The Government doesn’t just need an exit plan, it needs a strategy for recovery – and future resilience

April 27, 2020  |  By Adam Lent, Director, NLGN

Adam Lent, Director of the New Local Government Network, says we urgently need a post-pandemic recovery strategy for the public as well as the private sector.

While the UK struggles to get its head around a lockdown exit plan, the EU is already close to initiating a €1.5 trillion post-pandemic recovery fund. Similarly, Joe Biden has demanded a massive recovery strategy for the USA.

Despite our tardiness, a recovery plan for the UK is vital and urgent because it is increasingly clear that there will be no rapid economic bounce back from this pandemic. Leaving aside the ongoing fears of a new spike in cases and consequent restrictions, we will emerge into a world where many businesses and charities will have gone bust and hundreds of thousands of jobs will have disappeared. With confidence consequently low, investment in the economy is likely to be very slow to return. There will also be a huge wave of demand hitting already very stretched public services with all the family crises, health conditions and evictions which have been artificially deferred until after the lockdown.

No responsible Government can wash its hands of this challenge. There is no free market or austerity solution to the longer-term effects of this crisis that avoids a huge human and economic cost, a cost which could well lead to a political backlash that will dwarf the toxic populism of the last decade.

Such a plan will need to show investors and the general public that while corona-induced uncertainty remains, the Government and the Bank of England will do what is required to get the economy motoring again. That will mean major investment, loan guarantees and ultra-dovish (or supportive) monetary policy for the private sector. But it will also require cast-iron assurances that the necessary funding is there to keep public services going.

Covid has turned the logic of austerity on its head: the health of the economy is now reliant on the health of its population which is itself reliant on the health of the nation’s public services. Cuts will not only kill people, they will kill economic confidence as well.

Resilience as well as Recovery

Recovery, however, cannot become a synonym for resurrection of business-as-usual. Any recovery plan must hardwire much greater resilience into our economy. We need a strategy that will leave us far better placed to meet likely future challenges: another pandemic, a new financial collapse, severe climate disruption or, quite possibly, a self-reinforcing storm combining all three.

That will almost certainly mean addressing the things that make us vulnerable as families and as a nation in the face of sudden disruption: low pay and insecure jobs, over-reliance on imports of food and other vital products, continuing use of petrol which creates chronic illness and strains the NHS, as well as a whole host of other weaknesses.

As with recovery itself, the public realm is also central to resilience. The response of councils, the NHS, charities and communities has been absolutely fundamental to the country’s ability to weather this crisis – far more so, in fact, than the private sector which has proved remarkably fragile. Without their response, the human cost and, indeed, the economic cost would have been incalculably higher. Any resilience plan must include much greater financial support for these crucial pillars of our society than has existed over the past decade.

Funded Centrally, Delivered Locally

We will clearly need a very large amount of money to pay for this post-pandemic work – a Recovery and Resilience Fund maybe. No doubt a good proportion of that would come from long-term borrowing, but a considerable portion will have to come from higher tax. This is not only to avoid unsustainable levels of government debt, but also because tax is a powerful strategic tool. A fund that spent money on building resilience but was also funded by taxes on those things that weaken resilience, such as petrol and imported food, would double its impact.

That may mean funding a strategy centrally but it will have to be delivered locally. Labour markets, public service demand and environmental impact are very different in different places. Any attempt to impose a template from above – as we so often do in this country – will, as always, lead to wasted money and less impact.

Nor can Westminster successfully engage the public in the deliberation that will be necessary to navigate the complex trade-offs of any recovery and resilience plan. We must avoid a repeat of the gilets jaunes backlash that greeted France’s top-down decision to hike fuel taxes – and this will require an intensity of popular participation in decision-making that can only happen locally.

While in the eye of the storm, it can be hard to contemplate rebuilding from its ruins – or how to protect future hurricanes from wreaking more havoc. But if we are to live in an economy and society that does more than lurch from crisis to crisis we need to consider something beyond simple recovery. We need to demand more imagination and foresight from our politicians – so they offer long-term protection for the citizens and public services they profess to hold so dear.