Britain’s post-Covid settlement?

Bryn Jones says Sunak’s cunning plans – and Labour’s timid alternative – are no 1945 moment

If Britain’s struggle against Covid-19 resembles wartime, then Sunak’s November Spending Review could be the first sketch of a peace settlement. In 1944/45, wartime leaders rehearsed scenarios for what became Labour’s welfare state and Keynes’s managed economy. In 2020 the pro-business establishment pines for a ‘return to normal’. Political divides and socio-economic devastation make this highly unlikely. Johnson’s corporate cavalry charge of Big Pharma vaccine won’t prevent hundreds more businesses and thousands more jobs disappearing. Knowing this, and humouring Johnsonian braggadocio, Sunak’s de facto budget mixes fiscal first aid with stabs at economic reconstruction.

He has postponed tackling the huge debt mountain and tacked Keynesian demand stimulation onto neoliberal market forces. All this aims to adapt neoliberal orthodoxies to meet two challenges: 1) the very real threat of decimated consumer service sectors; 2) the failure of the Tories’ fabled promises to ‘level up’ impoverishment and neglect in ‘Red Wall’ constituencies – their new electoral base.

This pragmatic deference to public spending and workers’ grievances parks several tanks on Labour’s lawn. Does Labour have better alternatives? Sunak’s menu has three main courses: financial help for cash-strapped low earners with labour market interventions for the workless; cash injections into public services like the NHS; and public contracts for new jobs and idling businesses. He offers both short-term and headline-grabbing spending and more strategic policies: laying down the tracks on which the Tories hope an economic goods train will run.

The main pay packet measures include “a minimum £250 increase” for two million earning below £24,000 a year; rises for one million-plus NHS staff; and an increased National Living Wage to £8.91 an hour. The labour market policies, however, will produce groans in those who recall their 1980s Thatcherite archetypes. A three-year Restart scheme of regular intensive support, ‘tailored’ for the long-term unemployed, receives just under a billion pounds a year. It will be accompanied by extra ‘Plan for Jobs’ funding: £1.6bn more for 250,000 ‘Kickstart’ temporary placements for young workers – giving employers £2,000 for each new worker till March 2021. Reacting to long-standing inadequacies in further education provision, Sunak promises £138m of new funding for Johnson’s Lifetime Skills Guarantee: essentially training courses for post-teenage workers. Though welcomed by FE representatives, this scheme won’t directly link the unemployed and under-employed to growth sectors needing new occupations and workers. Similar schemes in the ’80s and ’90s produced extra hairdressers and car mechanics, not civil construction and software engineers.

Beleaguered and under-funded English pubic services – the NHS, schools, local authorities, prisons and police – get a total of £9.45 billion of, allegedly, extra funding. Yet nearly 50% of this money goes to prison accommodation! The rail network gets a £2bn subsidy. But these sums are overshadowed by £16.5bn of four years’ new money for ‘defence’, including a new AI agency for a ‘national cyber force’ and a new ‘space command’ to launch satellites and, potentially, space war rockets.

Apart from the claimed “thousands” of jobs, this last supports Johnson’s jingoistic boast that “in the teeth of the pandemic… defence of the realm must come first… to end the era of retreat, transform our Armed Forces, bolster our global influence, unite and level up our country, pioneer new technology and defend our people and way of life”. A Star Wars £16 billion panacea packaged in Brexit Thatcherism.

A £4bn “levelling up” fund bypasses – ideologically, financially and ecologically – Sunak’s earlier Green Industrial Revolution rhetoric. A token £1.1bn for green buildings (1% of all infrastructure spending) is eclipsed by funding for local infrastructure projects, such as new roads, which are likely to ‘level down’ the environmental score card. Even more jobs laying concrete and tarmac could come from a promised quasi-private ‘infrastructure bank’ for a Northern England location, needed to replace European Investment Bank funding. Underlying this neoliberal quasi-Keynesian largesse is a clear strategy and potential electoral target: stave off post-Covid/post-Brexit collapse of public services; display concern for key workers and dangle (temporary) benefit and training lifelines to masses of insecure and impoverished workers. But the big money goes to big business for military and construction contracts.

Unfortunately, Labour’s alternatives differ mainly in size rather than kind. Shadow Chancellor Anneliese Dodds wanted Universal Credit not to be cut and fixed to aid the self-employed, plus more capital spending – £30 billion, ASAP – for more jobs (400,000) than Sunak’s token green initiatives would provide. Dodds rightly said Sunak’s pathways “lock out” the green economy and make “transition to net zero harder”.

Meanwhile, as critics have complained, Labour is now locking out the radical structural changes – public ownership of railways and buses, progressive taxation and devolution of Green Energy and Zero Carbon funds to local government – recognised as necessary in its last manifesto. “Maybe later,” Starmerites may respond. However, Labour’s post-war settlement was not achieved by delaying its bold vision till the 1945 election campaign.

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