Spending review=Pay Freeze

On Wednesday we had the long-awaited spending review. Since May the Chancellor had told us it would be a comprehensive spending review. There was nothing comprehensive in this. No multi-year strategic vision.

What did we get? A public sector pay freeze. Let’s call that for what it is: a pay cut in real terms. Ministers were keen to post videos of themselves clapping keyworkers back in the summer. But firefighters, teachers, council workers and countless others have been insulted. Despite all the personal risk, inadequate PPE, cancelled leave days and unpaid overtime, they are still paid less today than in 2010. This is more of the austerity that even the International Monetary Fund say is economically damaging.

The “levelling up fund” will release £600 million next year. But it’s a competitive bid process for the whole of the country, not about levelling up the North. No strategic criteria have been set. The Towns Fund has been plagued with cases of pork-barrel politics: ministers signing off money for places that serve their re-election needs. The public value for money is invariably poor.

The third item of note was £billions for the DWP to get people into jobs. Which sounds good, until you think about the basic logic. Rather than spending £billions to help people find jobs, wouldn’t it make more sense to spend money creating jobs? Making people spend 30 hours a week hunting for jobs that don’t exist is dispiriting and demeaning. People will find the jobs if the jobs are there.

We’ve been through this loop time and again in the past ten years of austerity. Serco’s failure on test and trace. Carillion going bust. Damning value-for-money audit reports for corporate outsourcing firms.

They have this ideological obsession that if government does nothing, multi-nationals will create millions of jobs. It won’t, it hasn’t, and it never will unless the government intervenes. It’s far too profitable for big money to speculate on property portfolios and share buybacks. Meanwhile, 3 million small businesses are falling through the gaps of coronavirus support.

We’ve taken a different approach in the North of Tyne. We’ve safeguarded 1,782 jobs, and our projects are in place creating 2,732 new jobs across Newcastle, North Tyneside and Northumberland. This week we’ve announced another 500 new jobs created, bringing a global software developer here. These are good jobs – high paying, high skill, permanent jobs. Not minimum wage jobs in the gig economy. They are low-carbon jobs, exporting software over the internet.

We’re doing this with £20 million a year, and we’ve only been going 18 months. If we had the firepower that central government has, we could end unemployment. Across the country, Mayoral Combined Authorities have hit timescales and budgets time after time.

Imagine what this spending review could have been. The Chancellor could have said, “There you go, Jamie, there you go other Mayors, here’s half a billion, build me 5,000 homes.” We’ve got desperate need for affordable housing, for eco-friendly homes. We could have created jobs, lined up the apprenticeships and training opportunities, worked with supply chains to keep money in local economies. And at the end of it, we’d have the houses – real, tangible financial assets. Ultimately, it costs the taxpayer nothing – it pays for itself.

Over the summer, government wrote to me, and asked me to develop a plan for economic recovery. Everyone in the region pulled together, north and south of the Tyne, Local Authorities, businesses, universities, the lot. It would generate 55,000 high-quality jobs, 26,000 training opportunities, 15,000 new homes and retrofit another 100,000. It included clean, fast public transport, getting everyone where they needed to go reliably. It protected livelihoods, moving thousands of jobs from older, polluting industries into zero-carbon sustainable jobs. Also it boosted the economy so it would pay for itself with increased taxes from firms and the spending power it would have put in your pocket.

That’s why we need serious devolution. The CBI, Trade Unions, Think Tanks, Local Authorities, higher education, and, well, pretty much everyone thinks it’s long overdue. By law, there has to be a budget before next April. For all our sakes, let’s hope the Chancellor gets it right next time.

Originally published in the Journal and Evening Chronicle 30.11.20