‘In an economy that is over-leveraged to historic proportions, economic stimuli will not do the trick.’
Kenneth Eade, author: ‘Terror on Wall Street’
Economic stimulation was clearly the main purpose of Rachel Reeves’ Spending Review last Wednesday, which bore no resemblance to any call for restraint (such as that in our commentary on 2nd June). Her self-imposed rules for prioritising what she describes as ‘Investment’ resulted in huge commitments which will raise the national debt to unsustainable levels during the course of this parliament, probably doubling the annual cost of servicing that debt so that it is not far off the current cost of the NHS.
In the commercial world, proposals for investment are scrutinised carefully, with those prepared to commit funds invited to review the alternatives on offer and assess their various projected ‘Returns on Investment’. None of this applies to Government: they are judge and jury of their own commitments, which future generations will have to repay.
As a result, there is a serious absence of joined-up thinking in public investment.
Consider HS2, which will become the white elephant scarring Labour, Coalition and Conservative governments over the past twenty years. There's a mass of new transport projects in the current plans: they may provide employment for a few years, but will their cost be justified by returns? I doubt it.
Then — the Sizewell C nuclear project, with its cost of £14 billion. Does the government not realise that sea levels are rising at an increasing rate? They only have to look a few miles up the coast to Dunwich to see how the East Anglian coast is threatened, even before the worst impacts of climate change.
However, joined-up thinking is conspicuous by its absence not just with investment, but also in areas such as health and social care.
In respect of social care, the £555 million allocated for the Transformation Fund announced in the Spending Review, designed to prevent children going into care, is of course welcome, but it doesn’t change the fact that there are over 100,000 young people already in that situation. The Government needs to maintain its continuing focus on helping adolescents already in care and young adults from disadvantaged backgrounds, to achieve their potential in adult life: this needs further confirmation.
Substantial underlying reasons for young people going into care include family breakdown, concerns over child protection, and unaccompanied refugees/asylum seekers; these relate to issues such as the lack of family formation in today’s social/cultural context and migration. It’s difficult to see how ‘transformation funding’ will tackle these issues, and there needs to be a continuing focus on helping adolescents already in care to achieve their potential.
The situation for family formation has changed dramatically over the past sixty years. In the 1960s, only 7% of children were born out of wedlock, and this had been the situation since the 16th century. However, in August 2022 research from Manchester University reported that over half of children are now born outside marriage. One in every four families with dependent children in the United Kingdom are now with a single parent: 89% of these have a single mother, but only 11% a single father. It's also worth noting that 43% of children in single parent families grow up in poverty, compared to 26% for ‘couple’ families.
Why is this? Mainly because society and culture have changed massively over the past sixty years, and this has led to a de-stabilised society. Last Sunday was Father’s Day — but now young men are confronted with a major challenge. They see power-hungry masculinity in action across the world, but it doesn’t align with the gender balance which we see in today’s society and culture.
Meanwhile the Government is now justifying its major reduction in overseas aid by its plans to increase defence spending: but without support from ‘first-world’ countries such as the United Kingdom and the United States, there will be a continual flow of people wanting to leave their countries of origin.
The Government has provided some focus on young people in its Spending Review, for example by introducing free school meals for all children in households on universal credit. But there is limited support for young people aged 16-24 currently in care or from low-income households. Unless addressed, this will deepen the UK’s inequality and poverty.
The Government should retain this as a priority going forward, and they could demonstrate it by implementing The Share Foundation’s proposal for automated release of HMRC-allocated Child Trust Funds owned by those aged 21 and over, which would immediately provide nearly £400 million to these mainly low-income young adults at no cost to the Government. This would have a significant, positive impact on young people, and it would help them to realise their full potential.
Joined-up thinking means seeing the wood from the trees, not just searching for economic stimulation.
Gavin Oldham OBE
Share Radio