Chancellor’s annoucements a step in the right direction but not at scale needed tackle the crisis

Miatta Fahnbulleh, Chief Executive of the New Economics Foundation said:
​“The Government is taking steps in the right direction. There is a new consensus emerging that says we don’t just want to get back to the old normal where we had living standards stagnant for a decade, zero-hours jobs and inequality but we want to build back better.

“To do that Government is going to have to take bold and decisive action. We need a green investment closer to £28bn than to £3bn- almost ten times as big as currently being suggested that will create hundreds of thousands of jobs, not tens of thousands. So while the direction of travel is right we are nowhere near the scale we need to be if we are going to build back better from this crisis.”

Alfie Stirling, Head of Economics at the New Economics Foundation said:

“The chancellor has taken unprecedented steps in recent months, many of which have been welcome and vital. It was right that the government sought to innovate again today. But for all the strong rhetoric, the overwhelming takeaway from this ​‘summer update’ is that the Treasury has failed to fully adjust to the new economic reality.

“In past recessions, monetary policy has been used to get the economy out of a hole. We have known for years now that things would have to be different this time. But recognition of the scale of this truth doesn’t seem to have got through to where it is most needed. The evidence suggested we needed a carefully designed and well targeted stimulus today worth around £100 billion per year. What we got was £30 billion with potentially wayward effects.

“The ​‘job retention bonus’ is a particularly concerning example. For those unable to retain staff beyond October, it will likely make little difference; but for those companies & shareholders who were set to retain staff anyway, it is unclear whether the money will actually get spent any time soon. In effect it’s similar to extending the job retention scheme by a further month. But that amounts to simply nudging the cliff edge back, rather than building the ramp companies need to climb down.”

Chaitanya Kumar, Head of Environment and Green Transition at the New Economics Foundation said:

“The Chancellor is finally listening to voices from across the political spectrum and realising that energy efficiency and insulation are not boring but in fact essential if we are to address climate change while making our homes warm and comfortable. However, today’s announcement represents just a third of the Conservative party’s own manifesto commitment of spending over £9bn on upgrading our homes, schools and hospitals. What we are seeing today is merely an acceleration of that commitment albeit through creative schemes like the £5000 voucher.

“The energy efficiency and insulation sector is a jobs bonanza. When you are facing a jobs-led recession which can potentially leave almost 2 million unemployed by next year, energy efficiency must be the number one tool in anyone’s toolkit. The Chancellor seems to have acknowledged that and has promised to invest £3bn in upgrading our homes, hospitals and schools. And by promising to support low- and middle-income households, the scheme could cut energy bills for those who are burdened by it the most. The devil is, however, in the detail and how the scheme rolls out will be absolutely critical.”

Contact
Sofie Jenkinson, sofie.jenkinson@neweconomics.org, 07981023031