“Build, build, build,” was the prime minister’s message. He delivered his speech with the urgency and gusto of a man who is spending big. And he is, it’s just not new money.
Strip away the packaging, and Boris Johnson was serving-up the same investment promises which were first set out in the March Budget, when the government said it would increase Public Sector Net Investment to £407 billion over the course of this parliament - a level not seen for decades.
On Tuesday, Johnson told us that £5 billion of that investment will be brought forward to this year and set out how it will be spent.
The money will be thrown at hospital maintenance, the road network, repairs and upgrades to schools and colleges. In total, £900m will be handed to local authorities to help revive pockmarked high streets. All of it will be spent in England.The aim here is to “level-up”, to direct investment at parts of the country like the West Midlands and the North East which, over the years, have had much less public money spent on them than London. The aim is also to create jobs in the face of the biggest recession, possibly for 300 years.£5 billion is, of course, a large number but the Institute for Fiscal Studies points out that it translates into an investment increase of £106 this year for every person in England who doesn’t live in London.
That’s not an inconsequential sum but won’t do much to level up the difference in investment spending between, say, London and the East Midlands which stood at £835 per head in 2018/19. As far as jobs are concerned, the prime minister couldn’t say how many the projects he trumpeted today will create. It might well be tens of thousands but the government’s worry is that the number of people out of work could surge past 3,000,000 this summer as the government’s Job Retention Scheme tails off.
What jobs are set to go?
Overall, 9,300,000 jobs have been now furloughed. Not all of them will come back, even as lockdown lifts and activity bounces back.A recovery is underway but we don’t know how it will unfold from here. Many jobs will be lost, we just don’t yet know how many.
Johnson acknowledges that rising unemployment is the “biggest challenge” the government faces. By way of a solution, Johnson is channelling the former US President, Franklin D. Roosevelt, promising a version of Roosevelt’s “New Deal” that was introduced to tackle persistently high unemployment in America during the Great Depression.The comparisons don’t yet stack-up. Johnson’s “New Deal” won’t create anything like the 3,000,000 jobs Roosevelt’s version supported at its peak.But then neither does the UK face currently face the same problems. In 1933, the US economy was in a deep hole, demand and supply was depressed, the unemployment rate had reached 25%. The outlook here is bleak, but not that bleak. Not yet.