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Wednesday, July 01, 2020

FDR, he is not

Boris Johnson's comparison of his rather sad recovery plan to the Rooseveltian New Deal must rank as one of his more over-the-top uses of hype and rhetoric, and that is saying something. As the Guardian points out, the promise of £5 billion to rebuild Britain is a far cry from the US recovery scheme of the 1930s.

The paper explains that the New Deal was a package of government spending used to drag America out of the Great Depression, but there are significant differences between Roosevelt’s plan and Johnson’s:

Spending scale

Johnson’s commitment to bring forward infrastructure spending of £5bn amounts to just 0.2% of current UK GDP. By comparison, overall the New Deal was estimated to be worth about 40% of the US national income of 1929.

The Johnson funds have previously been announced, as part of £640bn in gross capital investment first publicised by the government in March.

Infrastructure projects

Like Roosevelt, the prime minister put investment in infrastructure at the heart of his recovery plan, echoing New Deal public works to build dams, housing, roads, bridges and housing across America.

From 1933, the US public works administration oversaw major projects including the Lincoln Tunnel in New York, work on the 113-mile Overseas Highway in Florida, the Grand Coulee Dam and the completion of the Hoover Dam.

Johnson’s plans are far less extensive, including funding for the refurbishment of schools and bridge repairs in Sandwell.

Protecting workers

Roosevelt’s administration brought in the Wagner Act and created the National Labor Relations Board, which increased the power of trades unions.

Maintaining a free-market Conservative approach, Johnson’s new deal prioritises deregulation.

The paper adds that Johnson promised he would not reinstate a period of austerity as Britain recovered from the coronavirus crisis. However, he has been criticised for not going far enough to rebuild Britain’s public sector from a decade of cuts.

The Institute for Fiscal Studies has estimated that out-of-work households will get £1,600 less than in 2011, even after accounting for emergency steps to raise unemployment benefits this year.

And as the devolved administrations have discovered, none of this is new money. By Roosevelt's standards it amounts to loose change found down the back of the Downing Street sofa, none of which will consequently be passed to Wales, Scotland and Northern Ireland through the Barnett formula.

Not so much a rescue plan, more a damp squib.
And where is the programme of replacing dangerous cladding of high-rise accommodation? That would not only protect vulnerable flat-dwellers, but also create employment. Smaller building firms would benefit as well as the multi-nationals.

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