the Brown years. Be careful not to elide decentralisation with devolution.
At heart levelling up as an agenda is a contest about whether we should be moving people to jobs, for which we can read cities, or moving jobs to people, for which we can read towns. In this singular context, it would probably be better in policy terms to use this exercise in decentralisation for the towns to get the spoils.
Jonathan Werran is chief executive, Localis