Smarter public spending is key to COVID recovery
23 March 2021
Rebuilding the economy and reducing inequality post-COVID will require a massive reorganisation of public spending on work, education and skills issues, according to UCL Professor of Political Economy, Sir Richard Blundell.
Professor Blundell has co-authored a report commissioned by Sir Patrick Vallance, the Government Chief Scientific Advisor, looking at the expected decade-long impact of COVID-19 on society. It is being published by the British Academy a year after the first national lockdown.
The report forecasts that significant intervention will be needed to avoid an acceleration towards poorer health, social and economic outcomes, and a more extreme pattern of inequality.
Professor Blundell said: “As we come out of lockdown and furlough is wound down, we’ll see increased job loss and we’ve already seen a strong decline in apprenticeships and reduced overall training. This will hit young workers and those just leaving education the most.
“Younger generations have not only had their education disrupted, but they’re also facing a labour market with fewer opportunities for training, reducing their prospects for career progression. Increased opportunities to work from home also favour some more than others - the educated, those on higher incomes.”
Professor Blundell says these challenges bring opportunities for a radical rethink, with areas that were already emerging as priorities now demanding urgent action.
“We’ll need a more agile and responsive education and training system to make up for lost learning and achieve a long-term reduction in the educational divide, along with a broader curriculum post-16 and extra tuition should remain an option for school and college students longer term.
‘We need to rationalise training routes for non-graduates. Better-resourced and sign-posted pathways are important for those entering FE Colleges, especially if they have poor GCSE results. We’ll also need a flexible system that allows a return to level-3 education in ‘high priority’ sectors such as new technologies, green innovation, and health and social care.”
More than 200 academics, practitioners and policy specialists from across the humanities and social sciences drew together insights from civil society, communities and policymakers for the evidence review. The COVID decade: Understanding the long-term societal impacts of COVID-19 highlights a range of interconnected trends:
- Low and unstable levels of trust in the national government, undermining the ability to mobilise public behaviour
- Widening geographic inequalities on measures such as health and wellbeing, local economic risk and resilience, and poverty
- Worsening social development, relationships and mental health – impacts which will vary according to age, gender, race and ethnicity, and levels of social deprivation;
- Severe strains on the capacity to support local community infrastructure, which has risen in importance during the pandemic
- Lost – and likely unrecoverable – access to education at all levels, exacerbating existing socio-economic inequality, limiting access to digital skills and technology, and impeding progress towards a prosperous, high-skilled economy.
The report is accompanied by a wide-ranging and thorough policy analysis, Shaping the COVID decade, which argues that these societal impacts have exposed several gaps in public policy making that the government now has the opportunity to address. They include:
- Resolving tensions between the roles of local and central governance to improve local-level resilience and the response to local needs across the country
- Strengthening and expanding the community-led social infrastructure that underpins services and support networks, particularly in deprived areas
- Improving the flow of knowledge, data and information between all levels of government, different government departments, and between state and non-state decision-makers, making use of specific local and community knowledge
- Eliminating the digital divide by treating digital infrastructure as a critical, life-changing public service
- Empowering businesses and civic, educational and social institutions to act with a shared sense of social purpose
Professor Blundell said across the challenges facing education, skills and employment, a key area for joined-up policy making will be in building digital infrastructure.
“We need to make up for lost learning and lost skills and to help facilitate people’s efforts to engage in the post-pandemic economy. One aspect of lost learning, and indeed of poverty, is lack of access to technology.”
Holes in the social security system have also come under the spotlight in the pandemic. Professor Blundell believes this is ripe for reform too.
“Do we maintain the increases in Universal Credit and sickness pay? Perhaps introducing a more contributory based social insurance system with better replacement rates and adapted to the needs of the new class of solo self-employed workers. We need not only to use Universal Credit receipt and minimum wage eligibility to support low earnings, but also to target vocational training for new employment and career opportunities.
“To achieve the shifts we’re recommending, I don’t think we’re necessarily talking about new money but more a reorganisation of what we prioritise for spending. Yes, it will be expensive, but many other governments, including across the Atlantic, already seem willing to make that investment.”
The reports will be shared with the Government’s Scientific Advisory Group for Emergencies (SAGE) and the Independent Scientific Pandemic Insights Group on Behaviours (SPI-B).
Professor Sir Richard Blundell is a Fellow of the British Academy and also Director of the ESRC Centre for the Microeconomic Analysis of Public policy at the Institute for Fiscal Studies.
- The Covid Decade: Understanding the long-term societal impacts of COVID-19 and the accompanying policy report, Shaping the Covid Decade are published as part of the British Academy’s COVID-19 – Shape the Future programme.
- Institute for Fiscal Studies ESRC Centre for the Microeconomic Analysis of Public Policy
- Professor Sir Richard Blundell's academic profile
- Professor Sir Richard Blundell's personal website
- UCL Economics
Tel: +44 (0)20 3108 9040
Email: j.bolger [at] ucl.ac.uk