Why throw money at the Town Halls to resolve the financial crisis?
In my last blog I suggested that the Government should use local authorities to kick start the economy. There are many advantages to using local authorities rather than very large infrastructure schemes like HS2, Hinckley Point nuclear power station, Trident replacement or even the Olympic Games.
Many of these very large capital projects are politically contentious and sometimes very slow to have an impact. Most get bogged down in expensive public enquiries and a proportion probably won’t come off. What is more much of the early expenditure is spent on highly paid staff, such as lawyers, architects and designers and not construction and support staff. An equivalent £1billion spread amongst Britain’s 500 plus local authorities would, on the other hand, have an almost immediate impact.
£10 or £20 million given to my local authority, Wandsworth, could be used to buy every school pupil a laptop or to implement 10 or 20 small, local environmental improvements. I think we would have little problem in spending most of it within a couple of years, with an immediate small but significant local economic impact. Such a nation-wide scheme might, of course, include some silly, vanity projects and some failures but nothing as disastrous and costly as failed and useless mega-projects. What is more such a scheme could easily be targeted to, say, the local authorities in the poorest parts of the country, with the highest unemployment rates or the worst health statistics.
I see William Keegan in the Observer (7th August 2016) agrees with me about using local authorities to kick start the economy, though I must confess I am more one of his disciples than the other way round!
A similar suggestion comes from one of today’s great iconoclasts, Simon Jenkins. He suggests that the simplest solution would be to throw money directly at people. His suggestion reminds me of Alistair Darling’s scrappage scheme, which gave people £2,000 to car owners to scrap their old car and buy a new one. But Jenkins’ idea is more open-ended, in that people could spend on clothing, food or, and here’s the rub, foreign holidays – I have nothing against foreign countries, of course, but, if one is trying to kick start the UK economy then giving it all to Benidorm seems rather pointless.
The problem with Jenkins’ idea is, it seems to me, that it is not targeted to those most in need and there would, I think, be considerable difficulty in targeting, say, the lower paid or the unemployed. It is an interesting idea and gets round Jenkins’ perennial scepticism about bureaucracy. But the time of local democracy has come (again). Think of Joseph Chamberlain in Birmingham in the 1880s or John Burns in Battersea in the 1900s, think of Attlee and McMillan boosting council house building in the 1940s and 1950s.
Boosting the local economy means boosting local democracy and society. Forget quantitative easing, which goes to the banks; forget big vanity projects, over-budget, over-time; think local – NOW.
Tony Belton
Tony Belton 