Labour for Devolution reaction to the Budget 2021

With the pandemic slowly starting to move into the rear-view mirror, yesterday’s Budget was a real opportunity for the Conservatives – after a decade in power – to explain how they intend to overcome Britain’s gross geographic imbalances.

We can see now what the Tory plan for ‘levelling up’ is – and it’s clear that plan is grossly inadequate.

Moving part of the Treasury to Darlington is no substitute for a comprehensive plan for every part of the UK to make its own economic decisions rather than one Westminster politician deciding for everyone. Relocating an office is not the same as relocating power.

From the Special Areas Act of 1934 to the Industrial Strategy White Paper in 2017, Westminster policy-makers have long responded to our regional economic weakness with top-down attempts to shuffle growth around the country.

This has never worked and it will never work, but the government’s announcement of eight new freeports is more of the same.

Far from being a new solution, the UK had freeports until 2012 when the last five were allowed to lapse because they generated no tangible benefits. Nevertheless, the Coalition government then introduced 24 “enterprise zones” which offered businesses much the same incentives.

These have been proven to, at best, create new jobs that are overwhelmingly lower-skilled, or merely move jobs from elsewhere in the country, as companies chase the tax breaks on offer.

The Towns Fund and the Levelling Up Fund are the latest corrupt tools to bung money to Tory constituencies. Rishi Sunak’s well-off seat has been prioritised for cash, while some of the most deprived communities in the country have been left off the list.

Weirder still is that the Levelling Up Fund is a just fund to help certain places bid for another fund.

Places have no option but to beg for Westminster’s piecemeal money. Rather than a comprehensive funding settlement for all, this is how the government prefers to dole out money to communities. It enables Sunak and Johnson to get credit for local largesse, while retaining all the power for themselves.

These random pots offer minuscule amounts of money, especially considering the day-to-day spending cuts that the Chancellor hid in the Budget’s small print are yet again likely to fall heavily on local government.

The Conservatives frequently claim to be against red tape. That apparently doesn’t apply to local government, which is forced to spend its dwindling resources on jumping through hoops for a shot at centrally-administered funds.

The Conservatives also now claim to be against raising taxes on ‘ordinary people’ and cutting spending in a recession. This too apparently doesn’t apply to local government which will have to raise the most regressive tax there is and cut spending in this recession as it has every year for a decade.

Without increases to local government funding, we will see:

  • council tax increases that hit poorer households hardest;
  • yet more cuts to local services such as social care;
  • councils going bankrupt.

Policy needs to overcome the constraints to inclusive prosperity in each region and this can only be done by empowering those regions to take control of policy-making and decide what works for them. There was zero attempt in the Budget to do this.

The Tories’ plan for ‘levelling up’ is a PR plan. It contains too few resources, too few powers, too little trust in places to shape their own futures.

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