COVID-19: immediate, medium and longer term economic development responses
In a time such as this, our first thought must be about the immediate and distressing public health consequences of coronavirus. In trying to pull together a position on economic development, the Institute of Economic Development (IED) is not making light of that situation. It is also clear that health outcomes will continue to deteriorate before they get better.
The IED has deliberately delayed any response to the economic impact of increasing social restrictions until after yesterday’s statement by the Government, and especially the Chancellor’s update. We stress that the IED is a non-political Institute and the Government is undertaking policy to work in the national interest. However, the IED made a cautious welcome to last week’s Budget, and we give a similar welcome to the measures announced yesterday.
The immediate response
It is clear that the Government is seeking to protect the travel, hospitality, retail and leisure sector, all of which are major contributors to economic development. It is also important to note that policy at the current time must have a ‘compensatory’ supply side element – it is impossible to create a demand side response when the official instruction to the public is to stay at home (and avoid spending in the sector).
The responses by HM Treasury, however, highlight that policy and intervention mechanisms are rooted in an economy of the past. Whilst the Chancellor is desperately trying to support registered businesses, mortgage holders and provide statutory sick pay (all of which is laudable), the reality is that the section of the economy where the bottom has just dropped out of the world is the self-employed and/or ‘informally’ employed sector – many of whom may be in the rented residential sector.
The headlines have been around hospitality and leisure – and this sector is likely to feel the difficulties first given the social isolation announcements this week – but it will very rapidly spread into the entire personal service economy and all of their suppliers. We need to spare a thought for the zero-hours sandwich shop worker, the hairdresser, the taxi driver, the entertainment industry worker, and countless others.
In response, the Government should:
For our local authority members, the mechanisms to distribute hardship funds and grants through the business rate system will create additional burdens at a time when staff absence is likely to impact resources. The Government should be reminded of the importance of local response mechanisms and ensuring they are properly funded when this crisis has abated.
The medium-term response
This is where economic development professionals are likely to play an increased role. With the country implementing social isolation measures, there is little that can be done immediately to mitigate problems and boost demand.
If the Government undertakes the policy recommendations set out above, there is probably an 8-10 week window to work hard (out of the office) on a specific policy intervention that is appropriate for the location but makes a big difference in the future. Such a considered approach is likely to be more effective than hurried policy measures whilst we remain locked down. There are probably hundreds of examples of interventions, but these may include:
In all of these measures the IED is keen to help, suggest, discuss and share best practice.
In response, the Government should:
The longer-term response
The longer-term response will need some serious thinking; however, the following are provided as considerations for policy. They are not intended as political but have leaning towards socially-minded capital markets:
The conclusion is that all the evidence of the last 30 years supports a model of a socially-minded market economy – let’s hope that we quickly reach a new normal and get the chance to implement some of these philosophies.
IED Executive Director Nigel Wilcock is available for interview via Phil Smith, Institute of Economic Development PR consultant, on 01778 21818/07866 436159/ email@example.com.
Notes to editors:
The Institute of Economic Development (IED) is the UK’s leading independent professional body representing economic development and regeneration practitioners. Established over 30 years ago, the IED’s key objective is to represent the interests of economic development practitioners and ensure their views are widely expressed and noted. The IED is committed to demonstrating the value of economic development work for local and regional communities; the pursuit of best practice in economic development and the attainment of the highest standards of professional conduct and competence.