A Budget of choice

Chancellor Rachel Reeves hopes that measures introduced at the Budget will begin to fix public services and that investment will stimulate economic growth. It is an expensive gamble. The Budget increased spending by almost £70bn a year for the next five years, with two-thirds of that covering day-to-day spending and a third directed to capital spending. Around half of this is funded by tax increases, the other by borrowing.

The danger is twofold. First, that the public do not experience enough change in their everyday experience of public services. Second, growth remains lacklustre. With both there is a risk it all just happens too late for a government hoping to win a second term.

Little things that matter

The public will be impatient to see and feel change happening in the meantime, and this will be matched by politicians’ (particularly those in marginal seats!) drive to make it happen. Just after the election, George Eaton – Senior Editor at the New Statesman – highlighted a list Harold Wilson compiled for his Cabinet of “little things that matter a lot”. Were the same list to be written today empty shops on high streets would be near the top.

The Government gets this and plans to introduce a permanently lower business tax for retail, hospitality and leisure businesses. This will clearly benefit community pubs and shops, but it needs to be wider to recognise that increasingly our high streets are moving back to the civic model they first embodied. These reforms should factor this in, and include community businesses outside of retail, hospitality, and leisure.

This Budget honours commitments made by the previous Government to fund levelling up projects through the Levelling Up Fund and a reformed Long-Term Plan for Towns. In doing so, the Government recognises that local regeneration funding is important for people seeing and feeling change happen in their local area.

There is one big question mark here, however, which is the omission of the Community Ownership Fund. Introduced to save buildings people care about in their local area that are at risk, it has been a vital source of funding for community businesses in owning assets. The lack of announcement on the Fund is concerning and the situation needs to be clarified. It is even more imperative for a Labour government that plans to introduce a Community Right to Buy to ensure that there is resource to sit alongside this so the opportunity to exercise this power is equally spread.

The Budget indicated the direction government is taking on funding, which might tell us something about how it expects community ownership to be resourced. It is moving to an allocative approach at a more local level. Clearly this Government has learned from the previous Government that competitive funding pots are wrongheaded, favouring areas with capacity and oven ready projects. This move signals and understanding that decisions are better made closer to people.

Government will also be developing a Social Impact Investment Vehicle to help social finance tackle social problems. We know social investment has often not worked for community businesses. Many still perceive social investment as too expensive. The new vehicle will need to address those challenges for investment to translate into seen and felt change.

Making our case

Towards the end of her speech, the Chancellor posed a challenge to the Conservatives, “If the party opposite disagrees with the choices that I have made, then they must answer, what choices would they make?”. It is a fair challenge, not just to the Opposition but for any of us who work to persuade this Government that our way is right way. As we work to ensure plans for the Spring Spending Review, government needs to recognise the important role community business can play in delivering change people can see and feel. It is a challenge that Power to Change will be working with others to meet.