Spring Statement

The Chancellor’s Spring Statement yesterday had the urgent task of reassuring families and businesses that the government has a plan for the country’s economy. Our economy faces huge pressures, not just because of the extraordinary events of the pandemic and international conflict, but as the result of over a decade of political choices by national Conservative and Coalition governments that have held Britain and Bristol back. Ideological choices to put off investment and cut public spending at all costs, have stripped resilience to shocks out of our economy, and left public services and local authorities with less resources and capacity to operate the social safety net we all rely on.

The Spring Statement recognised the economic problems the government has stored up for itself:

– the soaring cost of living;

– the ongoing need to support recovery from the pandemic;

– a tax system that prioritises taking money out of wage packets rather than taxing wealth and property portfolios;

– the high price we’ve paid for failing to invest in green infrastructure that gives us more control over where our energy comes from and relies less on polluting fossil fuels.

But the solutions on offer were pitched at the Tory backbenches, not at households in Bristol worried about how to make ends meet in the months ahead.

We need government spending to match the rhetoric on infrastructure investment. The statement yesterday coincided with the publication of the government’s second Levelling Up Prospectus, but I note that once again funding for Levelling Up comes in the form of a pot that local authorities have to compete against each other to access. Nonetheless, we continue to advocate to government to deliver the funding we need to deliver the shovel-ready redevelopment of Temple Quarter – the biggest transport and regeneration project outside London in a generation.

For household budgets, the remedies on offer were mixed. While rises to the thresholds for paying National Insurance Contributions reduced the burden somewhat on low paid workers, it doesn’t offset the percentage rise in contributions the Chancellor insists are needed to pay for the consequences of the Tories’ underfunding of the NHS while they’ve been in government.

And while a drop in fuel duty may take a few pounds off the price of filling up the car in the short term, it doesn’t protect households from price rises over the long term. And there was nothing on offer to tackle the other areas that are driving the rises in household’s costs: the rising price of food and energy prices. On the latter, the government’s refusal to take on board Labour’s suggestion of a windfall tax on oil and gas producers to fund a VAT cut on domestic fuel bills and an increase of the Warm Homes Discount is a huge missed opportunity.  

The continued squeezing of wages over the last 10 years has also left households with little room to manoeuvre. The Institute for Fiscal Studies calculate that someone earning the UK average salary of £27,500 will be more than £350 worse off than last year. And the failure to uplift benefits in line with soaring inflation means that those on the state pension or who rely on Universal Credit will actually experience a 5% cut in real terms.

It is local authorities and already-stretched health and advice services that are – yet again – going to have to try and step in and pick up the pieces. Of course I welcome the increase in funding available to distribute through schemes like our Local Crisis and Prevention Fund. But with the Resolution Foundation this morning warning that 1.3 million people (including 500,000 children) will fall into absolute poverty this year, I fear that once again this support won’t come near to matching the need we may see in the city. The funding of £4 million we received in October (that had to last six months), nowhere near covered the £3.5 million a month that we estimate Bristol citizens on Universal Credit lost through the removal of the £20 a week uplift.

We will continue to do what we can to help people who are struggling to make ends meet. You can access support for things like fuel bills, groceries, and school uniform through our Local Crisis Prevention Fund, and we have retained our Council Tax Reduction Scheme which helps around 40,000 families with up to a 100% reduction in council tax bills.

But this is a Spring Statement that both bears out and fails to heed a warning I have been giving to government for some time. Shocks like COVID-19 and energy insecurity hit the poorest hardest – and without proper care, they are most exposed to the economic restructuring that inevitably follows in their wake. For more than a decade government have failed to absorb that lesson – and they now risk deepening the economic divides that we have been working so hard to reduce in Bristol.