take it as a given that economic performance and social justice go hand in
hand. Social goals: equality, the eradication of poverty, building strong
communities, enabling everyone to participate fully in society, and the right
to respect and dignity, are most readily achieved through - and, I’d argue,
prerequisites for - sustainable economic growth.
plenty of evidence for this assertion, whether from the highly influential work
of Richard Wilkinson and Kate Pickett, popularised in “The Spirit Level”,
showing the superior performance of more equal societies against a whole set of
social and economic indicators, or the recent findings from the International
Labour Organisation and International Institute for Labour Studies that those
countries that prioritised income transfers to poorer households have seen the
fastest economic recovery.
the argument isn’t about whether, but how to balance economic recovery and
social goals. Sadly, nearly everything you can think of that’s being done by
the present government goes in the opposite direction. The economy’s in
recession, the highly respected IFS says child poverty’s set to rise. Disabled
people are being singled out for welfare cuts, while public attitudes to
disabled people harden, and disability hate crimes on the increase. The causes
of last summer’s riots are undoubtedly complex, but the independent Riots,
Communities and Victims panel’s findings are unequivocal: many young people lack a sense of hope for
the future in an age of record youth unemployment.
could a different approach look like, and what might Labour do differently?
Here are three suggestions, which have tackling poverty and inequality at their
rethink fiscal policy by rebalancing the approach to tax and spending cuts.
Analysis of the Chancellor’s budgets and spending reviews since June 2010 shows
that, with the exception of the very richest 10%, the impact of the measures is
highly regressive: the poorest take most pain. Yet, as the IMF itself has
pointed out, putting money into the pockets of the poor is the most effective
form of economic stimulus – they go out and spend.
poorest families stand to lose over £20billion from tax credit and benefit cuts
by 2015, as the Child Poverty Action Group has shown. CPAG suggests the “fiscal
hindrance” effect on the economy could be a £32billion reduction in GDP as a
cuts (including even that favourite of Liberal Democrats, cutting tax rates at
the bottom) favour the better off. A more progressive tax system alongside not
slashing welfare benefits should be the priority – not only to bring
much-needed funds into the economy, and not only because cutting poverty
doesn’t just help the immediate recovery but also brings long-term savings to
the Exchequer (research by the Joseph Rowntree Foundation has suggested that
the cost of child poverty to the public purse could be in the region of
£25billion a year), but as a matter of simple fairness.
invest in infrastructure spending that simultaneously supports economic growth
and promotes greater equality. That means investment in good quality childcare
(which brings the greatest developmental benefits to the most disadvantaged
children, and supports women’s employment); investment in more affordable
housing to create jobs and homes, and help build stable communities (the
government’s policies are proving woefully inadequate, with the most recent
figures showing a 24% fall in the number of new homes started compared with the
same period last year); and investment in education. Following the hike in
university fees to £9,000, we’ve seen a 7.7% fall in the number of applicants
for university places compared with the equivalent point last year – something
that makes no sense when our global competitive position depends on a highly
tackle the discrimination and disadvantage in the labour market that means that
women, disabled people, those from certain BME backgrounds, older and younger
workers, experience significant under or unemployment. There’s a whole range of
policy solutions that could be developed, from offering incentives to employers
who take on a young or disabled worker, to anonymising applications processes
to deal with employer discrimination, to mandatory pay audits. The government
has only a one-club approach to maximising labour market participation – a Work
Programme that isn’t actually working.
Rather than focussing exclusively on supply side measures, we need policies
that dismantle barriers that stop people working and create more opportunity
for people to work - not least, of
course, including the creation of jobs.
this might seem too simplistic or obvious an approach, but what we need are
policies that are effective. Policies that maximise social and economic
participation not only increase economic performance, they deliver stronger
communities, improve social justice, and promote equality for all. Those are
the goals that must remain at the front and centre of public policy.
This article has been published in the ResPublica Fringe magazine, a collection of articles and essays from our party conference partners.
Kate Green MP will be speaking at ‘Responsible recovery:
Balancing economic and social priorities’, a ResPublica public fringe event at
Labour Party conference: Wednesday 3rd October, 4.00pm – 5.15pm, Manchester