Communities should not bear the risk of this Government's growth gamble.
The Truss Government is embarking on a huge national fiscal experiment to drive down taxes and regulation in the belief this will automatically drive up growth. The trouble is, communities are yet to recover from the last big top-down economic gamble that was forced upon them: austerity.
Experts from the International Monetary Fund to the Institute for Fiscal Studies have cast doubt on the underlying economic assumptions of Truss’s plans.
What if it turns out that borrowing at scale from the public purse to fund tax cuts disproportionately benefitting the richest is not compensated by sustained GDP growth? A rising fiscal deficit would inevitably inform a case for deeper spending cuts, with the ultimate costs falling on local public services and communities.
Of course, a smaller state is part of the plan. But as we know from recent experience, starving public services of resource in the short-term simply builds up demand in the long term. It has never been clearer, in this post-pandemic moment, how urgently we must move from expensive crisis reaction to investment in prevention. For example, there is no point shovelling more money into a broken NHS, while ignoring the gaping holes in funding for social care and mental health, from where many hospital pressures originate.
The dark shadow of regional inequality has lurked behind our stagnating national growth for years, surprisingly impervious to short-term policy by soundbite. Now that Levelling Up has been all but shelved in favour of new investment zones, those ‘left behind’ areas which need a radical shift in their economic fortunes have little choice but to give themselves over to the latest Westminster policy fad. This only deepens the case for a serious long-term project of economic and democratic devolution so that local partners and communities can take control of their own destinies instead of being forced to shift direction at the whims of national politicians.
We are entering unchartered territory. Partisan ideology aside, the measure of success of this Government’s plans should be its impact on communities. Starting from a low baseline, after years of austerity, a pandemic and now a cost-of-living crisis – how well our communities fare under this Government will be a marker of its impact for years to come.
Jessica Studdert is deputy chief executive at New Local
@jesstud
