News

Why Boris Johnson's 'Rooseveltian' Plan to Rescue the Economy Is a Lie

The Prime Minister pledged "build, build, build" and help the economy bounce back, but the money he promised amounts to almost nothing.
03 July 2020, 8:00am
boris2
FDR. Shawshots / Alamy Stock Photo / Boris Johnson. Matthew Horwood / Alamy Stock Photo

A lot of the British press were impressed by Boris Johnson’s speech in Dudley on Tuesday, where the Prime Minister announced £5 billion in funding for investment projects for schools, hospitals, high streets, roads, rail, “and much more”.

“Boris Johnson plans a ‘Rooseveltian New Deal’ to rebuild Britain” ran a Telegraph headline that day. The Times shouted about a new “‘spending spree to boost Britain’s recovery from coronavirus”. “HEY BIG SPENDER” said the Sun, “Boris Johnson unveils bumper £5 billion ‘new deal’ recovery plan”.

Johnson has spent years telling the British public he’s a lot like Winston Churchill, and has moved onto raiding the legacy of his wartime counterpart Franklin Delano Roosevelt (FDR), whose New Deal built the Hoover Dam, reformed the banks, and employed millions of Americans during the Great Depression. But the headline boast of the UK’s new deal – fixing a bridge in Sandwell and building a bunch of new prison cells – are hardly on the same scale.

Nearly everyone, Johnson included, knows a genuine recovery plan is needed if we ever want to get the economy back near where it set off pre-COVID. “This has been a disaster, let’s not mince our words,” said the Prime Minister in an interview with the Times’ radio station on Monday, a day before the highly billed speech. “I mean, this has been an absolute nightmare for the country. The country has gone through a profound shock.”

Right now, GDP is in freefall. Having dropped off a cliff in March, no one knows how far it has left to go. The latest stats available from the Office of National Statistics (ONS) show the biggest month fall ever recorded, in April – ten times bigger than any fall ever recorded before COVID struck. “In April the economy was around 25 per cent smaller than in February,” summarised Jonathan Athow, ONS’ Deputy National Statistician for Economic Statistics. May and June’s stats, expected to show further falls, are yet to come.

But even a quick look at the content of Tuesday’s deal shows that it is nothing like a recovery package, let alone a New Deal. It’s difficult for many of us who haven’t seen a solid pay cheque since February to imagine just how minuscule this £5 billion is in terms of the economy. But it’s worth a try.

Johnson’s new deal is less than his manifesto promised he would spend on roof insulation. It is less than 0.3 per cent of GDP. Less than the National Audit Office says the backlog of school repairs will cost, alone. It’s eclipsed by the “green deal” announced by one Scottish electric company, SSE, a couple of weeks ago, and is not quite as much as TFL plans to spend adding four stations to the Underground. It is roughly the same amount as the government announced (to a lot of shrugs) for busses and bike lanes in February, as part of a speech that also greenlit the controversial £55 billion HS2 rail line.

When all is said and done, London will get £22.1 million from the Getting Building Fund, according to a letter sent this morning to Conservative MPs and seen by the BBC, which won’t build you a house in some parts of the capital.

Effectively, you're not going to build much of anything with £5 billion. And you’re not going to do much to create the fast, green recovery Johnson claimed, according to economists. “Funds that have been committed so far are way too low,” Carsten Jung, senior economist at IPPR's Centre for Economic Justice, tells me over the phone. “Now is a time for a step-change in the economy, we can build back better,” he adds. But this is not it.

In the absence of public investment, Johnson’s only indication of how he’d “level up” the UK, came in planning policy, where he announced Project Speed: these are “the most radical planning reforms since World War II” which will make it easier for private developers to convert empty buildings into homes without planning permission – and without having to build any affordable homes.

Deregulation and giveaways has always been this Tory party’s one big strategy on property development – even after 72 people were killed in the Grenfell Tower fire, demonstrating the dangers of previous attempts to loosen regulations, and after a 2014 attempt to create an empty property loophole was condemned as an “insane” giveaway to developers and stopped by the UK’s courts.

Already the government has shown similar instincts, strong-arming London’s transport network TFL to sell off its land to private buyers as part of the punitive bailout signed by Mayor of London, Sadiq Khan.

Johnson made clear that pleasing the private sector is central to his plan. “The way to get UK business confident and growing is to give the private sector the confidence to invest, in capital, in skills and people, is to create the platform, and that’s what we’re going to do,” he told the Times on Monday.

If private companies were debt-free and thought customers were likely to be rushing back to spend, Johnson’s plan might have merits. But, world-leading economist Ann Pettifor tells me, “because the pandemic has caused so much uncertainty, the private sector will be reluctant to risk investment."

Johnson’s attempts to catfish the British public with images of increasingly remote world leaders are running up against his lack of any real plans for how he might “build back better” in the wake of coronavirus.

FDR, the only four-term US President, warned Americans to stay on their toes about con men who tell the same lie over and over: “Repetition does not transform a lie into a truth,” he said in a radio address in 1939. It’s hard to imagine he would have been as impressed by Johnson’s empty promises to “build, build, build” his way out of this recession.

@mjponsford