The Government must invest in people as well as infrastructure for the improvements in skills and job quality that levelling up requires.
The pressing issue of the economic response to Coronavirus was rightly the initial focus of the new Chancellor's first Budget. But in describing the Budget as 'a plan for prosperity tomorrow', he was also keen to make clear this was a Budget to deliver on the Government's promise to 'level up' economic opportunity across the country. Was this the levelling up Budget we were hoping for?
There were certainly some big commitments on government investment. We are set to see some visible improvements in road and rail across the country, and it was welcome to see a focus on local transport as well as big, shiny national projects. The Chancellor promised to review the government spending rules that have tilted investment towards London and South East, and direct more to parts of the country that have seen less in recent decades. There will also be more investment in scientific research and developing new technologies that should bring good, high-skilled jobs into the Midlands and North of England.
All of this is welcome. But the true test of whether the Budget will 'level up' should be whether it will transform the chances of people who are currently locked out of opportunities to boost their standards of living. From this perspective, it’s too early to tell if the Government will deliver what is required.
Investing in people is just as vital as investing in roads and rail. People need opportunities to develop the skills that will allow them to break out of low-paid jobs. Businesses often cite a lack of skills as holding them back from investing. Creating a more skilled workforce is vital to get businesses investing and creating the good jobs that people want to progress into.
Skills got very little mention in the Budget speech. Delving into the Budget book shows there are commitments to increase funding: a reiterated commitment to creating a £2.5 billion National Skills Fund to be consulted on in the Spring, funding to improve college buildings, some smaller funding pots to improve delivery of technical education and T-levels, and a promise to help small and medium-sized businesses to design apprenticeships. But the overall sense was a much smaller commitment to investing in people than in infrastructure.
People relying on low-paid jobs near their home in sectors like retail and hospitality might be wondering if the Budget has really transformed their situation. The Budget confirmed the Government's commitment to raising the National Living Wage further, which is welcome. But many low-paid workers see the majority of this taken away from them as their Universal Credit payments are withdrawn. There was also an increase in the earnings threshold where people start to pay National Insurance contributions. This does benefit anyone who earns more than £8,632 per year, but only 3% of the gains go to the worst-off fifth of the population. These changes also don't address some of the problems with jobs that people really care about: a lack of security, and unpredictable and often insufficient working hours.
A generous reading on these points is that more is to come. The background document for the spending review to take place later in the year says the Government will level up by investing in people as well as infrastructure and innovation, signalling the potential for more skills funding to come. The Queen's speech also promised an Employment Bill this year, which holds the promise of giving people more control over their working life. It will be vital that the Government lays out how their levelling up strategy will offer security and new opportunities to those currently stuck in low-paid work.
Delivering the improvements in living standards we need will also involve more than increasing people's economic opportunities. It requires turning the tide on shrinking protection from the social security system, and rising housing costs that have led to rising poverty for workers and children in recent years. Among the sensible moves to provide workers with more protection if they have to take time off sick during the coronavirus crisis, it is notable that the biggest crack in the system will still be felt by those moving on to Universal Credit, who will still wait five weeks for their first payment.
Levelling up living standards across the country is an ambitious aim. It will require long-term commitment across several policy areas. Given the scale of the challenge it is sensible to take more time to get policy action right. With a spending review and Budget later in the year, the Chancellor will have two more opportunities to follow up on this bold plan for investment, to show the Government will also deliver the improvements in skills and job quality that levelling up will require.