The Week, 4 February 2022
This may have been the longest news week yet of 2022, and that’s saying something. On Monday Sue Gray published her “update” on partygate, which was followed on Wednesday by another ‘waiting for Godot-esque’ report, the Levelling Up White Paper. This was eclipsed on Thursday morning by the latest in the cost of living crisis (more below), which was in turn overtaken that afternoon by events in Northern Ireland and resignations in Downing Street. Thank goodness it’s Friday.
For our take on the Levelling Up White Paper see here. Top line: pretty much all domestic policy is being channelled towards levelling up the country. Bottom line: the proof will be in the delivery, and there’s a long history (extensively detailed in the paper!) of successive government’s attempting, and failing, to achieve this.
With impeccable timing, the National Audit Office also published their report Supporting local economic growth on Wednesday. The report informs us that between 2011 and 2020 government allocated £18 billion to policies designed to stimulate local economic growth in England. EU funding contributed a further £10.3 billion to the UK between 2014 and 2020. In addition, separate departmental funding, such as that for skills, also shared the aim of boosting local growth. A treasure trove of insights into what works must therefore be available to inform how the £11 billion committed through the 2020 Spending Review should be spent... right? No.
In short, the NAO says that DLUHC does not know what works: it has not “systematically assessed whether individual policies have had their intended impact and cannot say which have been most effective”. Fortunately, the NAO report that there are plans to improve evaluation, and the White Paper is strong not just on measurable commitments, but also pledges to “work with academics and industry experts to test and trial how best to deign evaluation of local interventions and introduce more experimentation at the policy design stage”. Nonetheless, right now, based on current (lack of) evidence, the NAO is not confident that levelling up spending will be value for money.
On Thursday, Ofgem announced a huge 54% increase to the energy price cap, taking the default tariff to almost £2,000, and over £2,000 for those on prepayment meters (often the most vulnerable). At the same time, the Bank of England announced a 0.25% interest rate increase, and forecast that inflation would in fact peak at 7.25% in April, and average 6% in 2022. The Governor of the Bank warned that households would see the biggest fall in their standard of living since records began in 1990.
The Chancellor responded by announcing two measures: (i) a £200 loan (NOT a rebate as badged) for all households, to be paid in October and clawed back via our bills over the next 5 years; (ii) a £150 Council Tax (CT) rebate. In addition there’s a £144 million hardship fund for local authorities to allocate on a discretionary basis.
At the time of writing, it remains unclear whether low-income households who don't pay CT will still receive the £150. Some media reports seem to imply they will, while the Treasury factsheet implies that they will be supported via the discretionary fund. If the latter is true, then that’s a problem: according to our friends over at the Resolution Foundation, 1 in 8 low-income households will not be eligible for the rebate, which means the discretionary pot is nowhere near big enough to provide each one with the £150.
It’s also worth remembering that the energy price rise isn't the only problem facing already struggling families — the NI hike also comes into effect in April, and inflation is effecting the cost of lots of goods, not least food. As we at Reform have repeatedly argued, the Government should look again at the rate at which benefits are due to be uprated in April (3.1%).
Our recommended reads from this week are...
First up, on Monday the Productivity Institute and the Bennett Institute for Public Policy published an insights paper on the productivity challenge in the East of England. The paper explores in detail the productivity performance of the region, and in particular within East Anglia, highlighting the fairly stark intra-regional differences. It is a fascinating read given the Government’s levelling up agenda and highlights just why an all encompassing approach is needed — from housing and skills, to transport and connectivity, to R&D and technological innovation. It also highlights the “fragmented” and “piecemeal” nature of political and public sector governance in the region, calling for the structures to be “reconsidered”.
Our second recommended read is from the Health Foundation, who yesterday published analysis of public perceptions of health and social care. Despite the ‘sacred cow’ status the NHS holds, just 42% of those surveyed think that their local NHS is providing them with a good service, and only 44% agree a good service is being provided nationally. Worryingly, people living in the most deprived parts of the country are more likely to think quality of care has deteriorated. Very few people think the Government has the right policies for the NHS (12%) or social care (8%) — though it’s unclear what they think those policies are. Though a majority do support the Health and Social Care Levy, in particular those who indicate they are Conservative voters.