Budget 2021: How could it go further?
Allocating scarce resources during a time of unprecedented need is always going to be a tough job. In 2021, the ‘need’ has taken the form of a massive hit to millions of people’s livelihoods, to our mental and physical health, to our education and opportunities, to our relationships and communities. We are feeling the costs of this past year across so many aspects of our wellbeing, in different ways for different people, with continued uncertainty for the months ahead.
Budget 2021 offers a way to ‘prop up’ existing support
This week’s budget has done a lot in this continued time of crisis to keep many people afloat:
- extending the furlough scheme until September
- extending Universal Credit uplift until September
- extending business rates relief
- grants for businesses will help them reopen when covid regulations permit.
- stamp duty relief will continue to prop up the housing market
all provide much-needed reassurance for people who have felt the impact of the lockdown on their income, jobs and businesses. This builds on the already protected budgets for health and education.
This short-term fix is complemented by a longer-term investment incentive for businesses, as well as a commitment to corporation tax rises. This is likely to make the financial costs of this response sustainable in the long run, through a prospering private sector.
To protect – and improve – our wellbeing, it’s vital to maintain the fundamentals: our health, health care system, jobs, and our incomes. This was a ‘propping up’ budget that will have brought some relief to many.
How could it go further to be a wellbeing-centred budget?
Yet this budget missed an opportunity to reorientate the UK’s focus: away from getting output, or GDP, back on track – which looks like it will be permanently 4% lower as a result of the pandemic, and towards ‘levelling up’ and reducing wellbeing inequalities. These inequalities were already evident before the pandemic, and have only been exacerbated in the past year.
Despite a body of evidence that shows us what works to support those most struggling, the budget missed the opportunity to invest in a way that contributes to our wellbeing as individuals and society.
A wellbeing-centred budget would:
- support the social enterprises and charities whose main assets are their people, and who provide so much support for people and communities to thrive.
- invest more in those jobs that are so important for all of our wellbeing, such as care workers, where working conditions can be so tough.
- identify those most at risk of the long-term wellbeing impacts of joblessness, such as young people who have had their final years of education interrupted, whose student experiences were fundamentally altered and whose employment and job prospects have been really difficult.
- take into account the challenges faced by many people in social housing, and in poor quality housing that has been particularly hard to live in during lockdown.
- reflect the ways in which things like social care, our transport systems and our local communities might need to change to improve the wellbeing for the most vulnerable.
- Use the tax increases – which in particular will kick in for firms in two years time – to change incentives for things like creating a greener economy for a more sustainable UK, and address the financial inequalities created by the pandemic where some businesses have experienced windfalls and some households increased their savings dramatically.
A wellbeing budget would identify the groups most impacted in different ways and set aside funds and programmes to support them across the spending and tax policy mix, explicitly seeking to maximize wellbeing outcomes and reduce wellbeing inequalities.
Shaping the new normal, rather than ‘business as usual’
I very much hope that the successful vaccine rollout continues apace in the UK, and that this is the last budget that the Chancellor has to put together while we are still living such different and precarious lives – with schools, retail, hospitality closed and still a long wait ahead for many of us to see our loved ones.
By keeping most of us afloat during these difficult times, we can perhaps hope for a more strategic rethinking of priorities and strategies, moving the UK towards a wellbeing approach in the next budget when there is less uncertainty about how the economy and society will respond during the reopening over the next few months.
The risk is that this crisis budget, which has been bold in it’s spending because of the context of this emergency, has instead set the tone for future consolidation as things return to some semblance of normality.
Where normality is the goal, by restoring output levels, through as much ‘business as usual’ as possible. This would be a missed opportunity. Budgets such as this could otherwise have been used to pave the way, create an appetite and set the ambition for more transformative approaches to how budgetary decisions are made, with the UK’s wellbeing central to those decisions, to be enhanced now and in the future.