It was a droll Autumn Statement that is now known to be the last. As of 2017, the Budget will take place before Christmas to give a longer lead in time before the next financial year. It has been a long time coming and, as the Chancellor argued, brings the UK into line with international best practice. But this was to be the only disruptive innovation in today’s much-anticipated fiscal event. The Chancellor delivered an Autumn Statement that had a distinct flavour of old school economic thinking.
In fairness, the tensions facing the UK economy put the Chancellor in a peculiar bind. As Alastair Darling argued earlier this week he has the enormous challenge of responding to the economic consequences of the vote to leave the European Union; new free trade deals will have to be the bedrock of UK export-led growth, demonstrating that we are truly open for business. At the same time the government has responded to the wave of disaffection in our politics, driven in many respects by a sense that the recovery since 2008 has been narrow and the benefit felt by only a privileged few.
The government’s emphasis on the ‘just about managing’ is a clear attempt to walk a political tightrope in appealing to the broad base of Middle England. As Janan Ganesh put it, “The political genius of the phrase is that most Britons, including those on many multiples of the average income, will assume the government is talking about them. There are millionaires who are just about managing once their third homes and other essentials are paid for.” However, an inclusive growth agenda would also factor in a greater emphasis on the ‘not managing’.
How we create an inclusive economy has been the focus of the RSA Inclusive Growth Commission since its launch in April 2016. Chaired by Stephanie Flanders, former economics editor for the BBC, the Commission published its emerging findings in September. Here weargue that the old model of trickledown economics won’t work if we’re serious about inclusive growth. Instead, an integration of economic and social policy is necessary - at a central and, particularly, local government level.
For too long investment in transport and digital connectivity has been the only form of legitimate government spend in driving productivity and creating growth. Such narrow focus on economic infrastructure has led to the kind of economy we have now, where millions feel dispossessed and disempowered. Yet the Chancellor’s statement today reiterated this approach.
Social infrastructure – schools, colleges, health and care provision, criminal justice system and welfare, within our public sector and wider civil society – would be on a par with physical infrastructure in an inclusive strategy. These are the services that underpin individuals’ sense of agency, capacity and productivity in the labour market, with huge social spillovers in their relationships with their families and local communities – and for the public purse.
Renewed commitment to devolution will be met by many with a sigh of relief. Promises to allocate additional resource in regions (via LEPs) and new borrowing powers to the mayoral city-regions stand out. But there was nothing in today’s Autumn Statement that says that this government has recognised the need for a different approach to broad-based growth and prosperity.
A new approach for inclusive industrial strategies, for example, would see government go beyond the confines of high-tech sectors to those, such as retail, hospitality and heath and care, where many more people are employed and earn less than the Living Wage. Similarly, why wait for central government to hand down strategies, albeit in a discussion document-come-Green Paper? City-governments could decide not to wait until central government has set out its stall, but show how it’s building strategic relationships of its own, collaborating more dynamically and organically with employers, large and small, fellow cities and towns with a shared interest.
Rather than ‘writing the manual’ from Whitehall, central government can then focus on supporting these relationships through strategic frameworks (where necessary) or specific interventions that leverage its national influence (where appropriate – e.g. Nissan).
In today’s Autumn Statement Philip Hammond sought to reiterate the government’s message that post-Brexit Britain is open for business, is responsive to the challenge of national productivity and is committed to continued fiscal prudence (read austerity) - complete with three new (inevitably arbitrary) fiscal rules. It just about managed, but an opportunity to present a comprehensive strategy for inclusive growth may have been missed.
The final report of the Industrial Strategy Commission is bold and ambitious - but must be complemented with a strong focus on inclusive growth.
Manifesting inclusive growth means attacking the 20th century Holy Grail illusion of meritocracy, argues Indy Johar.