Our sustainable and inclusive route to economic recovery – Cabinet speech 28.04.20

Yesterday we held our first virtual Cabinet meeting on Zoom. You can watch my opening speech about economic recovery below or read more about it here https://news.bristol.gov.uk/news/mayor-of-bristol-backs-sustainable-and-inclusive-route-to-economic-recovery

Here is a transcript of this speech.

Thank you.

As this is our first cabinet since the Covid lockdown, I also wanted to share some thoughts just to develop a common understanding of the scale of the challenge were facing in Bristol. Now, as a city, we have responded well to this pandemic. This was helped by the fact we had already built strong relationships through the city office and we were able to reorient those relationships towards tackling this challenge that comes against the whole of Bristol.

In our approach we’ve taken a whole host of actions to keep Bristol safe through this crisis.

Core to them has been a focus on:

  • Ensuring people can eat
  • Supporting women and children facing domestic violence and abusive situations
  • Making sure we are getting the grants out of the council and into the bank accounts of the businesses to help them survive
  • Getting  PPE out to our front line workers
  • And communicating with the city through regular interviews and press conferences, blogs and vlogs about what is going on and the latest state of play to counter the misinformation out there to make sure we were in touch with the truth and we’ve stitched that right in the centre of the many actions that we’ve taken on.

But I just want to be clear about the scale of the challenge:

So first off this the biggest global health crisis in a century.

World Health Organisation suggests 3 million confirmed cases worldwide, with at least 200,000 deaths, in 213 countries.

In Bristol we’ve seen 576 cases and as you’ll know Bristol’s fared quite well compared to the rest of the country and that’s not to make light of the challenge that it has been, but our numbers have been low but this is the biggest global health crisis in a century

Secondly the actions we must take to manage Covid are contributing to the most significant hit to the economy since the Great Depression – possibly even greater than that. The Office of Budget Responsibility is suggesting GDP could contract by 35% in the second quarter, which is phenomenal.

And on top of that, the increased costs, and lost revenue, is pulling the already stretched finances of local government apart. Ebony Hughes of consultancy Impower was in the Municipal Journal (a local government magazine) and he said “every recently approved medium term financial strategy will need to go back to the drawing board. Authorities without healthy reserves will be worrying about being pushed over the edge, but even those in a stronger will be challenged by the prospect of setting a balanced budget next year.” Local Government all across this country are facing an incredible financial challenge at the time in which they are called on to lead and when their services and interventions are most needed by their populations. Craig is going to talk more about that later in the meeting.

And there are some complexities that sit within this crisis and I think these are what are called wicked problems because they feed themselves.

The unemployment and inequality that results from the economic downturn that will result from us tackling Covid will itself generate a public health challenge of major proportions. Unemployment and inequality’s relationship with both physical and mental health is something that public health experts will know about.

Secondly the actions we are taking which is causing the economic downturn has not eliminated the virus, merely containing it. So if we continue with that threat in the background, but if we take the wrong relaxation in the wrong way it could mean we risk a resurgence of the virus, certainly costing lives but also bringing in more measures that would hurt the economy. So we’ve got this kind of arm lock on us and not even getting rid of the virus. Thirdly neither this virus nor the actions we must take to control it are indiscriminate. There was a little bit of mythology that we’re all equals because the Prime Minister got Covid-19. The virus itself is disproportionately hitting poor people – those people living in the most cramped conditions the least likely to be able to be socially distanced and those that are most likely to have pre-existing medical conditions because of their poverty. But then the actions we are having to take to manage Covid with the negative economic impact will again disproportionally affect the least able to afford it, those living on the economic margins, those needing to use foodbanks and those signed on to Universal Credit , those who didn’t have a big bank of personal savings to see them through a rainy day when the work dries up, those small businesses who survive month to month.

These people are going to carry the price for this and these are wicked challenges that we face as the world, certainly as a county and as the city of Bristol. And I think we must also recognise the scale of the political challenge that this brings with it: Unemployment, Food shortages, a real test for our civic cohesion and the potential for unrest. A growing demand for public services while local governments are being stretched and dare I say opportunistic right wing activism in the background taking advantage of the factors to sow in further discord in our society. This is the challenge that we are having to take on.

So we do have to come to terms with the sheer scale of it. There is not going to be a project by project solution. This is about a comprehensive assessment and replanning of who we are as Bristol.

SECTION 2 THE ECONOMY

 So to talk on the economy, the World Economic Forum is warning that:

“The shock to the global economy is faster and more severe than the 2008 global financial crisis and even the great depression of 1929. In those two previous episodes, stock markets collapsed by up to 50% or more, credit markets froze up massive bankruptcies followed, unemployment rates soared above 10% and GDP contracted at an annualised rate of 10% or more But all of this took around three years to play out. In the current crisis similarly dire macroeconomic and financial outcomes have materialised in three weeks.”

NATIONALLY- the Office Budget Responsibility estimates GDP could contract by 35% in the second quarter which is incredibly significant.

The economists David Blanchflower and David Bell – say we are already in a depression, with the manufacturing rates at an all time low, productivity way down and they say the collapse in economic activity looks to be 10 times faster than the Recession of 2007-09.

The CIPS UK purchasing index to the 27th March shows a record fall in and employment has fallen at the fastest rate since June 2009.

In the US 6.6million workers have filed for unemployment insurance since the crisis began. It was said during the 1929 Great Depression, when the US sneezes, the world catches a cold, including the UK. It’s as true today as it was then – the impacts on the British economy of any US slowdown could be immense.

The UK doesn’t have speedy or accurate measures in place for the labour market but the steep rise in applications for universal credit is one clear guide of what’s happening in this country.

Blanchflower and Bell have suggested that unemployment could reach 20%, or 6 million people.

BRISTOL

Business West have done a survey of businesses that tells us:

88% of firms are concerned for their future And only 11% of small businesses with 5-9 staff believe they could cope for 6 months

When we talk about the “economy”, this is what we have to take into account. When we talk about the importance of the economy we don’t mean disembodied , predatory, multinational companies stretching across many industries without regard for welfare of the people. That has been a part of our economic development of the past and present. But it also includes many small businesses, sole traders providing jobs and putting food on the table so protecting those businesses is protecting our economy. Getting our economy moving again is absolutely essential

Business West say:

  • Three quarters of business had seen decreased orders and sales;
  • Over half had lost business due to cancelled contracts or orders;
  • And half had reported cash flow issues
  • Over a third of businesses had already taken action to cut costs including, reducing working hours, reducing salaries and cutting back on contracted workers.

UNEMPLOYMENT

In terms of unemployment it is currently 3.9% across Bristol –  is 10,100 people (the lowest of the core cities).

If we got to 10% it would be 26,000. if we reach 20% as Blanchflower and Bell suggest we could, that would be over 50,000 unemployed.

And keep in mind that would not land evenly across Bristol. Areas like Knowle West, Lawrence Hill Southmead and Hillfields will take the disproportionate hit of the economic slowdown. So when we’re talking about the average rates of unemployment certain areas will be well in excess of those average rates on top of the already existing inequalities that they face. This is the challenge that we face as a city

GETTING BRISTOL MOVING IN THE RIGHT WAY IN THE RIGHT DIRECTION

So we’ve got to get Bristol moving again, we have to survive as an economy and then we have to start developing our economy again. But we want to be clear that we are not trying to create a carbon copy of what we had before. Doing the same is not an option. We want to rebuild the right kind of economy. We want one that tackles inequality, delivers inclusion and wraps itself around our environmental and sustainable strategies.

In fact, the economy recovery task group being led by are one city economy board (co-chaired by Cllr Cheney and James Durie) have been factoring in how we can use the UN Sustainable Development Goals as the framework for that economic survival and recovery plan which really is a progressive way of thinking about our city’s future

Next week we are talking with leading city thinkers including from our universities, think tanks and international guests to talk about the scale of how we reinvent Bristol as one that has a lower impact on the planet, is more inclusive and more sustainable and resilient in the face of future shocks. We are perfectly placed to lead a new economic recovery. While it is crucial we return people to their jobs, and ensure not just that manufacturing and productivity is back up but that we create a market for people to sell into.

And with the Western Gateway we can lead on that. We have built into that new economic vehicle a focus on inclusive and decarbonised economic development. In our Western Gateway prospectus we identified three key areas of localised growth that could we can lead the UK and even the world.

Advanced manufacturing and engineering

Creative, digital and cyberfinancial services

And we are putting our green infrastructure projects – sustainable housing, mass rapid transit, decarbonising waste and energy – on the list of flagship regeneration projects the government should guarantee and work through to get the economy moving again, as they have the YTL Bristol Arena.

 THE CHALLENGE:

Cannot dismiss the economy. The economy is not a sideshow. It is not secondary. It’s what will determine so many of our relationships as a society. It’s not a case of whether we get the economy moving again but what we make of it. We will support businesses and create jobs, rebuilding the right type of economy, tackling inequalities where nobody is left behind. There is no going back but we are moving forward as a city.

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