What is the issue?
The UK economy is not working well, and it is especially not working well for those on below average incomes. Despite recent economic growth, domestic disposable income per head is still below its level before the-financial crash. Half of all households have incomes barely higher than in 2008, and no UK economic region outside London and the Southeast has recovered to its pre-crash output. The UK economy has interlocking structural weaknesses – low investment, low productivity, a large balance of trade deficit, and sectoral and geographic imbalances – which go back at least thirty years, and are now compounded by significant fiscal, pension, inequality and carbon gaps (Jacobs et al, 2016).
The EU referendum exposed the political impact of economic failure. The vote for Brexit, particularly in the UK’s de-industrialised regions, has been widely understood as a protest by those ‘left behind’ by an unequal, globalised economy. It has already changed the rhetoric of public economic debate, with the Government now joining the Opposition in calling for ‘an economy that works for everyone’. All major political parties appear now to be in favour of a more interventionist economic policy, including a looser fiscal stance, industrial strategy and corporate governance reform. None, however, seem to know exactly what they mean by these. In the meantime, the paradox of Brexit is that – in the short to medium term at least – it will almost certainly damage the UK economy, hurting the incomes and economic security of the most vulnerable, and making it harder to withstand the pressures of globalisation. Yet it is not the only economic challenge facing the country. A new wave of globalisation is still to hit us, as China and other emerging economies expand their role in the international economy. The development of robotics and machine intelligence threatens major job losses in some sectors, even while opening up significant new opportunities in others. Innovation in digital technologies and business models is already having powerful effects on labour markets, taxation and the distribution of wealth. Climate change and other environmental pressures require the long-term decarbonisation and de-materialisation of the economy.
To face these multiple challenges and address its long-standing weaknesses, the UK economy needs to be significantly re-thought. Over the last two decades – the period of both Labour and Conservative-led governments – it has become clear that tinkering at the edges of orthodox economic policies is no longer sufficient. To achieve a more productive and more equitable economy in the post-Brexit era requires a fundamental rewriting of the rules. The institutions, policies and expectations of the UK economy need to be changed.
This is not a simple task, nor one which will be achieved quickly. But it will not happen at all without a very significant shift in the public consensus about what is wrong and what needs to be done. Such a ‘public consensus’ needs to encompass both the views of decision-makers in government and the business community, and those of the voting public. There needs to be a new national understanding of the country’s economic goals and how reforms to public policy, business practice and civil society organisation can enable them to be achieved.
What will the project try to achieve?
The IPPR Commission on Economic Justice will conduct a comprehensive, participative research programme into how the UK economy creates and distributes income and wealth, and make recommendations on how it can be reformed. It will undertake a continuous programme of communications, stakeholder engagement and coalition building to disseminate its ideas and proposals over a period of two years.
The Commission on Economic Justice’s goal is a UK economy that generates a fairer, more broadly-based and more sustainable form of national prosperity. In pursuit of this goal it has two core aims:
- To influence and change economic policies
– of the national UK Government
– of sub-national governments and public institutions (in Scotland, Wales, Northern Ireland, the North of England and local authorities in other English regions)
– of opposition political parties
- To shape and change public debate and consensus on the key economic challenges facing the UK (and other developed countries) and the policy solutions which can address them:
– among the ‘economic policy community’ (economic commentators and media, academic economists, business leaders, economic analysts, civil society opinion formers and parliamentarians)
– among the general public who follow politics
Who might be interested in this project?
The project is expected to be of great interest to senior government ministers and politicians across parties, as well as other policy makers and advisors. It will also be of interest to a range of business sectors, the trade union movement, civil society organisations, academics and think tanks, and a wide range of media commentators.
The Commission will arrange a series of meetings throughout its life with key stakeholders to ensure the direct communication of its ideas and discussion of them. Specifically, these will include:
• The Prime Minister’s office and No 10 Policy Board
• The Chancellor of the Exchequer and Treasury
• The Secretary of State and Department for Business, Energy and Industry Strategy
• Other UK Government ministers and departments
• The Leader of the Opposition, Shadow Chancellor of the Exchequer and other shadow ministers
• The leaders and economic spokespeople of other major political parties in Parliament
• The All-Party Parliamentary Group on Inclusive Growth, with which we have established a formal partnership and have agreed a series of initial events aimed at MPs, peers and others
• The Scottish Government and Parliament
• The Welsh and Northern Ireland Assemblies and Governments
• The Mayor of London and other city mayors, English local authorities and regional institutions such as Local Enterprise Partnerships
• The Bank of England
• The Confederation of British Industry, Institute of Directors, Federation of Small Businesses, Chamber of Commerce, EEF, and other business organisations
• The City of London Corporation and other financial trade associations
• The Trades Union Congress and individual trade unions