The flurry of piecemeal spending announcements in yesterday's budget has disguised a failure to invest enough in the still fragile recovery, levelling up - and in the drive to reach net zero, the IPPR think tank warns.
It said the government had set itself a high bar with a spending review the week before COP - and failed to reach it.
Carys Roberts, director of the Institute for Public Policy Research (IPPR) think tank, warns that the economic recovery remains fragile and uncertain, and that greater investment now is needed to secure the economy and build a fairer, greener and more prosperous post-pandemic society.
Carys Roberts, IPPR executive director, said:
The Chancellor was right to make the case for a new economy, but he failed to set out a plan that would actually deliver the high-wage, high-skill and high productivity economy he wants to create. Sunak says he wants to level up the country and deliver a net zero economy, but today we saw neither the money nor the policy ambition to make this a reality.
Despite his rhetoric and a flurry of piecemeal spending announcements the Chancellor's overall package reveals his reluctance and real failure to invest enough in achieving his stated aims.
The country faces major challenges, with rising costs hitting families' pockets, an urgent need to decarbonise our economy, and the NHS, social care and education under huge pressures. For all the rhetoric, these challenges won't be addressed by piecemeal tweaks and short-term measures.
The recovery is still remarkably fragile and subject to great uncertainty, with the IMF forecasting greater permanent damage to the UK economy than countries like the US that have invested more. Holding back now is being reckless with our country's future: to be sure of an optimistic future we need to invest more.
This should have been a moment to secure a strong, long-term recovery and a fairer economy with a major stimulus package focused on green industries, fixing the care crisis and redressing a decade of underinvestment in public services.
This budget failed to reset the economy and put it on track to a more prosperous, low carbon and fair future.
Last week Carys Roberts joined economists in calling for a stimulus of 70 - 90 billion per year over the parliament, to ensure a fully-fledged recovery.
This stimulus would boost the recovery and push the UK towards full employment so that employers bid for workers, rather than workers fighting for jobs, as IPPR called for last month. This scale of investment would be in line with the scale of investment targeted by the Biden administration in the USA. IPPR believe that the Chancellor has greater scope for additional borrowing to invest in the economic recovery.
This would include around 30bn a year in green investment needed to meet the UK's legal net zero emissions target; 11 billion more to deliver free personal care for the over-65s, raise pay for social care workers, and improve access to care in people's own homes; and around 10bn a year for childcare.
Carys Roberts and other IPPR experts are available for interview
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NOTES TO EDITORS
- Last month IPPR published Prosperity and Justice after the Pandemic a report detailing the powershifts needed to address the structural weaknesses in the UK economy, including investing to achieve full employment. Available here: https://www.ippr.org/research/publications/prosperity-and-justice-after-the-pandemic
- Ahead of the budget, IPPR joined over 70 other leading think tanks and economists in signing an open letter to the Chancellor and Prime Minister calling for a green and care-led' recovery.
The open letter is available to read here: https://docs.google.com/document/d/19sK8qGgPSxt0i12P1Aru9q5002zPt-cSmXxqdSAIwJE/edit
- IPPR North will publish a separate response focusing on the Chancellor's levelling up commitments. This will be available here: https://www.ippr.org/impact/press-releases-1
- The landmark IPPR Economic Justice Commission (2018) found that the economy is not working for millions of people, is fundamentally flawed and in need of fundamental reform. Available here: https://www.ippr.org/research/publications/prosperity-and-justice
- IPPR is the UK's pre-eminent progressive think tank. With more than 40 staff in offices in London, Manchester, Newcastle and Edinburgh, IPPR is Britain's only national think tank with a truly national presence. www.ippr.org