Autumn statement: What it means for local economies, people and places

In his first autumn statement, chancellor Philip Hammond set out plans for an increase in the so-called ‘national living wage’, a ban on lettings fees, and the end of further welfare savings in the current parliament.

Infrastructure plans include a £2.3bn investment in affordable housing in high demand areas, a £1.1bn investment in local transport networks and rural rate relief increased to 100%.

But at a time of economic fragility and uncertainty, will it be enough to guide our national and local economies to prosperity?

Three experts set out what the budget means for people and places, for economic development, and for housing.

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Autumn statement means little for local economies

Matthew Jackson, deputy chief executive, Centre for Local Economic Strategies

The new chancellor delivered much of what I anticipated in his first autumn statement:

• a realisation that financial and growth forecasts in the last parliament were over-inflated;
• an understanding that national debt was on the rise;
• a commitment to continuing cuts detailed in the 2015 spending review across government departments and subsequently local government;
• some taxation and pay benefits for those in work;
• a shift in the taper rates for Universal Credit and a commitment for no further welfare savings;
• and a whole host of investment in infrastructure including housing and transport including already allocated Local Growth Fund monies.

All this macro level policy and financial change begs the question of what does the autumn statement mean for local economies and people in our communities? I would argue very little for three core reasons.

First, the investment in infrastructure will follow the tried-and-tested and failing economic model. Over the last 30 years infrastructure investment whether it be in transport, housing, or physical regeneration schemes has been undertaken with ‘trickle-down’ economics in mind. Invest in a building or other piece of infrastructure and the benefits will flow to communities – it does not work as people in surrounding areas remain unemployed and low-skilled, and local businesses and their supply chains do not benefit anywhere near the amount they should do.

‘Infrastructure investment can no longer be undertaken

just with the view of economic growth in mind’

Second, the taxation and pay benefits for those in work do not go far enough. The increase of the National Living Wage to £7.50 per hour is significantly below the levels required to live comfortably and the Living Wage Foundation’s rates – over six million people who are in poverty have at least one member of their family in work. The changes also do not reflect the wider array of challenges people in work and on low pay face including uncertainty, zero hour contracts, and the scope for progression.

Third, while the changes to the Universal Credit taper rates and the plan for no further welfare savings are welcome, the damage has already been done. The introduction of Universal Credit, the work capability and disability assessments, the ‘bedroom tax’, and the Work Programme have all had profound effects on individuals, communities and organisations which look to provide support.

We need to change the economic model in the UK so that it brings greater benefits for local economies and communities, in ways set out in this recent report by the Centre for Local Economic Strategies.

Infrastructure investment can no longer be undertaken just with the view of economic growth in mind; instead it needs to be framed by places and deliver a ‘torrent’ of benefits including jobs, skills development, SME development and sustainability, and in a way that addresses environmental concerns.

There is a need for a realisation that places already have an array of wealth in the form of anchor and other institutions. The key is understanding this wealth in the form of procurement and employee spend and asset and land ownership and harnessing the potential of that wealth for the benefit of local businesses and people. Realising this wealth potentially negates the need to follow a growth-focused infrastructure approach.

The mindset of business needs to shift so that they are not just contributors to the national economy in taxation terms and the local economy in employment terms; but instead citizens in the places in which they are based bringing an array of benefits for their employees through terms and conditions and for the wider place through support for the voluntary and community sector, for example.

This autumn statement was devoid of any focus on supporting places to deliver greater benefit for their local economies and communities. I would argue that the time is ripe for places to plough their own furrow and harness their own potential without the intervention of government.

No ‘wriggle room’, but lacking new ideas

Nigel Wilcock, executive director, Institute of Economic Development

While there is always a need to examine the detail of budget announcements, yesterday’s autumn statement wasn’t big on new ideas and, as is common these days, most of the announcements have been previously trailed.

Of course, Philip Hammond didn’t have a lot of wriggle room. All of his announcements were made against a deteriorating public finance position. It is beginning to feel as though devolution may only go so far. Much has been made about infrastructure funding and the increased growth fund being passed to English regions, but in truth the numbers do not suggest any large-scale re-allocation of resources.

The largest numbers were reserved for housing infrastructure announcements – to be spent in areas of highest demand – or, put another way, the high performing areas of the economy. Perhaps devolution is seen as a step too far for a Conservative government when the majority of core cities are actually under Labour control?

At the Institute of Economic Development we are also taking careful note of chancellors making statements about business rates – this time rural rate relief – which, unless safeguards are built in, may start to impact further on the funding for local authorities. It is a curiosity of the proposed changes that chancellors make national statements about a taxation measure that is supposed to fund local authorities in the future.

‘There is need for a far bolder move

towards devolved powers and finance’

In an economy where London thrives and Scotland is increasingly separate in the structures of economic development, there really needs to be a complete rethink in the approach for the development of English regions.

Infrastructure expenditure will not address the need for more inclusive economic growth and nor will extra funds for specific initiatives when at the same time democratically elected bodies – the local authorities – are increasingly starved of funding.

The lessons of Brexit and Trump suggest that the status quo and shuffling of deckchairs really is not enough. Policies need to better reflect the whole of society rather than the economically included.

The autumn statement had the opportunity to make a step change in the manner in which the budget of the UK is devolved. There was the chance to set out more content on the structures of local delivery and also make some bold statements about how the Westminster machine could be moved to the regions – especially in light of the renovation of the Palace of Westminster.

Aside from the opportunity for devolution there was also nothing in the autumn statement that could really be said to be aimed at those most in need. The evidence is now suggesting that local cuts are having a major impact on social care, mental health services and care for the increasingly ageing population. This is likely to become the economic and social imperative of the next decade but is not addressed. This will further the gaps between the economically enabled regions and the rest.

We accept that the chancellor had no more money but the world has changed. There is need for a far bolder move towards devolved powers and finance. If anything this autumn statement made this approach seem to be drifting further away.

Baby steps towards the housing policy needed

Tom Chance, independent housing policy expert and consultant

This autumn statement is a baby step forward for housing and placemaking

Spokespeople and ministers often talk of announcements delivering a ‘step change’. In recent years we have had more steps backward than forward. Today’s autumn statement at least takes a baby step or two in the right direction.

The chancellor promised a comprehensive package of reform, but we will have to wait for the housing white paper due next year to see if he can live up to that promise.

What we got in the autumn statement were some positive announcements and a lot of unanswered questions.

First, the good bits.

An extra £0.9bn per year has been announced for affordable housing and infrastructure up to 2021. This isn’t a particularly large sum of money when compared to the scale of the challenge. ResPublica recently proposed a £10bn annual investment in affordable housing alone. The campaign group SHOUT published updated research in October suggesting a similar scale of sustained investment in social housing could deliver savings of up to £300bn over fifty years.

‘It’s hard to see how this could be the promised comprehensive

package to halt the decline in housing affordability’

But the government has started to relax its restrictions and support housing associations, councils and builders to solve local problems. Grant money can be used to build affordable rent and rent to buy homes, not just shared ownership and starter homes. Grant rates of £35k per home are too low for genuinely affordable homes in much of England, of course. The definition of starter homes may be made more flexible, to include other low cost home ownership options. Money is being put into local infrastructure that is needed to make schemes viable. These should make for more coherent and appropriate place-based schemes.

There were also other welcome items such as a small relaxation of welfare cuts and a ban on letting agent fees in England.

Many local authorities will probably be frustrated that the government still isn’t providing adequate funds for other needs, like brownfield remediation or estate regeneration. Some of this is coming through devolution deals with combined authorities, but the sums are still pretty small.

We’ve not heard any details about Heseltine’s 100 estates programme. Nor have we yet seen any details in the public domain about the promised £300m community housing fund for rural and coastal areas affected by second homes.

Hopefully the housing white paper will shed light on these policies and how they fit with others like the affordable housing programme and the builders finance fund.

In the absence of the kind of investment that ResPublica and SHOUT have called for, it’s hard to see how the paper could set out the promised comprehensive package to halt the decline in housing affordability. But at least this autumn statement shows signs that the government is listening to those trying to provide homes and shape better places.