You know how, in the early days of your Economics course, Fiscal Policy is taught as "when the government spends it creates jobs and produces significant gains"? While I am not advocating you drop that view and become cynical of government (that is for you to develop - or not - as you mature), I do advise you to be able to evaluate the value of some government spending. FREER is a new part of the IEA, and it has published a report into inefficiency in government departments and spending projects. There are rumours that not only is Crossrail late and over-budget, it also has issues with the platforms being too low for the trains; this is something the French encountered after spending nearly £4.5bn on trains that now cannot be used. Here is a taster (from the report) of commons committees questioning some of the "culprits":
The Charge Sheet
“The Public Accounts Committee continues to have serious concerns about the cost and delivery of the
Emergency Services Network (ESN) […including] the delivery timetable, potential overrun costs, and the
absence of detailed contingency plans.”
Public Account Committee preamble, www.parliament.uk
“It is disappointing to us to see a programme that at first seemed so promising unravel so quickly and fall
victim to the same project management issues that we see so frequently across Whitehall.”
Public Accounts Committee report: ‘Crossrail: Progress Review’, 3 April 2019, p.4
“Just so I am clear […the Disclosure and Barring Service] took a service […] ‘modernised’ it and productivity
dropped off a cliff by a half. It has now got a little better, and we are about to go through a total reprocurement to use the same system, which you are concerned is architecturally flawed, in order to get us
back, potentially to close to where it was before it was touched. Is that the summary?”
“Yes, because that is the sensible way to go about it.”
Exchange between Public Accounts Committee and the Head of the Disclosure and Barring Service reviewing their flawed ‘Modernisation’
Programme which cost £220 million more than expected, 11 March 2019
“If the project is too complex to provide a name as to where the failure is, why is the project not too
complicated to provide bonuses to those at the top when they haven’t delivered?”
“I don’t think you are comparing apples with apples in that regard.”
Exchange between Public Accounts Committee and the former Chair of Crossrail reviewing their £2.8 billion cost overrun, 15 May 2019
“Do you think, as the head of the civil service, that we have the wrong people in the wrong jobs? Do we have a
lot of very senior civil servants who are interested in policy and not at all interested in project management?”
The Executive Summary (to read more click this link):
The UK public sector currently struggles to provide IT and project management. From NHS Records to the
Emergency Services Network, and from the Disclosure and Barring Service to e-borders, the Government has
been responsible for a litany of project management, delivery, and implementation failures stretching back
over many years. On their own, these failures occasionally make the news — buried after the latest political
intrigue and guaranteed to elicit no more than an eye roll from most.
Yet each one of these failures matters:
they represent a forgone opportunity for change, a promise to the public not being realised, or spending not
achieving what it was intended to do.
Indeed, government institutions seem rather flat-footed when it comes to project management. Repetitive
failure matters more when, for much of the last decade, the Government has been making the case for
spending restraint. When your pounds need to stretch even further than before, the ones you actually spend
should be done so wisely. And, given that the political narrative has recently (regrettably) swung towards raw
spending totals and inputs, the focus on how we spend, or what we achieve, has been lost at the very top.
Prime Minister’s Question Time has recently felt like an arms race, characterised by evermore inflated
amounts to spend, and little focus on how we spend it.
And that is why the travails of public-sector project delivery are so frustrating. In the last couple of years, the
select committee I sit on (the one charged with overseeing that value-for-money test), Public Accounts, has
dealt with nine separate instances of project failures, costing the taxpayer over £7.5 billion pounds and
collectively causing 34 years of project delays. That’s £7.5 billion of money that has effectively been written
off. Or, in crude terms, money that could have funded a penny off corporation tax for a year, the building of 21
new hospitals, the funding of 17,000 new police officers for the next ten years, or the ability to plug the socialcare gap for the remainder of this parliament.
Of course, project failure is nothing new. The public are relatively inured to poor project delivery precisely
because they have seen decades of it before. And, whilst those at the most senior level of politics have failed
to focus on value for money, there has been a valuable continuing effort further down to build on the greater
commercial focus first applied by Francis Maude in the 2010–2015 parliament. Credit should go to those
people for some successes. This paper neither seeks perfection nor full success in project delivery. Yet, we
need a renewed approach to the reduction of project failure in the public sector. We need to decrease
inefficiency, to reform public-sector delivery mechanisms properly, and to shift the focus back on to how we
spend money, rather than just how much.
“[…] Well, my background is not in programme and project management. I would not say every permanent
secretary has that […]”
Exchange between Public Accounts Committee and the Head of the Civil Service, 1 April 2019
“Neither the Army nor Capita tested the fundamental changes to the recruitment approach prior to its
introduction.”
National Audit Office Report: ‘Investigation into the British Army Recruiting Partnering Project’, 14 December 2018
“We also found no clear or shared understanding of what constitutes value for money in nuclear
decommissioning.”
National Audit Office Report: ‘The Nuclear Decommissioning Authority: progress with reducing risk at Sellafield’, 20 June 2018
Blog resource for 6th Form, with contributions from teachers and students.
Saturday, 27 July 2019
Ammunition to query validity of UK data releases
https://notayesmanseconomics.wordpress.com/2019/07/19/uk-statistics-are-in-quite-a-mess-as-the-public-finances-highlight/
Skim read this, but do try and assimilate some of the question marks over data gathering in the UK - how can the Treasury and ministers formulate appropriate economic policy if the data they are using is inaccurate? A real-world example of government failure, insofar as the problem has been known for quite a while, but has not been corrected (i.e. those responsible sacked):
UK Statistics are in quite a mess as the Public Finances highlight
Today we complete a week filled with UK economic data with the public finances and so far it has been a good week. Before we get to it there has been news about the state of UK statistics from the Public Affairs Committee or PAC of the House of Commons. A major part of this has been the ongoing shambles over the Retail Price Index or RPI and I gave evidence to the PAC on this issue. So what do they think?
There has been much criticism of the position that UKSA ( UK Statistics Authority) has taken at many stages during the last nine years and the position is not resolved. The Economic Affairs Committee of the House of Lords was critical of UKSA’s failure to correct errors in RPI, stating that, “In publishing an index which it admits is flawed but refuses to fix, the Authority could be accused of failing in its statutory duties.” Evidence to this inquiry from the RPI CPI User Group was similarly critical, stating: “It is a measure of the UKSA failure as an independent regulator that such an inquiry was necessary in the first place and produced such a damning report.
It seems that much of my message has got through.
Concerns have been raised about the Treasury and the Bank of England’s influence over UKSA regarding inflation measures.
That’s polite for they dictate them. Also the designation merry-go-round has been a farce.
UKSA designated RPI as a National Statistic in 2010,286 but cancelled the designation in 2013…… Ed Humpherson later de-designated CPIH, ONS’s preferred measure, as a National Statistic……..CPIH was re-designated as a National Statistic in July 2017 following action by ONS.
As the PAC points out nothing ever seems to happen.
In evidence to our inquiry Sir David Norgrove stated that UKSA was planning to respond to the House of Lords Economic Affairs Committee report in April 2019. This did not happen.
Sadly I can also vouch for this sort of thing as I wrote to the House of Lords on the 26th of February about this issue and if I ever get a formal reply I will let you know. Also I am awaiting a response from the ONS to the points I made at the Royal Statistical Society on the 13th of June last year. I think you get the message.
View
In general this is a good report which follows on from the report on the RPI by the Economic Affairs Committee and I welcome them both. However there have been nine years of failure here by the UK Statistics Authority where it has proven incapable of getting any sort of a grip. In fact it has made things worse. My experience of giving it evidence was that my time was wasted as it was going through the motions and ignored and or did not understand my points about the large revisions to the Imputed Rent numbers.
Also there is a danger that the establishment parrots the same old lines as for example this.
Chris Giles told us “Index-linked gilts, student loans and rail fares are all pegged to the RPI” and said that “the continued use of an index known to be wrong, takes money from recent graduates, commuters and taxpayers, and hands it as a windfall to longstanding owners of index-linked government bonds”.
Chris who is economics editor of the Financial Times has done some good work highlighting the failings of the UKSA. But it is also true that he has led a campaign against the RPI and previously ( now abandoned) in favour of CPIH. This means that the fact that CPI and CPIH are systemically wrong in the area of owner-occupied housing frequently gets ignored. It has also contributed to the wasted nine years as the establishment represented by HM Treasury were more than happy to get on board with a campaign to get lower inflation numbers otherwise known as CPIH.
After all HM Treasury could de-link student loans and rail fares from the RPI today if it wished. In my opinion they do not do so for two reasons the first is greed and the second is that they want the RPI to garner bad publicity.
Public Finances
There is a link here because over the years we have observed quite a few strategic issues with the UK Public Finances. Two large ones come to mind of which the biggest has been the hokey-cokey with the Housing Associations which have been excluded, included and the excluded again. This has had an impact on the National Debt of between £50 and £60 billion. Then there was the Royal Mail situation where a pensions liability of the order of £17 billion was initially recorded as a surplus of £10 billion.
Added to that I note that this is on the way.
While the change is mainly focused on presentation, we expect public sector net debt (PSND) at the end of March 2019 to decrease by £30.5 billion as a result of the consolidation of pension schemes’ gilt holdings and liquid assets.
On a stand alone basis that may be fair enough but the collective issue is of a large almost entirely ignored liability which increases the numbers here.
Today’s Data
We learnt that the run of better data had come to a close with some signs that the closing of Prime Minister May’s term of office has led to an opening of the spending taps.
Borrowing (public sector net borrowing excluding public sector banks) in June 2019 was £7.2 billion, £3.8 billion more than in June 2018; the highest June borrowing since 2015……..Borrowing in the current financial year-to-date (April 2019 to June 2019) was £17.9 billion, £4.5 billion more than in the same period last year; the financial year-to-date April 2018 to June 2018 remains the lowest borrowing for that period since 2007.
As to why there are several factors at play and in these times it is hard not to have a wry smile at this.
This reduction in credit accounts for around half of the observed £405 million year-on-year June increase in EU contributions.
There was something of a curiosity as well.
Interest payments on the government’s outstanding debt increased by £2.1 billion compared with June 2018, due largely to movements in the Retail Prices Index (RPI) to which index-linked bonds are pegged.
To that we can perhaps add this announcement via the BBC earlier.
Two million public sector workers are reportedly set to get a £2bn pay rise.The Treasury will unveil the biggest public sector pay rise in six years as one of Theresa May’s final acts as prime minister,the Times reported.Soldiers are set to get a 2.9% rise while teachers and other school staff will get 2.75%, police officers, dentists and consultants 2.5% and senior civil servants 2%.
This next bit seems to be unlikely though.
It is thought the money will come from existing budgets.
Comment
Today’s theme is one of reinforcing the Quis custodiet ipsos custodes line. Or if you prefer who guards the guardians? The UK Statistics Authority and Office for National Statistics regale us with rhetoric about “improvements” but miss the bigger issues and often make them worse. Added to the problems I have highlighted earlier comes a click bait culture where it is increasingly hard to find the data you want. Also we get opinions on the data which is not the job of the ONS, as its role should be to provide the numbers. The situation with the UKSA is so bad I think it would be better to take the advice of Orange Juice.
Meanwhile I opened by saying so far this week the economic data has been good but today we did get a possible flicker of a slowing from the tax data.
Central government receipts in June 2019 increased by £0.8 billion (or 1.5%) compared with June 2018, to £58.7 billion,
That night be a monthly quirk but it is lower than inflation.
Must-read article for aspiring economists
This article covers so many areas you need to have an understanding of, and be able to bring into essays, that it is critical you read and re-read it, until you have grasped its import; you can always email me (or bring up in September) about any bits that are unclear. CapX is an excellent source of commentary, and you should subscribe to it (it is free):
Rebalancing Britain: The northern city on the south coast
Photo: David Goddard/Getty Images
Today CapX launches a major new project with the Joseph Rowntree Foundation focusing on how the next Prime Minister should tackle the longstanding imbalances in the British economy. The project will focus not only on the well-documented North/South divide, but on the way smaller towns and cities are often left behind in national policy debates.
To kick off the series, CapX’s Acting Editor John Ashmore visited Portsmouth to find out the challenges facing the ‘northern city on the south coast’ – and the policies that can help address them.
On first inspection, Portsmouth might seem an unusual place to report on the challenges of rebalancing the British economy.
My first impression stepping off the train at Portsmouth Harbour is of confident prosperity.
Tourists converge on the HMS Victory and the Mary Rose, while the Emirates-sponsored Spinnaker Tower looms on the water’s edge. Bestriding the waterfront is Gunwharf Quays, once a key defensive bastion for the home of the Royal Navy, but now a 33-acre development of upmarket shops, offices and upmarket flats.
Look the other way, though, and you are greeted by the tower blocks of Portsea, an area that was once home to thousands of local dockers.
Those grey 60s buildings crop up all over the island city and are a reminder that while it might have world-class attractions, and it might be in affluent Hampshire, this city is also home to some of the most deprived places in the country.
HMS Warrior docked alongside the city’s historic dockyard (Photo: Gareth Milner / CapX)
It is often referred to as “the northern city on the south coast”. That’s partly an aesthetic observation – long Victorian terraces certainly make you feel more as though you’re in south Wales or the industrial north than the Home Counties. And like those areas, Portsmouth has suffered from the slow drawdown of traditional industry. Where once the local dockyard employed 40,000 people, now there are only a quarter of that number.
Though the city is medium-sized, with about 215,000 inhabitants, it is part of a much wider Solent economic area that is home to 1.3 million people, taking in Southampton, the New Forest and the Isle of Wight.
Wage levels and the unemployment rate in Portsmouth are average by national standards, but they lag behind the rest of the south-east.
Donna Jones, who led the local council between 2014 and 2018 and is now the Conservative PPC for Portsmouth South, says her home town stands out in the comfortable affluence of the wider region.
“Our average house prices, average employment, average education is much lower than the remainder of the south-east, the demographics of cities are often more challenging than the demographics of the countryside around.
“Portsmouth and Southampton are both very working class, elbows out, they’ve got a bit of an edge to them.”
Unlike some now down-at-heel former industrial towns, though, Portsmouth’s is not a story of steep decline from a heady era of shared prosperity. Parts of the city have always been poor, with a large working class population sustained by working at the docks. Conversely, areas such as Old Portsmouth and Southsea have been rich for a long time.
That disparity is reflected in the huge variation in house prices – a four-bed end of terrace in Buckland might set you back £200,000, while a similar-sized property in Old Portsmouth is on the market for just shy of £1.4 million.
Old Portsmouth is packed with high end housing and tourist attractions such as the Spinnaker Tower (top left) and the Royal Garrison Church (Photo: Gareth Milner / CapX)
After the Second World War, when Portsmouth suffered sustained bombing, huge slums were cleared and made way for council estates in the central areas of Buckland, Landport and Somerstown, as well as Paulsgrove, which is north of the island but still thought of as part of Portsmouth.
Back in 2014 David Cameron’s government was moved to create a Minister for Portsmouth when BAE announced the end of shipbuilding operations and the loss of almost 1,800 jobs – a role filled variously by Michael Fallon, Matt Hancock and Mark Francois. Several hundred more followed at the end of 2017.
Those job losses were a big blow to a city which includes neighbourhoods which rank in the bottom 10 per cent of the UK using the government’s Indices of Multiple Deprivation. [see Figure 1].
The disparity in affluence is clear in health outcomes. A resident of affluent Drayton in the north-east corner of the island can expect to live fully 10 years longer than someone just a few miles away in Charles Dickens ward (named for the novelist’s birthplace).
Figure 1 – How Portsmouth compares to the nation on the Index of Multiple Deprivation
Nor are the poorer parts of town tucked away or relegated to the margins: Portsmouth is the UK’s most densely populated city and its poorest areas rub right up against much more affluent ones.
As I walk around central areas such as Somerstown and Fratton, the contrast is quite striking.
While the waterfront has been lavished with care and cash to reel in the tourist pound, further inland boarded up shops and neglected buildings speak to some of the deep-seated economic challenges facing the city.
Despite these kinds of differences, Portsmouth also feels like a place with a strong sense of itself and its long history. Flick Drummond, who represented Portsmouth South between 2015 and 2017 describes a cohesive, tight-knit community.
“It’s not a divided community because we all work together. We all live on top of each other so we all know how the other half lives and there’s a community spirit,” she says.
Politics
Politically the city is a real mixed bag. Labour won Portsmouth South for the first time ever in 2017, while Defence Secretary Penny Mordaunt holds a 10,000-odd majority in Portsmouth North.
No party has overall control of the council, which is led by the Liberal Democrats’ Gerald Vernon-Jackson with Labour support. His predecessor, Donna Jones, is now the prospective parliamentary candidate for Portsmouth South, as well as leading the opposition group.
Portsmouth South is exactly the kind of seat the next Conservative leader will have to win back in a future election if they are to have any hope of a Tory a majority.
And if they are to win, the Tories must focus on the concerns of those on low incomes, whose votes are very much up for grabs. New research from the Joseph Rowntree Foundation and academic Matthew Goodwin shows that Britain’s least affluent people are more engaged in politics and less loyal to particular parties than ever before.
Ten years on from the financial crisis, these voters are still feeling the pinch. Goodwin’s research found that those in low income households are as likely to say they are struggling financially as they were after the recessions of 1992 and 2008.
Long rows of Victorian terraces give Portsmouth the look of cities much further north (Photo: Blom UK via Getty Images)
Struggling to get by
One person who sees that belt-tightening up close on a daily basis is Sandy O’Neill, the chief executive of Portsmouth’s Citizens’ Advice Bureau.
Last year the charity’s Money Advice Team helped over 2,500 local residents, primarily with debt problems. Solutions range from formal measures – declaring bankruptcy, Individual Voluntary Arrangements or Debt Relief Orders – to simply asking creditors to relent.
The causes of financial trouble are familiar: high housing costs and rising utility bills and an increase in transient, short-term work have all contributed. O’Neill says her clients are more likely to be living in the private rented sector than in social housing.
The constant struggle to make ends also has a profound psychological impact, O’Neill says.
“In some areas people feel powerless. They feel that’s their lot and there’s nothing they can do about it and nobody’s listening to them.
“It’s born out of having battled for such a long time and nothing’s changed, they just feel like it’s pointless.”
Something has clearly gone badly wrong when people living in a relatively job-rich city in one of the country’s most affluent regions feel they have no way of improving their lives.
Frustrations dealing with government can add to the energy-sapping financial difficulties. For instance, some clients wait weeks just to get through to a Department for Work and Pensions adviser on the phone.
Being in arrears on Council Tax may also invite an extra charge if a client is taken to the magistrates court, something O’Neill describes as a postcode lottery.
“Charges in Portsmouth are very expensive, so when someone fails to pay Council Tax the local authority can take them to Magistrates and they charge approx £95, in London it’s £110. When you look at Fareham it’s £45, in Havant it’s £60.
“We believe it only costs £25 to the local authority so they’re passing on a cost to the resident…to be charging on a profit basis just seems to be ludicrous.”
Council leader Gerald Vernon-Jackson agrees that there is a “large group who feel disenfranchised by the system”, something which was partly reflected in a 58-42 split in favour of Brexit.
He too identifies housing as a major issue. He points to the experience of one local woman who has had to move flat 17 times in the space of nine years, despite holding down the same job for seven years.
But, as the presence of affluent areas alongside the poorer ones suggests, the economy here has a great deal going for it. The Royal Navy has contributed to a thriving ecosystem of small, specialised engineering firms. While some service the defence sector directly, there are also firms working with Formula 1, pharmaceuticals and precision engineering.
In terms of bigger employers, IBM did at one time have their European headquarters in Portsmouth, but have been gradually scaling down their presence. The likes of Airbus, Rolls Royce and BAE Systems are here too.
SMEs
The problem, Vernon-Jackson argues, is attracting companies in between the big conglomerates and the smaller outfits.
“We’ve got a few big companies and we’ve got lots of little ones – what we don’t have is as many medium companies as we should have and that’s the area where we need to grow the economy of the city.”
Attracting medium-sized companies is one thing, but the city also needs to do more to make sure they are bringing the kind of highly-skilled jobs that boost productivity and wages. In the Centre for Cities ranking of urban areas based on their share of knowledge-intensive service jobs, Portsmouth came 50th in a list of 62.
“In the context of other cities it hasn’t done well in attracting these kind of jobs. That has implications in terms of jobs, wages and career progression,” says Paul Swinney, the Centre’s policy director.
Swinney says the issue is not so much skills – where Portsmouth performs reasonably well – but the poor condition of the city centre. In that respect, it’s a challenge shared by many similar-sized towns and cities in the post-industrial north of England.
The Centre for Cities advocates using a portion of the £31bn National Infrastructure Fund specifically for city centres, which areas like Portsmouth would then be able to apply for.
However Vernon-Jackson says that even if bids are successful, the whole model of local government bidding for slices of Whitehall’s cash is an exhausting, counter-productive process.
“We waste such huge quantities of money bidding for stuff, setting stuff up and then when the money finishes three years later winding it all down again and the money would be much better spent if we could just put it in the base budget and we knew what we were spending it on.”
Another concern is an over-reliance on public sector employment, which means vulnerability to cuts in central government. At the moment the biggest employers are the Queen Alexandra hospital north of the island, the Navy base and the council itself, which between them have nearing 30,000 staff – this in an area with a working-age population of about 145,000.
Retail woes
That parts of the private sector are struggling is evident in areas such as North End, where many of the shops on the main thoroughfare, London Road, are boarded up or in a state of disrepair.
Caroline Collings, who chaired the city’s branch of the Federation of Small Business for 15 years, points the finger squarely at the tax system.
“The business rates are ridiculously high for retail and have decimated our high street so at one point the business rates were higher than the rents being charged.
“London Road is classed as a ‘high street’ so it was being charged exorbitant rates. It has a main road going through it, but that doesn’t make it a high street.”
Disused shopfronts, including a former snooker hall on London Road (Photo: Gareth Milner / CapX)
The demise of some retailers and the fact many shopfronts are left more or less abandoned creates a vicious circle. The kind of high-wage middle-sized companies the council wants to attract are not keen to locate in a city centre that is not the most attractive and lacks high-quality office space.
In an attempt to rectify that, the council has recently given the green light to spending £100m to buy up a 120-acre site in the north of the city. It’s not a move that’s been met with unanimous approval, to say the least. Morgan, the local Labour MP, has described it as a “very risky gamble”. On the Tory side, Donna Jones is concerned that one of Lakeside’s biggest tenants, IBM, is dialling down its operations at the site.
Infrastructure
Inadequate infrastructure is also holding Portsmouth’s economy back. It’s a challenge the city shares with swathes of the country waiting for a better bus service, a road to be dualled or a train line to be electrified. Smaller towns in particular are often forgotten in a national transport debate that has in recent years become fixated with mega-projects like Crossrail and HS2.
The train from London takes an hour and 40 minutes on the “fast” service and a little over two hours on the stopping one. It may be in the south-east, but in terms of transport to the capital, Portsmouth might as well be in the Midlands – except that it’s actually much quicker to travel the 120-odd miles to Birmingham.
Although getting to the country’s economic powerhouse quickly is clearly desirable, of much greater importance to most Portsmuthians is transport within the city and the wider Solent region
It’s an issue that will only become more important given the paucity of land available to build new houses on the island, which means new housing is liable to be north of the island. Local buses are not terrible but could be improved. Ideas for a tram or a light-rail system have been floated in the past, only to wither and die on the vine of tight budgets.
In terms of what economists call ‘agglomeration benefits’, the Solent region could be doing a lot better too. The train between Portsmouth and Southampton takes about an hour to crawl just 20 miles along the cost. That means people in both cities are forced into their cars.
“Lots of people work in Southampton, so the motorway is busy every day, it’s like a carpark in the morning because the motorway is so overcrowded,” Donna Jones observes.
There’s little love lost between the two cities – especially when it comes to football – but closer, quicker links between the two would clearly benefit the whole of Hampshire’s economy.
Local government
The way services are provided is also clearly a source of frustration. A common theme talking to local politicians was a feeling that the council could administer many services more efficiently and responsively than Whitehall departments, some of which have competing and sometimes actively contradictory policies.
Gerald Vernon-Jackson cites skills as a prime example. “Government has 42 different agencies delivering skills stuff and the transactional cost between all those organisations is enormous and the waste of public money and all their stuff is done on a national basis and different places have different needs for different skills,” he says.
Bus services are another area he would like to see brought under local control – and one where improvements could have a marked impact for those on low incomes. As the Local Government Association has pointed out, there are some 5 billion bus journeys a year in the UK – three times more than made by train.
Policy solutions
Where do we go from here? The ‘rebalancing’ debate in the UK often seems to boil down to a crude regionalism, with projects such as the Northern Powerhouse dominating the conversation. Although redressing the investment imbalance between the north and south is certainly a necessary condition for improving the UK’s economic performance, it is far from sufficient.
There are other equally pressing imbalances – between coastal communities and those further inland, between big cities and small cities, and between built-up areas and the countryside.
And just as the north is far from uniformly deprived, so too the south of England is far from universally affluent. As a city like Portsmouth amply demonstrates, some of the most deeply ingrained poverty can be found in places that appear to be doing alright.
As Matthew Goodwin’s recent research demonstrates, addressing the needs of low income voters is a political imperative for the next Prime Minister.
The next Chancellor, whoever he or she may be, will also have the chance to shape longer term priorities with the Spending Review, which will conclude at the same time as the Budget in the autumn.
The good news is there are a great many pro-market, conservative policies that the next occupant of 10 Downing St can put in place to deal with people’s concerns and revitalise the parts of the country that might need a helping hand.
- Among the biggest priorities will be coming up with a post-Brexit regional development policy to replace the EU structural funds on which some areas have relied heavily. Millions of voters who backed a campaign based on taking back control want to see that reflected in concrete plans – and money – for their local areas.
- One post-Brexit policy which could benefit Portsmouth and other coastal cities is free ports – areas treated as outside the UK for customs purposes, meaning goods can enter and re-exit without being subject to import procedures or tariffs.
- Reforming taxes to help the poorest is crucial. One of the policies put forward by CapX’s parent organisation, the Centre for Policy Studies, is making sure people on the lowest incomes no longer have to pay national insurance, a step which would significantly boost disposable incomes for the least well off workers.
- The CPS has also called for a reduction in the taper rate for Universal Credit, as recommended in the CPS’ Making Work Pay report, would significantly boost the incomes of the working poor and ensure people are always better off in work.
- Dealing with concerns over housing by both liberalising the planning system to increase supply, while also offering more secure tenancies for those in the private rented sector.
- Small businesses, often the lifeblood of our town centres, also have an unnecessarily hard time – and their struggles have serious knock-on effects that must be taken into account. While it’s encouraging that reform is now high on the political agenda, the next Prime Minister must be bold and really tackle what has become the scourge of small retailers, replacing a system that is both complex and iniquitous with one that is simple and fair.
- A simpler, flatter funding system for local government would be welcome, too, so that councils do not have to waste their time and limited resources bidding for central government money and can concentrate on actually getting things done.
- The next Prime Minister must also continue the decentralisation agenda which begun with the introduction of Metro Mayors, and recognise that local government is often much better placed than Whitehall departments to deliver services.
Over the coming weeks CapX will be publishing a series of responses from MPs and commentators as part of the Rebalancing Britain series, beginning on Monday with a piece from Mansfield MP Ben Bradley.
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