Four principles structuring the Chancellor’s speech. Chancellor Rishi Sunak gave his first speech to the Conservative Party Conference this week (video here), structured around four overarching principles: a “pragmatic” approach to economic policy, a commitment to fiscal responsibility, a focus on jobs as a poverty alleviation strategy, and an “unshakable optimism” about the economic opportunities provided by technological progress. 

Fiscal responsibility. Sunak argued that “there can be no prosperous future unless it is built on the foundation of strong public finances”, counterposing Labour’s proposals as fiscally irresponsible.

  • Debt as % of GDP. The Chancellor warned that public debt was approaching 100% of GDP. A decade ago many macroeconomists believed such a level to be damaging to economic growth. But at today’s ultra-low interest rates the cost of servicing that debt is at historic lows (Twitter thread explainer by UWE economist Jo Michell here.) So the idea that a debt level of 100% of GDP is unsustainable is now widely regarded as arbitrary and outdated. The IMF argues that fiscal rules limiting debt to GDP ratios are inappropriate in today’s conditions and should be abandoned. 
  • Public investment is fiscally responsible. Cambridge economist Dimitri Zenghelis and the LSE’s Nicholas Stern explain why public investment in economic growth is key to debt sustainability: “G7 countries should increase post-pandemic public investment...recognise the potential economic and social returns to increasing public debt for the purpose of investment…[and wait] to pay off the public debt until the economy is undergoing robust growth.”
  • International comparisons. Sunak boasted that the UK has “one of the fastest recoveries of any major economy in the world”. But as noted by BBC Newsnight’s economics editor Ben Chu, this is largely because UK GDP fell much more than other G7 countries during the pandemic. In terms of GDP levels, the UK has reached a level relative to its pre-crisis peak roughly equal with Italy, France and Germany. Responding to the Biden administration’s larger stimulus package, the US has now surpassed that level. (For an analysis of the US economy’s recovery, see this article from the Brookings Institution.)

Plan for Jobs. With the furlough scheme having ended on 30 September, the Chancellor said the Government would be judged on how many good jobs it creates. He pledged more than £500 million in new funding to extend the Kickstart Scheme for young people until March 2022, as well as to support workers leaving the furlough scheme and unemployed over-50s back into work. A £3,000 incentive to businesses to take on apprentices has also been extended until February 2022. Sunak promised to create 2,000 “elite ArtificiaI Intelligence scholarships” for disadvantaged young people and to double the number of  Turing AI World-Leading Research Fellows “to ensure that the most exciting industries and opportunities are open to all parts of our society’.

Job creation and UC. Sunak defended his much-criticised refusal to keep the £20 per week uplift to Universal Credit (UC), arguing that dependency on benefits was the wrong approach to reducing poverty. He emphasised instead the government’s commitment to providing jobs. 

The “transition to a new economy”. The Chancellor argued that beyond the measures it has taken (such as issuing temporary visas for HGV drivers) it is not the government’s responsibility to sort out labour shortages; this should be left to the market. Boris Johnson and other ministers have been arguing that today’s labour shortages are the growing pains of an economy which is transitioning, after Brexit, to a high-wage, high-productivity state no longer reliant on immigrant labour. 

Weekly Updates

Poverty and climate change

Rising energy costs and the cost of living crisis. As rising gas prices lead to higher energy bills, Joe Tetlow, Green Alliance’s Senior Political Adviser, explains why accelerating the rollout of cheap renewables and reducing demand for energy through better insulation can reduce dependence on fossil fuels. 

Local economies

Defining ‘levelling up’. Speaking at the Conservative Party conference Michael Gove set out four aspects to “levelling up”: strengthening local leadership, raising living standards, improving public services and enhancing people’s pride in place. But his speech was widely criticised for lacking in clarity.  

Alternative funding options for local authorities. The Green Finance Institute announced the first 5 councils signing up to the Local Climate Bonds campaign. Community Municipal Investments are a way for local authorities to raise green finance using crowdfunding-related methods. 

West Yorkshire Mayor calls for greater devolution. Tracy Brabin, Mayor of West Yorkshire, wrote to the Chancellor calling for the upcoming Spending Review to include greater devolution of funding and powers so local governments can help achieve national priorities more effectively, for example through delivering employment and skills training and helping to address climate change. 


Pandora papers and offshore tax havens. The International Consortium of Investigative Journalists leaked the Pandora Papers, “the largest trove of leaked offshore data in history” mapping the exponential growth of offshore tax havens and the true ownership of shell companies. The data reveals how a variety of politicians and wealthy people hide their wealth and avoid tax by using offshore companies. Tax Justice Network’s Alex Cobham collated the global media response

Industrial strategy and work

Artificial Intelligence (AI) strategy.  This week the Government released its long-awaited National AI Strategy, a ten-year plan to make the UK a “global AI superpower”. The Institute for the Future of Work’s Anna Thomas welcomed the document, but warned that the Government “must swiftly develop proposals for an overarching, principles-led regime to promote accountability [of AI] in the public interest… The AI Strategy should go hand in hand with an Accountability for Algorithms Act to address the risks and harms of algorithmic systems for work, workers and the workplace.” She discussed this further with Ed Miliband and Geoff Lloyd on their ‘Reasons to be Cheerful’ podcast on the Rise of Robo-Bosses

  • AI in the workplace. The podcast explores California’s landmark bill regulating the use of AI in the workplace. It is a response to Amazon’s algorithm-driven rules by requiring warehouses to disclose the quotas and metrics used to track workers. IFOW has researched similar trends in algorithmic management in UK warehouses in its report The Amazonian Era: How algorithmic systems are eroding good work