Regeneration plan? The government doesn't have one

MPs find that ministers have "no adequate strategy" to tackle problems faced by England's deprived c

Ministers have no "adequate strategy" to tackle the problems faced by England's most deprived communities, and a focus on economic growth will increase the gap between rich and poor further, according to a report by MPs. Spending cuts compound the problem.

The cross-party communities and local government select committee (which has a Tory/Lib Dem majority) concluded that the government's regeneration plan "lacks strategic direction and is unclear about the nature of the problem it is trying to solve", adding:

It [the regeneration document] focuses overwhelmingly upon the achievement of economic growth, giving little emphasis to specific issues faced by deprived communities and areas of market failure.

Clive Betts, the Labour MP chairing the committee, pointed out that a billion-pound programme to renovate housing in sink estates had been cut, leaving just £30m as a "transition fund". He criticised the government's emphasis on large scale projects such as high-speed rail and the London Crossrail:

The measures identified by the government focus overwhelmingly on the pursuit of economic growth. The government's measures will not attract sufficient investment for renewal into those communities where the market has failed.

There is no sign that the private sector is filling the gap as public resources are being withdrawn... Without further investment targeted at those places most in need, ministers will store up serious social, economic and environmental problems for the future.

This echoes the conclusions of the Joseph Rowntree Foundation, which warned that favouring more prosperous areas of growth "risks creating a spiral of decline in certain deprived areas" and will further increase the gap between affluent and poor areas.

While this is unsurprising, it is profoundly worrying at a time when the gap between rich and poor in Britain is wider than ever before, with income inequality ahead of Ireland, Japan, Spain, Canada, Germany and France.

Indeed, ministers have made little effort to even create a strategy, with no definition of what "community-led regeneration" means, and no attempt to identify why and where it is most needed.

The problem here is the same it has always been: deprived communities tend to be disenfranchised, therefore there is little political capital to be gained from their regeneration. When times are hard, it's the obvious thing to cut -- indeed, even when times are good, as under 10 years of Labour, these projects remain on the backburner. This summer's riots showed the nihilism of young people within these communities, and the need to regenerate.

Before coming to power, David Cameron himself noted the importance of wealth inequality, citing The Spirit Level in his 2009 Hugo Young lecture. Back in 206, he said:

The right test for our policies is how they help the most disadvantaged in society, not the rich.

Sadly, this laudable aim does not seem to have been borne out.

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

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George Osborne's mistakes are coming back to haunt him

George Osborne's next budget may be a zombie one, warns Chris Leslie.

Spending Reviews are supposed to set a strategic, stable course for at least a three year period. But just three months since the Chancellor claimed he no longer needed to cut as far or as fast this Parliament, his over-optimistic reliance on bullish forecasts looks misplaced.

There is a real risk that the Budget on March 16 will be a ‘zombie’ Budget, with the spectre of cuts everyone thought had been avoided rearing their ugly head again, unwelcome for both the public and for the Chancellor’s own ambitions.

In November George Osborne relied heavily on a surprise £27billion windfall from statistical reclassifications and forecasting optimism to bury expected police cuts and politically disastrous cuts to tax credits. We were assured these issues had been laid to rest.

But the Chancellor’s swagger may have been premature. Those higher income tax receipts he was banking on? It turns out wage growth may not be so buoyant, according to last week’s Bank of England Inflation Report. The Institute for Fiscal Studies suggest the outlook for earnings growth will be revised down taking £5billion from revenues.

Improved capital gains tax receipts? Falling equity markets and sluggish housing sales may depress CGT and stamp duties. And the oil price shock could hit revenues from North Sea production.

Back in November, the OBR revised up revenues by an astonishing £50billion+ over this Parliament. This now looks a little over-optimistic.

But never let it be said that George Osborne misses an opportunity to scramble out of political danger. He immediately cashed in those higher projected receipts, but in doing so he’s landed himself with very little wriggle room for the forthcoming Budget.

Borrowing is just not falling as fast as forecast. The £78billion deficit should have been cut by £20billion by now but it’s down by just £11billion. So what? Well this is a Chancellor who has given a cast iron guarantee to deliver a surplus by 2019-20. So he cannot afford to turn a blind eye.

All this points towards a Chancellor forced to revisit cuts he thought he wouldn’t need to make. A zombie Budget where unpopular reductions to public services are still very much alive, even though they were supposed to be history. More aggressive cuts, stealthy tax rises, pension changes designed to benefit the Treasury more than the public – all of these are on the cards. 

Is this the Chancellor’s misfortune or was he chancing his luck? As the IFS pointed out at the time, there was only really a 50/50 chance these revenue windfalls were built on solid ground. With growth and productivity still lagging, gloomier market expectations, exports sluggish and both construction and manufacturing barely contributing to additional expansion, it looks as though the Chancellor was just too optimistic, or perhaps too desperate for a short-term political solution. It wouldn’t be the first time that George Osborne has prioritised his own political interests.

There’s no short cut here. Productivity-enhancing public services and infrastructure could and should have been front and centre in that Spending Review. Rebalancing the economy should also have been a feature of new policy in that Autumn Statement, but instead the Chancellor banked on forecast revisions and growth too reliant on the service sector alone. Infrastructure decisions are delayed for short-term politicking. Uncertainty about our EU membership holds back business investment. And while we ought to have a consensus about eradicating the deficit, the excessive rigidity of the Chancellor’s fiscal charter bears down on much-needed capital investment.

So for those who thought that extreme cuts to services, a harsh approach to in-work benefits or punitive tax rises might be a thing of the past, beware the Chancellor whose hubris may force him to revive them after all. 

Chris Leslie is chair of Labour's backbench Treasury committee.