Magic money forest

Is it a concern that so much funding has been found by government yet universal credit has only been temporarily uplifted by £20 and it took a sustained campaign to extend free school meals?

• An introduction to 2020s Crises and Change
• Navigating a transitional space during Covid-19

Two recent UK prime ministers said ‘there is no magic money tree’, equating management of the nation’s finances with managing our own household finances.

Many have noted this is a fallacy, and the fiscal response to the pandemic shows that where there’s a will there is a way. However, access to the forest’s resources is still largely privileged.

What we heard...

“What is possible is a new relationship to ‘money’ given that the magic money tree is a real thing and one that more people now understand than previously.”

Graham Leicester, director, International Futures Forum

“People saying national broadband was a waste of money have been proven wrong. Another example of turning a blind eye.”

Birmingham resident

“All are aware of how immediately the experience of the pandemic shines a light on inequalities - particularly on community investment levels. Inverting inequality - helicoptering large amounts of cash into the poorest communities seen as more radical than UBI (universal basic income).”

Kathy Evans, chief executive, Children England

Stats and facts

• The Office for Budget Responsibility (OBR) - which keeps tabs on government spending - said that borrowing would be £355bn for the current financial year (April 2020 to April 2021), before falling back to £234bn over the next year. That's the highest figure ever seen outside wartime.
  
• The chancellor, Rishi Sunak, said: "Coronavirus has caused one of the largest economic shocks this country has ever faced, which is why we responded with our £352bn package of support to protect lives and livelihoods.”
  
• The amount the government has to spend on state pensions will fall by £1.5bn by 2022, partly because of over-65s dying of Covid, forecasts suggest.

Food for thought 

“To shine a light on one of the greatest spending sprees in Britain’s postwar era, the New York Times analyzed a large segment of it, the roughly 1,200 central government contracts that have been made public, together worth nearly $22bn. Of that, about $11bn went to companies either run by friends and associates of politicians in the Conservative Party, or with no prior experience or a history of controversy. Meanwhile, smaller firms without political clout got nowhere.”

Jane Bradley, Selam Gebrekidan and Allison McCann, The New York Times, 7 December 2020

“A familiar feature of emergencies is that governments feel entitled to take powers that would not be merited in normal times. Public sympathy relies on such emergency powers not being abused – as clearly is happening in these cases. At a time when billions in taxpayers’ money is being spent fighting disease and relieving hardship, breaking rules designed to avoid corruption can only diminish public sentiment and sympathy.”

Simon Jenkins, The Guardian, 23 February 2021 

“The spending watchdog [National Audit Office] also noted that firms channelled through the Government’s ‘VIP’ lane – for companies with ties to ministers, MPs and officials – were 10 times more likely to win a contract than other firms. As Byline Times has revealed, contracts worth £900m have been awarded to firms that have donated £8.2m to the Conservatives, either directly or via their owners. A firm chaired by a senior government procurement advisor even won a £38m deal. Meanwhile, despite this gargantuan government outlay, ministers have insisted there isn’t enough money in the coffers to give NHS staff more than a 1 percent pay rise.”

Sam Bright, Byline Times, 7 March 2021