How Rishi Sunak can save the Yorkshire Dales and tourism – Alan Lockey

ACCORDING to polling conducted after his recent ‘mini-Budget’, Rishi Sunak is the most popular Chancellor of the Exchequer for 15 years.

Chancellor Rishi Sunak during a recent visit to Cowley Cycles in Northallerton, part of his Richmond constitutency. Photo: James Hardisty.
Chancellor Rishi Sunak during a recent visit to Cowley Cycles in Northallerton, part of his Richmond constitutency. Photo: James Hardisty.

He will need to draw deep on this well of support in the months ahead, because this was the week where the economic outlook blackened significantly.

May’s growth figures turned out much less healthy than expected, casting further doubt on the prospects for a speedy ‘v-shaped’ recovery.

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Meanwhile, new HMRC data showed that his furlough scheme now supports a staggering 9.4million jobs – more than a quarter of the UK’s entire labour market.

Chancellor Rishi Sunak talks to managers in Barkers department store in Northallerton. Photo: James Hardisty.

There is no understating the scale and historic nature of this policy. Not since the foundation of the welfare state in 1948 has a British Government intervened so emphatically to support incomes – and even then, not to subside employees’ wages directly, as now.

But with the Chancellor confirming his plans to wind the scheme down in October, the key economic question now is what comes next. His answer will have huge consequences for Yorkshire.

The data shows parts of the region – particularly Ryedale, Craven and Scarborough – number amongst the worst affected local labour markets.

Across Yorkshire, the total number of jobs furloughed is just over 700,000 – a figure close to one and half times the population of Leeds.

Rishi Sunak recently tok part in a walkabout in Northallerton. Photo: James Hardisty.

In some respects, this is unsurprising. At the start of lockdown, the RSA predicted rural areas that rely heavily on tourism would suffer most from pandemic economics.

The furlough data bears that out – across Yorkshire, it is areas close to the region’s two national parks that see the highest rates.

In fact, the Cumbrian fringe of the Yorkshire Dales contains the two hardest hit local authorities – South Lakelands and Eden – in the entire country.

With his Richmond constituency standing at the Dales’ North Eastern gateway, the Chancellor should have a unique vantage point on the economic needs of such communities.

But whilst his restaurant voucher scheme and VAT cut for hospitality businesses go some way to acknowledging the distinctive challenges such economies face, the furlough policy remains a resolutely national programme.

This feels like a mistake. The more we move away from lockdown, the more the economic effects of the pandemic will be targeted on particular sectors, workers and communities.

We should also be blunt that the biggest economic stimulus policy available – a working vaccine – is much more likely to be years away than we usually care to admit. The Chancellor may thus need to experiment with radical new solutions to guarantee economic security.

The RSA has long supported universal basic income – an unconditional cash payment to all citizens – as the most effective way to provide a modern safety net for three main reasons.

First, it removes the punitive conditionality and pettifogging bureaucracy of the current system – no more sanctions if, for example, you need to care for an elderly relative instead of job seeking.

Second, it means work always pays – there is no complicated withdrawal of credits that reduces the incentives to work.

Third, like the NHS, it creates a safety net that is the same for all of us; catching us in bad times, whilst allowing us to save in good (though, as with the NHS, richer people would contribute more through taxation).

Practically, we think this system would have dealt better with the pandemic by getting money into people’s pockets far more effectively. The furlough scheme has been a success, but the self-employed equivalent has struggled with administrative challenges – many people have fallen through the cracks.

However, it is UBI’s long-term potential that should now interest the Chancellor. Previously, we thought of UBI as a response to the problem of technologies such as artificial intelligence and driverless cars massively reducing the demand for human workers.

Yet strangely, that is exactly the challenge the pandemic poses now – businesses can still tick over, but at nowhere near the same scale.

The removal of lockdown trading rules will change that dynamic for some, but Yorkshire’s tourism-dependent communities look likely to remain at the sharp end. To be sure, UBI is a huge, transformative policy – it should not be introduced nationally without a thorough pilot. That is a commitment the Scottish government recently made, yet there are no plans to do likewise in England.

The Chancellor should think again – the time is right to see if UBI can make a difference. And if he needs a suitable place to launch a trial, then he should look no further than home.

Alan Lockey is head of the 
RSA Future Work Centre.

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