No green shoots from the Spring Statement

By Sarah Longlands | 21 March 2022

‘Whatever it takes’ was the chancellor’s response to COVID-19. The pandemic illustrated how crises can bring focus and cut through policy inertia at pace.

In contrast, however, we can expect a distinct lack of momentum from the Spring Statement 2022 and many of our poorest citizens will find their choices cut to the bone. 

The chancellor will attempt to justify his choices in the context of war in Ukraine and rising inflation. These factors may indeed make his job more difficult but the challenge he faces is nothing compared to that of local councils as they prepare to deal with a tidal wave of human misery, so much of which goes unreported and underappreciated.

But whilst Westminster may be retreating to a pre-COVID state of policy inertia, there is no reason why local government should follow. It is precisely Westminster’s lack of interest in councils, along with the scale of the crisis now faced that means council leaders have nothing to lose by doing ‘whatever it takes’ at a local level to deliver a better economic future.

Councils know better than most that household income and living standards have been under pressure for years. Rising levels of insecure and low paid work have meant that wages have failed to keep up with costs. In some areas, like Blackpool, there are real welfare concerns as people choose to opt out from social security entirely.

One of the most immediate actions that local councils and their partners can take is to use their own economic wealth to boost household income. Local government pay and conditions are still competitive, and councils can use their influence to target recruitment in the most disadvantaged neighbourhoods to help fill vacancies within council services and within public and private sector partners. The I Can Programme in Birmingham is just one example of where partners in the city are working together to use their recruitment power to help give people a step up into employment in health and social care.

The housing market will determine much of how this crisis unfolds locally. Research published last week from the Joseph Rowntree Foundation (JRF) shows that over the last 25 years, median housing costs for low income private and social rented households has increased substantially, whilst those buying houses with a mortgage have seen their costs fall. In addition, the private rented sector has grown substantially in recent years, particularly in deprived neighbourhoods with high levels of housing churn. It’s here that the impact from the current crisis will be felt most.

The Citizens Advice Bureau suggests that many renters are already struggling with the impact of the pandemic - almost one in ten are struggling to pay rent and other bills and households in London are significantly more likely to be behind on payments. With fuel expected to account for as much as 19% of the poorest households income by April, problem debt is likely to increase substantially and councils will need to consider how they pursue council tax arrears in this context.

Rising energy costs will not only hit these households hard but will also impact on councils – public services already spend some £3bn on energy and fuel every year – surely an incentive, if ever one was needed, to meet net zero by 2030. Councils like Oldham are already taking steps to develop a local energy market to incentivise renewables and drive down costs for communities.

Like COVID-19, this crisis will exacerbate existing inequalities with disproportionately poor outcomes for lone parents, people with disabilities and minority ethnic communities. Where there are already negative trends, these will get worse, for example, we can expect the already spiralling levels of child poverty in London and the north east to continue. But it will also generate new vulnerabilities, for example, spiralling fuel costs on top of low incomes and fuel poverty in rural areas may create real hardship and debt for low income families in areas such as Cornwall.

The crisis will also challenge preconceptions of which areas are being ‘left behind’ – many seemingly affluent places are also struggling. Take Hounslow, for example, which on the face of it is a successful inner London borough. However, despite its affluence, one in five children are living in poverty, a figure which doubles after housing costs are taken into account.

Senior leaders in local government already know how difficult this challenge will be for their residents and are taking steps to mitigate the impact on the most vulnerable. Rishi Sunak’s decision to ignore the need to finance local government properly is a risky strategy because if the crisis is widening inequality in seemingly affluent areas, how much more difficult will it be for the Government to convince people in other parts of the UK that it is committed to levelling up?

Sarah Longlands is chief executive of the Centre for Local Economic Strategies (CLES)


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