If the Conservatives have a big idea, it is to take it to the next level. Few could disagree with the premise – the need to tackle Britain’s deep and yawning divide between regions, communities and citizens. Yet despite some additional funding and promises that the idea would be turned into a white paper, the idea involves little more than reallocating public infrastructure funds often to areas that foster the political support base of the government. . Some dismiss it as a “slogan in search of a policy”.
The label has some parallels with Tony Blair’s “third track”. For Boris Johnson, it is a vague generic term to define a new direction. In reality, it’s there to disguise a limited program as measures and, in its current form, won’t do much to deliver on the promise of a better post-COVID society.
Britain is deeply to divided nation. It occupies second place, behind the United States, in the inequality ranking of rich nations. Over the past four decades, the risk of poverty has almost double. A serious strategy to fight inequalities would require a much more comprehensive strategy. A measure that would have a much greater impact than adjusting infrastructure funds would be to introduce a guaranteed income floor, without means test, a direct form of leveling for all low incomes.
Building on a long series of calls for a social guarantee, Beveridge and Attlee’s postwar reforms aimed to provide a guaranteed, albeit modest, minimum income for all. But while their plan raised the income floor for many, Britain has yet to create a solid minimum, with millions still falling short of it. A ‘new Beveridge plan` – a program that would directly attack the current system of unequal, petty and overly punitive benefits – must therefore complete the work started in 1945.
Such a plan should institute an automatic and universal income base that would underpin the current heavily means-tested system. Simulations by Compass show that payments of £ 60 per adult and £ 40 per child per week – £ 10,400 per year for a family of 4 – would be achievable, affordable and very incremental. Such a floor – a form of basic income for all, even if it is very different from the big bang regimes proposed by some – would stimulate low incomes, reduce poverty and inequality, strengthen universalism and reduce means test. .
A number of tax adjustments would ensure that the cost is fully covered by the existing tax / benefit system, while making the tax system much more progressive. The most important of these adjustments would be the removal of the personal tax abatement – a very regressive measure that benefits the better-off the most, but costs £ 120 billion a year – and converting it into a cash payment for all adults. . These changes would involve a powerful form of “race to the top” combined with a modest “race to the bottom” to the very top.
While directly reducing poverty, this program would create a new regional equalization and rebalancing instrument that would stimulate all low-income citizens and revive neglected regions in a way that would help revive main streets and local small businesses.
It would also help remove one of the main weaknesses of the UK economic model – its reliance on “luxury capitalism” that stems from extreme concentrations of income and wealth at the top. In his influential book Wealth and poverty, the radical journalist and future deputy Leo Chiozza Money warned a century ago that the “bad distribution” of land ownership encourages “unproductive occupations and luxury trades, with a marked effect on the national productive powers “. Such concentration was the main source of economic turbulence, including the devastating crashes of 1929 and 2008.
Today, luxury capitalism can be seen in fortress developments, private airports, and land settlement for luxury developments that exclude middle and lower income people. A new London bank managed by International Bank Vaults only deals “with billionaires”. One in three new cars bought in London is an SUV, while nearly a quarter of jobs in the UK take the form of ‘on-call work’ which serves the interests of the mega-rich while ignoring the common good. Luxury capitalism has added to exaggerated expectations and ecological imbalance and helps explain the paradox that as societies get richer, there appears to be less capacity to meet basic needs, from health care to housing and to decent work.
Egalitarianism is no longer in fashion. Even Labor failed to deploy it as a political strategy. Yet seldom has there been a greater need for an agenda for greater equality that would not only create a fairer society and more equal life chances, but a better balanced and more resilient economy.
Stewart Lansley is a visiting scholar at the University of Bristol, a board member of the Progressive Economy Forum and author of Breadline Britain and The Cost of Inequality.
This item was first published in LSE Business Review
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