The Rt Hon Rishi Sunak MP
Chancellor of the Exchequer
19 November 2020
Spending Review: priorities for a fairer, greener and kinder United Kingdom
We are writing to ask you to ensure the forthcoming Spending Review prioritises protecting incomes and creating jobs by restoring nature, tackling climate change, devolving power and resources to the local level and creating a fairer society – and to set out some proposals to that end.
The proposals draw on the findings of the Reset inquiry, conducted by the All Party Parliamentary Group on the Green New Deal. In total we heard from over 57,000 people, including two nationally representative polls of 2,000 people, in-depth workshops with 108 people, and interviews with people who are digitally excluded.
The Reset inquiry found that the public are often far ahead of ministers in the boldness, scope and scale of change they are actively seeking. Participants in our nationally representative surveys and workshops had ambitious ideas about the future of work, public services, community, nature and local life. Two thirds of survey respondents wanted the Government to intervene to make society fairer and the same proportion believe that health and wellbeing should be prioritised over GDP growth.
This popular mandate goes beyond investment in green energy. It is an endorsement for deep-rooted transformation of the way the nations of the UK live and work – laying the foundations for a fairer, greener UK after Covid. Alongside the Climate Assembly, they point to using the Spending Review as a turning point, to transform the UK into a fairer, greener and kinder place. Delivering on this public mandate would lead to a job-rich recovery and deliver on the Government’s promise to ‘level-up’ our nations.
The following points set out some key findings from the Reset inquiry and how the Spending Review could act on them:
1. A jobs guarantee, protecting incomes and creating green jobs
- Ensure jobs for everyone with a good jobs guarantee: Two thirds of the public support a jobs guarantee where the Government creates the opportunity for everyone to access a fairly paid job. This enjoys wide support across political affiliation, region and class.[i] Such a policy would make sure there were enough fairly paid jobs available for everyone, in work that is socially useful, organised around community need. Jobs created under the scheme would pay at least a national living wage, be voluntary and not replace existing social security.
- Embark on a green infrastructure transformation: With unemployment set to rise into the winter, there is a clear case for Government investment in the physical and social infrastructure that will make life in the UK greener and fairer. There is clear consensus that the investment needed to transform the UK economy and infrastructure to meet the UK’s emissions targets and reduce inequality could create over a million well-paid jobs, offsetting many of the jobs lost as a result of the economic shock of Covid. Transition Economics propose, for example, that investment of £85 billon in a range of social and environmental infrastructure could create over a million jobs over the next two years.[ii]
- Create a National Nature Service: Proposed by Wildlife and Countryside Link and supported by a coalition of over 50 organisations, this would employ and train thousands of people in environmental work across the UK, from habitat creation to controlling invasive species.[iii] As well as restoring ecosystems, addressing climate change and increasing access to nature, the new service would provide employment, particularly for young people and disadvantaged communities in both urban and rural areas, and provide new practical skills and training opportunities.
- Create a National Care Service: The Spending Review should also include a major investment in care. The Women’s Budget Group has shown how sensible that would be: investing in care creates 7 times as many jobs as the same investment in construction, for example, with 50% more recouped by the Treasury in tax revenue4.
2. Financing investment in a green and fair recovery
A report from Oxford University’s Smith School, from a team that included Nobel Prize winner Professor Joseph Stiglitz and climate economist Professor Lord Stern, found that: “there is strong evidence that green stimulus policies are economically advantageous when compared with traditional fiscal stimuli.”[iv]
At a time of economic downturn, the national government remains the only institution that is large enough to lead a programme of economic transformation. By borrowing to invest in the economy at a time of high unemployment, your Government can create jobs and economic activity, as well as restore business confidence. Using public investment for job creation can drive up aggregate demand where it is needed most, reduce business uncertainty, crowd-in private investment and support the private sector in generating further high quality jobs. Investment in jobs ensures that significant amounts can be recouped through ordinary taxation of income, and of the spending by those in employment. In addition to borrowing to invest, and thereby ‘crowding-in’ private investment, we urge that you:
- Redirect existing spending: There are a range of existing allocations of funding that could be redirected towards a job-rich zero carbon transformation of the UK’s infrastructure. For example, the Reset poll found very little support for Government investment in road building, with fewer than one in seven people backing it, and three times as many supporting investments in cycle networks and local buses. [v]
- Channel savings into the green recovery: There is huge potential for UK pension funds and savings to play a key role in the green recovery by investing in the future, while also providing the returns people need now. Finance for the Future set out simple rule changes to ISAs and pension contributions that could ensure that a substantial part of the investment required for urgently needed energy efficiency programmes could come from these two sources.[vi]
3. Devolve power and resources to the local level
In response to the pandemic, local councils developed support hubs for care homes, while volunteer groups, existing charities and council staff have worked together in rapidly established new partnerships. These distributed responses, and the unparalleled knowledge local people have about their own communities, happened both more quickly and were more effective than Westminster Government led initiatives in many areas. This understanding should be carried through from the pandemic response to the recovery plan and be enabled by your forthcoming Spending Review.
- Level up the regions with nationally funded, locally developed plans: The Local Government Association argue that: “Councils should have a lead role in post Covid recovery plans. The economic, social and environmental recovery our communities need will look different in different areas and only a locally coordinated response will be effective.”[vii] Financing for the recovery should be provided nationally – whilst decided and delivered locally.
- Support the development of a new local banking infrastructure: Many small businesses experienced difficulties accessing Government schemes, in part because the UK no longer has a local banking service able to meet local needs. Banking expert Tony Greenham and community development expert Frances Northrop gave evidence to Reset that proposed remedying this by supporting and strengthening the Community Development Finance (CDFI) sector; establishing new community venture funds to link local capital to local projects; and establishing a capitalisation fund for regional mutual banks using dormant assets to match fund regional private, social and public investment.
4 - Health and wellbeing
The Spending Review should mark the beginning of a beyond-growth economic approach in the UK, with the adoption of economic objectives and indicators that are far better than GDP at charting our progress towards a fairer, greener and kinder future. As outlined in a new high-level OECD report, written by senior economists and policymakers (including the Bank of England’s Andy Haldane), GDP growth is no longer associated with improved social and environmental outcomes. Now is the time for the Treasury to adopt economic objectives that are better than growth; those proposed in the OECD report are: environmental sustainability, rising wellbeing, falling inequality and resilience to shocks.
We would also urge you to use this opportunity to improve the social security system into one that lifts everyone up. This would not only address growing poverty but would also have a positive and immediate economic impact, through spending in local communities.
We urge you to consider the Reset findings in full and ensure they are taken into account in the forthcoming Spending Review.
Caroline Lucas MP
Clive Lewis MP
Wera Hobhouse MP
Debbie Abrahams MP
Claire Hanna MP
Dr Stephen Farry MP
Nadia Whittome MP
Lord Randall of Uxbridge
Baroness Bennett of Manor Castle
Baroness Lister of Burtersett
Baroness Jones of Moulsecoomb
[i] Opinium Poll, 12-15 July 2020, Q7 A3.
[iv] Hepburn, C., O’Callaghan, B., Stern, N., Stiglitz, J., and Zenghelis, D. (2020), ‘Will COVID-19 fiscal recovery packages accelerate or retard progress on climate change?’, Smith School Working Paper 20-02.
[v] Opinium Poll, 12-15 July 2020 Q9