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Comparing the comprehensive spending review to the #NeverMoreNeeded 5 point economic plan

Ahead of the Comprehensive Spending Review 2020 the #NeverMoreNeeded coalition wrote to the chancellor and the secretary of state for housing, communities and local government with a number of proposals that if implemented would help to tackle some of this country’s biggest social and economic challenges. 

The proposals would boost investment in social infrastructure and community assets, and enable the voluntary sector to play a greater role in supporting the government’s goal of spreading opportunity and building a more inclusive economy. Greater investment in social infrastructure, including in civil society organisations could also enable charities, voluntary groups and social enterprises to continue to play a crucial role in tackling the crisis. 

The #NeverMoreNeeded submission contained long-term sustainable solutions that if enacted fully could strengthen communities across the country permanently. This briefing looks at a few of the key announcements made by the chancellor in the comprehensive spending review on 25 November and assesses them against the #NeverMoreNeeded coalition’s proposals.

  1. Levelling Up Fund

The government announced a new Levelling Up Fund worth £4bn for England, an idea floated by Danny Kruger MP in his recent report to the prime minister. More details are expected in the New Year but at this stage the spending review document states that the fund will invest in “local infrastructure that has a visible impact on people and their communities and will support economic recovery.” However, at this point the suggestion is that those wishing to access the Levelling Up Fund will need to engage in a competitive application process channelled through central government departments. 

How does this compare to proposals in the #NeverMoreNeeded submission?

The #NeverMoreNeeded submission and the five point economic plan include an ask for a Community Wealth Fund. It is important at this point to emphasise that the ‘Levelling up Fund’ is not the Community Wealth Fund with another name. There are some very important fundamental differences between the two programmes:

  • The Community Wealth Fund proposes using dormant assets to create a permanent multi-billion pound national endowment for the most deprived communities, communities which even before COVID-19 did not benefit from Britain’s wider economic prosperity. By contrast the ‘Levelling Up Fund’ must be spent in this parliament.
  • The Community Wealth Fund gives local residents direct control of funding decisions so that money can be invested in the causes that matter to local people. The ‘Levelling Up Fund’ requires applications to be submitted, and decisions to be made, via central government departments.
  • The Community Wealth Fund should be used to tackle structural inequalities that create additional barriers and disadvantages for working class people, women, disabled people and Black, Asian and minoritised ethnic groups. It is unclear whether the same would be true of the ‘Levelling Up Fund’.
  • The Community Wealth Fund is about ‘social infrastructure’ including funding for community groups and local places for people to meet together and strengthen community connections. In contrast the Levelling Up Fund seems to predominantly focus on physical infrastructure like roads and railways. 

We welcome the announcement that further money will be invested in local services and communities but currently have serious concerns about the design and proposed mechanisms for distribution. In particular we know that competitive commissioning processes are not cost-effective, wasting time and resources that could be better invested in local communities. We also know from experience that the right criteria and support need to be put in place, otherwise the funding is likely to perpetuate and deepen pre-existing inequalities. 

We hope that there will be the opportunity to work with MPs, regional mayors, devolved nations, the treasury and MHCLG to ensure that the Levelling Up Fund is able to create the biggest possible impact for local communities.

Further information about the Community Wealth Fund can be found through the Local Trust who coordinate the campaign to implement a Community Wealth Fund. In particular, this blog, outlines the difference between what we know about the Levelling Up Fund and the Community Wealth Fund in more detail.

  1. The Shared Prosperity Fund

For decades communities across the country have benefited from the European Social Fund and European Regional Development Funding which focus on skills, employability, regional inequality and the low-carbon economy. The fund’s equality and non-discrimination objectives ensured women, disabled, BAME and LGBT people and others facing disadvantage were included. 

Ahead of leaving the EU the government made a manifesto pledge to replace this lost funding with a new UK Shared Prosperity Fund (UKSPF). A consultation on the UKSPF has been trailed for some time. At the CSR the chancellor confirmed the launch of the UKSPF in 2021 saying it will begin with £220m for local areas to pilot programmes before ramping up to ‘at least match receipts from EU structural funds, on average reaching £1.5bn per year’. 

The spending review states that the UKSPF will focus on investment in people and skills; investment in community and place; support for those most in need, including people facing barriers to entering the labour market.

How does this compare to proposals in the #NeverMoreNeeded submission?

#NeverMoreNeeded has called for an effective and efficient distribution of the Shared Prosperity Fund that focuses on similar objectives as those funds it replaces. The coalition also calls for the UKSPF to follow a set of key design principles laid out by the National Council for Voluntary Organisations (NCVO).

There was not enough detail in the spending review to yet know if the proposed UKSPF will match the ideas and principles put forward by civil society. It is however of concern that the pilot will not begin until 2 months after the end of the transition period and that it is not clear how long it will take to ramp up from the £220m pilot to the £1.5bn annual spend.

There are also a number of other key outstanding questions including:

  • How will funding need to be identified and who will be responsible for distributing the money?
  • What role is there for civil society, who are often those closest linked to communities, to help deliver the pilot and future work under the new UKSPF?
  • How much of the funding will be allocated to supporting, or ‘levelling up’, marginalised communities?
  • How this fund will be delivered in the devolved nations, where the aims of the fund are devolved to the Welsh and Scottish Governments, and the NI Executive
  • The balance of distribution across the UK – will some areas lose out if their own levels of funding are not ringfenced?

3)    Local authority core funding

Charities, volunteers and local authorities work closely together across the UK to ensure that people can access the support, help and services they need to live their lives well. Greater investment in the delivery of public services should be seen as an opportunity for inclusive, local economic growth and of ultimately long term economic value.

The spending review includes a number of cause-specific pots of money relating to the Covid-19 response, and a £250m fund specifically to address rough sleeping. The spending review also included the announcement that next year local authority core spending would be increased by about 4.5% in cash terms. In addition local authorities will also be able to increase their council tax bills by 2% without needing to hold a referendum, and social care authorities will be able to charge an additional 3% precept for social care.

How does this compare to proposals in the #NeverMoreNeeded submission?

The #NeverMoreNeeded submission emphasised that additional local authority funding should be a) long-term and b) provided by central government rather than generated through council tax rises or other revenue raising mechanisms. Unfortunately the spending review announcement fell short on both counts.

Precept rises will not address the underinvestment in local authorities because it will be the poorest communities, those that have been ‘left behind’, in which local authorities will struggle most to raise the local revenue needed to fund the services that people rely on. Leaving areas solely reliant on council tax and business rates would further exacerbate inequality, not least because of the disproportionate impact that Covid-19 has had on deprived areas and communities.

The 4.5% increase is a start but it is not enough to fill the funding hole caused by years of austerity on top of the pandemic. The Local Government Association (LGA) and Institute of Fiscal Studies (IFS) have indicated that an additional £2bn is still needed to meet the impact of Covid-19 in 2020/21. Even with council tax rises at 2% each year the LGA and IFS estimate there could be a funding gap of £5.3bn by 2023/24. The LGA has called the spending review a “blow to our communities and will hamper local and national recovery efforts.” 

#NeverMoreNeeded ask the government to provide a plan for addressing the economic inequality that will be caused by relying on additional funds to be generated from precept rises. In addition the government must offer a long-term plan for investing in local authorities so they can fulfil their central role in building back better socially and economically.

International Aid

In our submission to the Treasury we called for development priorities to be maintained so it is deeply worrying that the government has changed its commitment to spending 0.7% of GDP on international aid. National and international interests are interconnected. A thriving global environment supports a thriving domestic environment. Many charities have expressed their support for the aid budget through this open statement and called for the decision to be reversed.

In summary

The period covered by the spending review was shortened because of Covid-19 to cover a 12 month period. Many of the announcements reflect that short-term thinking and we must continue to advocate for longer-term sustainable economic and social solutions. There is an opportunity with UKSPF and the Levelling Up Fund for money to be directed into local communities, however we must keep in mind the principles outlined in this document to make sure that any new funding reaches those that most need it and best know how to invest it to make their communities stronger.

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