According to Chancellor Rishi Sunak we are entering a new age. The question is what type of new age? Is this period one in which we all have to become accustomed to living with the pandemic or is this the start of the post-pandemic age? Alternatively, is this the era when climate change starts to make major impacts on life on earth and the UK government begins to take the climate change challenge seriously?
All nations must continually adjust their national budgets to meet national and international circumstances. There must be some attempt to develop a balanced budget over some period which will perhaps not be clearly defined. Attention needs to be paid to immediate problems, but also to laying the foundations to support sustainable economic activity. The key word here is ‘sustainable’. Sustainable does not mean being over-reliant on migrant workers that are educated in other national jurisdictions and whose education has been partly funded by taxpayers in other countries. Sustainability is about developing local capacity and capabilities.
The UK October 2021 budget occurs during a time of great uncertainty. Thus, we have no idea when and if the pandemic might end. We also know very little about the longer-term impacts of the pandemic on everyday living and economic activity. One worrying trend that might be partly linked to the pandemic is the reduction in UK birth rates. Thus, the UK population may be entering a period of shrinkage rather than growth and this will impact on economic growth as well as intensify skill shortages. A shrinking population would also be an aging population, and this then would be linked to a new UK era of economic stagnation. This is not just a UK problem as many countries, including China, face a similar problem.
The key for the October 2021 budget is to focus on skills and laying the foundations for a higher skilled, but all diversly skilled economy. A sustainable and successful economy is based on a variegated skill base, and this requires a blend of different skill levels and capabilities. Another important issue is to ensure that budgets increasingly nudge or even force UK residents to adopt more climate friendly forms of consumption. The UK political debate is based around levelling up but tackling climate change also requires levelling down as carbon intensive lifestyles are replaced with carbon-light lifestyles. For this budget, and all future budgets, a key challenge concerns negotiating the tensions between economic and environmental sustainability. The real danger is that infrastructural investments reflect the economy and society as it was rather than laying the foundations for a new carbon light society.
In August 2021, a book that I co-edited with colleagues was published under the title: Living with Pandemics: Places, People and Policy (Edward Elgar). This book highlights that one of the long-term impacts of the pandemic will be an increase in direct and in-direct taxation and that pandemic recovery must be placed in the context of decarbonisation. Another critical issue is developing policy interventions that will enhance UK resilience in response to future pandemics. The October budget needs to pay much more attention to enhancing UK pandemic resilience.
The budget needs to balance tensions between business as usual and developing nudges to alter behaviour in response to longer-term challenges. The problem with this budget is that it projects conflicting messages. An excellent example is the cut in air passenger duty on UK flights. This is an excellent example of a budget that is projecting mixed messages – encouraging air travel and, at the same time, sustainability with the latter targeted at net zero greenhouse gas emissions by 2050 and travelling in a more environmentally sustainable way. If the UK is going to take climate change seriously then all policies must be focused on reducing inputs (energy/water) and waste, and carbon-intensive forms of travel.
At the centre of this budget, are investments intended to increase travel and there is a limited focus on encouraging a shift towards carbon-light living. The UK government can do much better than this in demonstrating that this country is taking climate change seriously. The problem is one of trade-offs that exist throughout this budget between supporting the economy and society as it currently is and shifting towards a new carbon light age. A rapid reading of the October budget is that this is more targeted at supporting the economy as it was rather than supporting the shift towards a new era.