Big budget
Budgets are big events in the economic and political calendar; this Wednesday's showpiece for the toxic chancellor is being billed as the most important for his and the Coalition government's future. The persistent and increasingly consistent calls for an end to austerity, for investment in jobs and growth, are likely to be ignored by Osborne, who will attempt to argue that the current exclusive focus on deficit reduction remains correct - despite borrowing continuing to rise and the economy continuing to fail.
What we are likely to see is some moves toward devolving public spending budgets, following the innovative (if lengthy) set of recommendations made in Michael Heseltine's review of economic development, 'No Stone Unturned', complete with his cartoon depiction turning over a large boulder on the front cover. In particular, more localisation of skills funding and potentially some of the transport budget are being discussed as possible areas where 'local bodies' gain greater influence over the way in which limited public resources are allocated.
These are interesting ideas, combining this government's aspirations to push greater localism with the pull from local authorities, businesses and other stakeholders, including the TUC, for a greater say in the allocation and prioritisation of public investment. There is much evidence from the evaluation of Regional Development Agencies to suggest that reducing the gap between where policy priorities are determined and the delivery and impact of those decisions leads to a much more effective set of outcomes. This government will never admit that RDAs were successful and it is unlikely that Labour will commit to reintroducing them, but imitation is the best form of flattery and progressing back toward a 'single pot' focused on locally determined priorities is as close to imitation as this Chancellor is going to go.
The devil will be in the detail, of course. Who is going to determine what the key priorities are? The NE LEP is in the middle of a large-scale consultation to identify just that, but the accountability of who decides those priorities at the end of the day is somewhat unclear, and how are those decision-makers changed if their choices don't work?
There is little doubt that the failure of the Coalition government to deliver economic progress, to 'rebalance' the economy, is a major problem and George Osborne in particular is suffering a major popularity decline. Shifting the decision point for public investment is not a magic wand, especially if there is no fundamental shift away from the macro-economic policy and exclusive focus on deficit reduction. Devolution of resources may well turn out to be a fig leaf Osborne seeks to hide behind if and, more likely, when the economy continues to fail.
Devolution can make a difference to economic growth, as the RDAs proved, but to be effective it needs to be substantial and it must be backed by a central government shift to much more regionally sensitive policy making. That may not be in the budget.
Kevin Rowan
Regional Secretary
Northern TUC
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