Over the last few years it has felt like social democrats have been missing a project. The IPPR’s latest Commission on Economic Justice could provide the radical ideas we’ve been looking for. This is a special editorial for the September/October 2018 issue of Progress magazine
‘You cannot lead a social democratic party without an economic project.’ That was the conclusion Progress came to almost three years ago, in Labour’s missing project, the editorial of the December 2015 issue of this magazine. For various reasons – not least the 2008 crash – the centre-left in the Labour party has not had a political economy vision to root its argument within the party or speak out to the country in recent years. It has held us back.
This month, the independent thinktank the Institute for Public Policy Research launches the final report of its Commission on Economic Justice – you can read a special extract exclusive for Progress readers named Prosperity and Justice: A Plan for the New Economy, this project could be for Labour (and other political parties if they are willing to listen) in the 2020s what its predecessor report of the Commission on Social Justice was to Labour in the 1990s. It is more than a pamphlet of good ideas: it is a programme for the third ‘paradigm shift’ since the second world war; the first being Keynesianism pioneered by Clement Attlee’s Labour government, the second neoliberalism forced upon the country by Margaret Thatcher and Keith Joseph.
Led by a diverse group of commissioners – from the head of the Trades Union Congress to chief executive officers, senior academics and the archbishop of Canterbury, keen ‘Remainers’ and influential ‘Leavers’ on the central issue of the United Kingdom’s membership of the European Union – what is remarkable is how the IPPR leadership has found consensus on the need for a very different kind of economy, and how to bring it about. The analysis is not always new – in fact, in many ways, former Labour leader Ed Miliband was a pioneer of the arguments for this change. He speaks exclusively to Progress about this report and how it ‘comes five years too late’. However, the reason why Miliband is not now prime minister is because he was unable to articulate what the new agenda was, let alone corral a disparate group of stakeholders to back its manifestation in the new economy. For achieving this, those of us who believe in a better capitalism owe the IPPR a debt of gratitude. It has shown that it is possible to overcome divides in our society and find a common ground.
The silver bullet solution of Corbynomics does not make the 304 pages of the report. But those who baulk at that should not see this as confirmation that the IPPR report is ‘neoliberal’. It is far from it.
This is an agenda social democrats can get behind: a national investment bank, establishing a citizens’ wealth fund, replacing corporation tax and inheritance tax, and accelerating economic devolution. There are ideas that could be both picked up by the Tories and appropriated by Trotskyists – this should not put anyone off. It is vital that Labour centre-left internalise this report and its findings; we should own its conclusions.
The left of Labour party may lament the absence of any mention of nationalisations. The silver bullet solution of Corbynomics does not make the 304 pages of the report. But those who baulk at that should not see this as confirmation that the IPPR report is ‘neoliberal’. It is far from it.
Social democrats may critique the absence of strategies for growth as a country rather than via regions alone, improving social mobility and reducing child poverty. Those who want to reduce the gap between the rich and poor should work relentlessly to help those at the bottom as well as appropriately tax those at the very top.
Britain, after all, needs a pay rise and public policy can help bring that about
In recent years, the focus in Labour has moved from creating opportunity to reducing inequality. This is a false choice. The two should go hand-in-hand. Working people are not just better off because rich people have higher tax rates. Top-rate tax reform has to go with both redistribution to the worse off people and regions of the UK and real social mobility. Economy security aligned with aspiration, if you will. The report, however, is very good on how the economy could hardwire this equality into the labour market, which is a very welcome step. Restoring trade unionism to the private sector is of vital importance, and social democrats should always preference redistribution in people’s pay packets (higher wages) over income transfers (tax credits) after pay day. It is not that the latter is bad, just that the former is hard to achieve but more preferable. Britain, after all, needs a pay rise and public policy can help bring that about.
The part of the report that is to be welcomed most – and is of the greatest challenge to traditional social democrats in the party – is the case made for wealth taxes. Britain’s wealth is in the hands of so few, and the nature of wealth is self-reinforcing: if you have wealth you accumulate wealth, if you do not, you will not. With access to the housing market cut off for so many young people, and too many jobs stubbornly linked to the minimum wage, home ownership is declining and those with assets are ageing. The transformation of life expectancy means pensioners leave an inheritance to their pensioner‑age children.
The status quo is rigged in favour of those with wealth accumulating more: capital gains are taxed less than earnings and higher-rate taxpayers get greater tax relief on their pension contributions. The commission’s final report, like Progress’ Purple Book before it, recommends we sweep both away. Prosperity and Justice goes a significant step forward in promoting a ‘lifetime gifts tax’. The £9bn extra income for the Treasury should provide the capital for another IPPR proposal, the citizens’ wealth fund. Land tax reform is also part of this picture. Together these add up to a radical new approach; they will, however, need the country’s greatest minds to convince the public of the benefits we do not dispute they could create.
Labour’s missing project may have just been found.
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