WIREDGOV

nef responds to the Comprehensive Spending Review (CSR), with comments on banking, climate change, housing, inequality, the Big Society and jobs.

Don’t forget the banks
“With the Bank of England reckoning that too-big-to-fail banks enjoy over £50 billion a year in extra profits from taxpayer guarantees, the Chancellor is still doing too little too late.” said Tony Greenham, Head of Finance and Business at nef. “He should concentrate more on rebuilding the public tax revenues that were shattered by this banking-led recession."

Climate change and energy
nef believes the Government is seriously underestimating the benefit that greater investment in renewable energy industry could provide. nef research indicates that a £10 billion investment in renewable energy could re-skill 1.5 million people, get 120,000 people back into work, and increase the earnings of low-income workers by £15.4 billion.

“George Osborne is set to apply the economic equivalent of medieval medicine to the UK economy. Unfortunately bloodletting an already ailing patient is unlikely to improve their progress,” said Andrew Simms, Policy Director at nef. “To strengthen the economy and make it more resilient and fit for current challenges, we need to invest comprehensively in new low carbon infrastructure. This modern medicine will improve security, create jobs and boost the economy.”

“At the global level the UK is still dragging its feet in its attempt to decarbonise its economy,” said Dr Victoria Johnson, Acting Head of the Climate Change and Energy Programme at nef. “We need at least £200 billion to be invested into our aging energy infrastructure in the next ten to fifteen years to ensure climate and energy security. Carbon capture and storage and nuclear power are dangerous distractions that will divert funds away from more established and effective renewable energy options. If the UK is to have any chance of becoming a leader in the low carbon revolution the Coalition Government must develop a skilled workforce capable of taking on this challenge.”

Housing
“Halving the social housing budget will cause a major crisis in housing, and simply putting up rents and removing security of tenure won’t be enough to prevent it. If the Government cuts housing benefit without making changes to the rental market, we run the risk of ghettoizing our cities, driving out poorer renters from wealthy areas, especially in London and the South East.” said Charles Seaford, Head of the Centre for Well-being at nef.

“The Chancellor promised 150,000 new homes,” he continued, “but there are 1.8 million households on the waiting lists. The reality is that the Government could slash the housing budget and have one million new affordable homes built in the next five years if they stopped giving away the value created by the planning system to land speculators, and if they reformed social housing finance to make it more efficient: at the moment housing associations are paying high rates to banks and the losers are vulnerable people.”

“Even if the private sector takes up the burden, as the Government hopes, this will actually add to the housing benefit bill, and be financially inefficient.”

In a report to be published in November, nef will set out an economically and politically viable way of solving the housing problem – while cutting the deficit.

Inequality
“The Coalition Government has repeatedly said that we should not saddle future generations with today’s debts,” said Dr Faiza Shaheen, Researcher on Economic Inequality at nef.  “But with these drastic spending cuts there is a serious danger of creating false economies.  Spending cuts which will disproportionately affect women and poorer families will inevitably harm their children and young people. Despite the promises that have been made, some of these cuts will entrench patterns of poverty and inequality, reducing social mobility and worsening health and social outcomes.”

The Big Society
“These cuts reveal the not-so-hidden agenda of David Cameron’s Big Society,” said Anna Coote, Head of Social Policy at nef. “The Government wants to reduce the deficit by replacing paid with unpaid labour through more ‘voluntary’ action.  But the net result is a double-whammy for Britain’s poorest communities.  On the one hand, support for third-sector groups is being slashed as local councils take the brunt of the cuts.  On the other hand, the very same groups are expected to deliver the ‘Big Society’ by filling the gaps left by a retreating state. Life will get a lot tougher for those who are already the most disadvantaged – a recipe for social injustice and wider inequalities.”

Private sector jobs and small businesses
“The CSR indicates that nearly half a million people working in the public sector will lose their jobs. But for the private sector to have any chance of generating the additional jobs, it will first be critical to address the stagnation of lending from the banks to small and medium enterprises,” said Nicola Steuer, Programme Director at nef. “SMEs are the bedrock of the UK private sector. In any event, some parts of the UK will be hit disproportionately hard by these cuts and the Government is mistaken if it believes that the private sector alone will be able to stop further inequalities in our society developing.”

Previous nef research has indicated that there already exists a ‘jobs gap’ between the number of people able to work, and the number of jobs available, particularly in the North of England.