There may or may not be a plan for Brexit, but after the Autumn Statement last week, there is now at least a plan for mitigating it. In summary, it is based on abandoning George Osborne’s fiscal targets and borrowing significant amounts in order to fund infrastructure and to finance a new industrial strategy. Taken all together it looks like a low tax and high tech plan, says Andy Westwood.
That may not give much reassurance for those keen to create an economy that works for everyone or for those that believe leaving the EU gives us a better shot at rebalancing our economy and improving the prospects of people and places left behind during years of polarising globalisation. Yet, this is also a plan that puts cities and regions at its heart.
Unlike his predecessors, Philip Hammond decided against a long list of project announcements – excepting one new train line and a very big house in the country – but there’s every chance that the next Budget and the new Spring Statement will revert to that approach after the announcement of competitive funds for infrastructure, industrial strategy and local growth.
New powers and levers
Following the surprise commitment to increase research and development funding – by some £4.7 billion over the Parliament, the Science and Innovation Audits, with a second wave formally announced, now look well placed to be turned into bids to drive economic growth. So as Mayoral candidates in the big city regions will be wanting to carve out a pitch for new powers and levers, they should also now be combing through the mini industrial strategies that the audits have become.
All the main candidates in Greater Manchester, the West Midlands and Merseyside had broadly shared at least two stated objectives of the Government – rebalancing the economy and achieving more inclusive or fairer growth along the way. Now they can add a third, although like current and recent occupants of Downing St they might find that wanting it is the easy part. Under George Osborne, devolving powers and levers to new ‘metro mayors’ was a key part of his strategy. For his successor, the major issue will not only be how they use these powers but also whether they win much from the new funds on offer. So the challenge for candidates is now to decide what they want to bid for to grow their city region economies and whether they get them.
New mayors will also be able to raise some of their own cash or at least borrow more against the prospects of such future growth, rather neatly replicating Hammond’s approach nationally. So they will be able to raise some cash to part fund their plans or to match money on offer through the Industrial Strategy and Infrastructure Challenge Funds and the third round of LEP Growth Deals. But along the way, and like the Chancellor, they will still be making cuts to spending at the same time.
A Hammond-Osborne model
George Osborne might have hoped for a series of high profile leaders emerging across English cities with new powers and accountabilities, but Hammond’s addition to the model is that they look and act rather like he does. Whilst Osborne could afford to be slightly laissez faire about how they governed, Hammond cannot. He needs mayors to build the infrastructure and the economic growth to make his Brexit plan a success so in the end then, he may have rather more invested in their success.
So this is now an Hammond-Osborne model. Familiar trends for savings and rethinking roles of town halls but with new opportunities to bid for growth funds in infrastructure, housing and in R&D. How might that influence the electoral strategies of those now standing? How will they use his Brexit mitigation plan to put forward economic strategies for new investment, growth and jobs?
In Greater Manchester that might be in health, materials or digital. In the West Midlands it might be in engineering or transport – driverless cars, new engine technologies or high speed rail. In both it might be in more applied facilities that grow the skills base, supply chain capacity and new jobs? It is time that mayoral hopefuls started to scrutinise their Science and Innovation Audits in some detail. But whatever their choices, the economic plans of candidates will rapidly turn from election narrative to bidding strategy. Everything else that they promise will likely depend on what they say now and then what they eventually deliver.
A successful Brexit – for their city regions, as well as for Philip Hammond’s broader economic plan, depends on them.