Anneliese Dodds pre-Budget speech to the Institute of Global Prosperity
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In a speech to the Institute of Global Prosperity at the University College London ahead of next week’s Budget, Anneliese Dodds MP, Labour’s Shadow Chancellor said:
Too often, during the course of the last year, the milestones we have passed have been desperately sad.
This week we passed a much more positive milestone, with a third of all adults having now received their first shot of a vaccine.
That is such good news. I want to pay tribute to all our fantastic NHS and GP staff and volunteers who have made that possible. I also want to thank all the scientists, lab technicians, nurses, trial volunteers and support staff, including in my own constituency of Oxford East, whose work helped lead to vaccine breakthroughs in the first place.
Hope is on the horizon.
And with that hope, our thoughts can turn to the kind of recovery we need following this awful crisis. We can lift our eyes to the kind of country we want to be as we come through the other side.
The UK needs to become the best place in the world to grow up in – and the best place to grow old in. Action to achieve that ambition can’t come soon enough. After a decade of the foundations of our economy being weakened, we need to start strengthening them and building towards that better, more secure, greener future, now.
We will only be able to do that if we are honest about the state of our country, and the state of our economy, going into this crisis. Because we know that our economy was not working for everyone.
Ten years of Conservative-led government left our economy on shaky foundations even before coronavirus hit.
For families up and down our country, too many indicators have been heading in the wrong direction.
The cost of childcare rising, twice as fast as inflation, so that British parents face some of the highest costs in the developed world.
Opportunities falling, with the year before the pandemic struck seeing the lowest number of young apprentices in a decade and a huge 36% fall in the number of disadvantaged people starting an apprenticeship.
And wages stuck, just 1% higher on the eve of the pandemic than they had been ten years before. Indeed, the Conservatives have overseen the worst decade for pay growth in generations.
Costs up, opportunities down, wages flatlining. That decade-long squeeze on living standards has contributed to the most depressing statistic of all: 600,000 more children living in poverty since the Conservatives took office.
For too many people in our country, life was already uncertain and insecure. One in four families had less than £100 in the bank, and as a result were financially unprepared should the worst happen. Some 3.6 million people were trapped in insecure work, not knowing from week to week how many hours they would be able to work, and how much income they could expect as a result.
Yet even those headline national figures don’t tell the full story. It was not an even picture across the whole country. People’s job security, income and prospects – were intricately bound up with where they lived.
Under the Conservatives we have become an increasingly unbalanced nation, a country out of kilter.
People living in the North of England, for example, are less likely to have a degree and more likely to be paid low wages than people in the rest of the country. Life expectancy varies radically depending on where you live, with a child growing up in a deprived area in the North East expected to live for five years less than a child growing up in even a deprived area of London.
That is not the natural order of things. It is not preordained. There is no iron law that says people in Bradford or Oldham are destined to have a shorter life expectancy than those in Bracknell or Orpington.
Yet for too many people in our country it has become the reality: predestination by postcode.
With such shaky foundations, it comes as no surprise that when the pandemic did hit our country, it hit harder than elsewhere.
But this was exacerbated by Government decision-making during the last twelve months which has not alleviated that hit, but intensified it.
The Government was too slow to lock down, too slow on testing, and too slow on getting vital protective equipment to our frontline workers.
As a result, when the first lockdown did come, it lasted longer and was more severe. We had the same problem again when indecision and confusion around the Christmas break then led to the current lockdown which is stricter than that in many other countries.
The British people have showed unbelievable fortitude and sacrifice during this crisis. By staying home when asked to do so, they were doing their bit – to give our NHS the vital capacity it needed to save lives.
But the Government did not fulfil its side of the bargain. That first lockdown should have been used to get a proper grip on its Test and Trace system, so that as the country emerged from lockdown we could keep the virus under control.
The Government refused to work with local councils – those who know their communities best – and instead spent £22 billion, including in outsourced contracts to the likes of Serco, on a system that for months failed to deliver what was needed to get the virus under control.
Contrast that with developments in Labour-run Wales, where responsibility for Test and Trace was given to local government and local public health boards from the outset and where a much higher rate of contacts were traced.
That failure, combined with the endless chopping and changing of economic support schemes, has sapped people’s confidence, left businesses unable to plan, and seen a second and then third national lockdown applied.
Little wonder with that kind of approach that not only have we had the worst death toll in Europe, but also the worst economic crisis of any major economy.
Again, this has not been an experience evenly felt across the country.
Over the period of this crisis, people in the North have experienced a larger fall in their mental wellbeing than people in the rest of the country. They’ve been more likely to have their working hours reduced, or to have lost their jobs altogether. They have been more likely to die of Covid-19.
Rather than a response to those problems, last year we had the indignity of the government playing regions of the country off against one another.
Local leaders like Andy Burnham, Steve Rotheram and Dan Jarvis were forced to ask of government the support that families and businesses in their areas desperately needed.
They were compelled to engage in a series of murky negotiations which were actually anything but – everyone emerged with the same, one-off payment of £20 per head of population. This was not designed to meet the needs of local businesses. Nor was it linked to how long a local area had been or would be subject to public health restrictions.
So Manchester and Liverpool had to make their £20 a head stretch for months on end, while Cornwall’s money only needed to last for the four weeks of the second national lockdown.
Those ten years of rising inequality, have as a result been followed by a year in which that trend only got worse.
And the Chancellor’s response looks set to make it worse again.
While it was his government that wasted and mismanaged billions over the course of the past year, he seems determined to make ordinary families carry the can.
Unless he changes course at next week’s Budget, families face a triple hammer blow to their household finances: pay freezes for our key workers, £20 a week cut from family budgets for those needing Universal Credit, and the prospect of a giant hike in council tax because the government won’t give councils the funding they need.
And yet again, these hammer blows will fall harder in some parts of the country than others.
The TUC has shown that key workers in the North East, the North West and Yorkshire and Humber will suffer the biggest hits to their spending thanks to the Chancellor’s pay freeze. And if those key workers have to tighten their belts, they have less to spend in local businesses and on their high streets, trapping the local economy in a vicious downward spiral.
The same is true of the Chancellor’s insistence that local authorities hike council tax, which makes up a larger proportion of disposable income for poorer households than it does for those who are better off. People in lower income areas like Wales, the North West and Yorkshire will be hit more by this regressive policy than those in the South East.
Rising inequality before the crisis hit, rising inequality during the year of the pandemic so far and the risk of rising inequality as we begin to recover.
That is the Conservatives’ legacy when it comes to management of the UK economy.
We cannot go on like this.
A balanced economy is a better performing economy. Closing the gap between our best and worst-performing regions will boost growth.
That is why Labour has been clear that this has to be a recovery that works for all parts of the economy and all parts of our country.
A recovery that brings growth and prosperity to every corner of the UK – instead of concentrating it in a handful of places and hoping that this will somehow magically spread outwards.
A recovery with people, their families and their communities at its heart.
A recovery we can be proud of.
At next week’s Budget we already know some of what we’re likely to hear from Rishi Sunak about the Conservatives’ solutions.
Grand sweeping statements about infrastructure investment that make for a good soundbite.
Government by press release and photo call.
But after more than ten years people are getting wise to this. They know that what matters is what comes after the cameras are switched off and the headline writers have moved on.
And they know by now that on this score the Conservative record is one of failure.
Six years ago the Conservatives announced £2.3 billion to build 60,000 starter homes. Not a single home has been built.
In the last seven years the Conservatives have re-announced or re-committed to major rail projects in the North more than 60 times in the last seven years. But we’ve not seen so much as a spade in the ground.
A ‘Garden Bridge’ that existed solely in Boris Johnson’s head, somehow still cost the taxpayer £43 million.
We’ve seen a relentless cycle – of overpromising, and underdelivering.
The same is true of their trumpeted announcement to move more civil servants out of London and into the regions.
Spreading government jobs around the country is an admirable aim. But once again the Government’s track record here runs in precisely the opposite direction to their stated ambitions.
In the last ten years, we have lost 65,000 civil service jobs in England.
Almost every region has lost jobs, with some hit harder than others. The East of England has seen 3 in 10 civil service jobs go.
I say almost every region, because there is one exception: London. Here, the Conservatives have overseen a 6% rise in civil servant jobs. So as they have let people go in the regions, they have actually concentrated power in the capital over that period.
Meanwhile, the investment that communities really need has gone begging. The North, the Midlands, the South West, Wales and Northern Ireland have between them been missing out on £4 billion a year of R&D investment compared to other regions.
£4 billion a year.
That’s the same as the Government’s much-vaunted ‘Levelling Up fund’ across its entire lifespan.
If government investment is going to make a difference to every part of the country, we need to set out some clear tests for what it should deliver.
It should be focused on reducing the productivity gap between regions.
It should halt and then reverse the widening of educational and health inequalities between regions.
And it should ensure there are better quality jobs in every corner of our country.
For years the Conservatives have used the catch-all justification of ‘Brussels’ to explain away why they haven’t been able to invest strategically to deliver these sorts of outcomes. Often that’s not even been true. And now it’s no excuse at all.
They say they want to do things differently. Well, we will hold them to that.
We want to see every pound of public money working overtime for local people and their communities.
Rather than setting up a piggy bank in Westminster and getting local councils to fight it out for access, we would work with communities to determine their needs and to invest where it will make the most difference.
Public investment should come with a commitment – that wherever possible, it will create local apprenticeships.
That local firms will be involved.
That people living nearby will have access to the jobs that are created.
That where value is created locally, it is captured locally.
Labour is already putting this into practice, and has been doing so for years.
In Labour-run Wales, the government has developed a new ‘Economic Contract’ between government and business, based on the principle of “public investment with a social purpose”. Businesses seeking Welsh government support must commit to growth, fair work, reducing their carbon footprint and promoting health and learning in the workplace.
Unbelievably, we heard yesterday that the UK Government will overrule Cardiff on this when it comes to the new Levelling Up Fund. Rather than being allocated by the Welsh government, who understand Welsh needs best and who have put in place a strategic and responsible approach to public investment, this will now all be disbursed from Westminster. Welsh people now have no guarantee that investment will come to their nation, much less that it will deliver the decent jobs and sustainable outcomes that Welsh Labour have embedded into their approach.
As another example, Manchester has put the idea of ‘social value’ at the heart of its public procurement for years. In ten years, it increased the proportion of money spent locally from 50% to 70%. That represents an additional £138 million in the local economy, supporting over 500 apprenticeships, over 1,500 jobs, and over 7,500 employment opportunities for hard-to-reach people living in the local area.
And in London, Sadiq Khan has introduced the Good Work Standard, a voluntary code where employers commit to go above and beyond the bare minimum legal requirements when it comes to how they treat their staff. Sticking to that code boosts the ability of those businesses to win public contracts.
These are the smart, community-focused actions that must be at the heart of our recovery. To ensure that where public money is spent on boosting our recovery it delivers for every part of our country.
There are a whole host of ways in which Government can do this, but today I want to focus on three.
The first is much greater transparency. The next few years require a considerable amount of capital spend from government. People across the country have a right to know exactly what that’s being spent on, and what difference it’s making to their local area. Public sector contracts are supposed to include a 10% social value requirement – such as commitments around local jobs or training opportunities – but the Government can choose to waive that in certain circumstances. People must have the right to know when that happens and why- this should be public information.
Secondly, the principle of social value must be embedded in public investment and not an afterthought. The creation of a new National Infrastructure Bank, an initiative which Labour has been calling for ever since the Conservatives sold off the Green Investment Bank, offers an opportunity to do this. Social value must form a critical component of the mandate of the new National Infrastructure Bank when it is announced next week, along with ensuring the Bank delivers for every part of the country. Those people across the UK who have been able to build up savings through this crisis can also obtain a stake in the work of the bank through the launch of British Recovery Bonds, as Labour has called for.
Thirdly, good jobs, and decent work, must be at the heart of government investment. Government should start by learning from the pioneering work Sadiq Khan has done in London and create a national set of good work standards, so that wherever businesses have signed up to these it increases their chances of winning government contracts.
It is this strategic approach to government investment that will mean it genuinely makes a difference to people’s lives and their communities.
But we know that rebuilding our economy is also about making sure that people can once again have a sense of pride in their communities. In the places that matter to them, where they can come together.
Our high streets used to be that beating heart of our local communities, and they can be so again. But they have been battered by this crisis. And they were already struggling to begin with.
In the five years from 2015 to 2020 alone, we lost 7% of our high street shops, with over 32,000 more stores closing than opening.
And the crisis has only exacerbated this trend, with almost 8,000 shops lost in the first half of last year alone.
More than one in ten shops in the UK were sitting vacant by July. This matters.
Not just for the jobs that our high streets support – both those who work on them directly and those who work in the supply chain. Though that is undoubtedly important.
But because high streets are a central part of how people feel about their community and their local area.
I am not blindly nostalgic about our high streets. People’s spending and shopping habits have been changing for years and we are never going back to a world where Woolworths, Debenhams and House of Fraser stood side by side in huge retail units up and down the country.
But nor does that mean we should just abandon our high streets to a sad, disorderly fate.
If we act smartly and strategically we can recapture the hearts of our communities and make them part of a better, brighter, greener future.
Unfortunately, on current plans the Conservatives risk accelerating the decline of our high streets and even seeing some of them lost for good.
The Chancellor has so far refused to heed Labour and extend business rates relief and the reduced rate of VAT. Our high street businesses face huge bills in just a few weeks’ time that will hammer their prospects of recovery.
But that is only the beginning.
New Conservative rules that are due to come into force in the summer risk a mass sell-off of our high streets, over the heads of local communities.
Until now, if a landlord wished to convert an old shop into a flat, it required proper planning permission – including giving local people a say as to whether this was what they wanted, and making sure those homes were decent. A vital piece of protection to ensure people had a stake in what happened to their high streets.
From August, all of that will be ripped up. Local people will have no say at all, and landlords will be able to use a fast track process to turn shops into flats, bypassing many of the standards we normally expect for new homes. They would be under no obligation to provide any outdoor space, nor to contribute to community infrastructure or affordable housing.
This is a bad idea at the best of times. But right now it could be catastrophic for local communities. Businesses will be placed into direct competition with the residential housing market after a year in which they have been hammered and from which they will have barely begun to recover. Unable to compete with the high prices that residential properties can command, we risk seeing a giant sell-off of our high streets all in one go.
Local people won’t have any power to stop it. And once those local amenities are gone, they are highly unlikely ever to come back. For smaller high streets, the loss of several shops at once could be the point of no return. Of the 1,200 towns tracked by the Local Data Company, one in three have a hundred shops or fewer – right on that tipping point.
So we are calling on the Government to scrap these plans as a matter of urgency. To hand back power to local communities. To give them a say in securing their high streets.
That’s not to say a blanket ban on converting shops into homes. There will be circumstances where that’s the right thing to do – but only with the consent of local people, and only where they can be guaranteed that where new homes are built they are to the highest possible standard and they contribute to the local community through shared resources and affordable housing.
Securing our high streets and stopping them being sold off is just one part of the puzzle. We also need to do more to rebuild our high streets so they once again become the thriving heart of our community.
That means action to encourage new businesses and other enterprises onto a modern, resilient high street. We should not try to recreate the past, but we should support the small shops, cafes, and public spaces where people will be able to meet again.
Labour has called for an expansion of the Start-Up Loans scheme to support 100,000 new businesses across the UK over the next five years. And with that expansion we want to see funding earmarked for particular regions and nations, reversing the situation at the moment where £1 in every £4 lent under the existing scheme has gone to London and just £1 in every £20 to the North East.
These new firms can help breathe life into our high streets, with 3 in 10 small businesses already being located on or next to the high street.
And where there are persistently empty shops, blighting local areas and not being filled, we should give local councils the power to step in – just as they can with persistently empty homes already.
40% of small businesses say that making vacant units available for rent is one of the biggest changes that should be made to help their high street. Where these are not coming back into use via the market, we would create an ‘Empty Shop Order’, giving local councils the power to take them over, bring them back into use and offer them to local businesses or other enterprises.
Once this is successful, and council has recouped its costs, the landlord should begin receiving rent again from the property. The Government should look to use the newly expanded dormant assets fund to provide loans to councils for this purpose.
Done well, everyone should win: the local community gets a diverse range of new services on the high street, a new enterprise has got the foothold it needs to start work, and the landlord sees rent coming back in again.
Powers for local communities to secure and rebuild their high streets are a key part of making sure the recovery works for every part of our country.
They are not the whole answer for our high streets.
For that, we need government to make good on its longstanding promises to overhaul the outdated business rates system, including action to level the playing field between bricks and mortar firms and their online rivals.
We also need action to ensure that communities can continue to access cash and banking services on their high streets.
Three quarters of small businesses have seen bank branches close on their high street, with Which estimating that branches have been closing at a rate of 55 per month.
Again, this shouldn’t be about preserving in aspic the way things were 20 years ago, but we can’t just have a disorderly retreat from cash that leaves those who most rely on it with nowhere to go.
The Government promised action on this a year ago, and we’ve still seen nothing.
The pandemic has only made the need more urgent, and so they must come forward with legislation at next week’s Budget.
The recovery from Covid-19 will be no recovery at all if it only delivers for a minority of people, or for a handful of areas of the country that were doing well to begin with.
It will not be a recovery if we revert to how the world was in December 2019 and pretend that it was working for everyone.
We know that wasn’t the case. Ten years of Conservative rule had fundamentally weakened the foundations of our economy, and in some parts of the economy it had eroded them altogether.
We need a government that is genuinely committed to doing the hard yards when it comes to rebuilding our communities.
Not sticking around for a photo op and a headline and then moving on. But working hand in hand with local communities to deliver the outcomes that they want.
Making sure every pound of public money invested is delivering value locally, in terms of jobs, training opportunities, business contracts.
And empowering people to secure and rebuild their high streets, the beating hearts of their communities that have taken a battering over the last 12 months.
That is what a recovery for every part of the country truly means. And it’s what a Labour government would deliver.