This article will be updated as more reactions from our panel of experts come in.
“The health emergency is not yet over, and the economic emergency has only just begun.” With a global pandemic for a backdrop, Chancellor Rishi Sunak has announced a short-term spending review for the year 2021. With a freeze on public sector pay, an economy declining more than it has in 300 years and no mention of Brexit, experts from across the country share their reactions.
Ernestine Gheyoh Ndzi, Senior Lecturer, York Business School, York St John University
Early on in his speech, the chancellor stated that, despite the pandemic, the UK still has one of the lowest unemployment rates in Europe. But this statement is highly misleading as, in the UK, people in precarious and insecure work – such as those on zero-hours contracts – are considered employed. Indeed, these types of contracts can have a hugely devastating impact on people’s lives – yet a ban on them has been ignored by the government.
But the headline statement of the day was the pay freeze for all public sector workers – apart from nurses and doctors in the NHS. The chancellor talked of restraining public sector pay levels to retain consistency with the private sector. Yet compared to the private sector, public sector pay has fallen drastically in the past decades.
Employees in the public sector, especially frontline services, have worked incredibly hard throughout this pandemic. And a pay freeze would likely affect worker morale and performance.
The pay freeze will be interpreted as a lack of recognition and appreciation for the work public sector employees are doing. There is also the risk that this will affect frontline staff’s mental health – which has already been impacted during the pandemic.
The government needs well motivated workers to rebuild the economy that has been hit hard by COVID-19. But this will not be achieved by damaging the morale of workers.
There’s also the fact that the public sector has, for some years, been struggling to recruit and retain staff in areas like the NHS and teaching, and this pay freeze will most likely exacerbate difficulties with recruitment and retention of workers.
In this sense, it seems the government still hasn’t learnt its lesson from the impact of the two-year pay freeze imposed across the public sectors in 2010, that resulted in increased gender inequality and widened the gender pay gap. With the UK economy in its steepest decline for centuries, while a pay freeze may seem like a good solution, it’s likely to create more problems in the long run.
Anupam Nanda, professor of urban economics and real estate, University of Manchester
Infrastructure is key for unlocking economic opportunities and supporting prosperity. Infrastructure investments tend to have very long-term implications for the economy and society. Today’s announcements have put emphasis on using infrastructure spending to support and accelerate economic recovery from the pandemic.
Sunak has tried to address concerns of funding inequality across and within regions with the creation of a £4 billion “Levelling Up Fund”. Local areas can bid directly for support for projects from this fund.
Using national and regional infrastructure investments to close the regional inequality gap is welcome, as areas such as the north of England continue to suffer heavily from the ongoing pandemic. However, whether this is enough remains to be seen and will depend on how the fund is administered.
The creation of a new infrastructure bank – to be headquartered in the north of England – is good news. This will replace the UK’s involvement with the European Investment Bank and, by encouraging private sector involvement in infrastructure projects, will lead to more streamlined investment.
The spending review also placed emphasis on green and digital infrastructure and renewable energy use. This is very much needed.
Much will depend on the choices and types of specific infrastructure projects, as well as the mixture of national, regional and local investment. The success of these projects will rely on skill development and cooperation across the government departments and agencies involved. It will also demand collaboration across all government levels, down to local authorities.
Listen to Recovery, a series from The Anthill Podcast, to hear more about how the world recovered from crises including the Lisbon earthquake, world wars, the collapse of the Soviet Union and the 2008 financial crisis. Start here with episode one on the recovery after the Black Death.
Anupam Nanda's research has been sponsored by UK and international public and private funding bodies and companies, including UKRI/Innovate UK, the Real Estate Research Institute in the US, UK Foreign and Commonwealth Office, UK Department of Energy and Climate Change, the Investment Property Forum and the Royal Institution of Chartered Surveyors. He is a board member of the European Real Estate Society.
Ernestine Gheyoh Ndzi does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
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