For decades real family incomes used to grow by 2 per cent a year. But today the real incomes of working-age households are only just higher than in 2007. Earnings are not expected to return to pre-crisis levels until the 2020s and planned cuts to social security will further reduce the living standards of low- and middle-income households. Yet policy makers behave as if nothing can be done.
The Fabian report challenges this fatalistic view by bringing together politicians, economists and policy experts – and collectively the contributors show that new public policy can bring much faster growth in living standards.
Raising the Bar unveils a six-point plan to raise household incomes:
- Fiscal and monetary policy: end austerity by stopping public spending from falling as a percentage of GDP; increase public investment; only raise interest rates when there is evidence of domestically driven inflation; consider a managed exchange rate as part of monetary policy.
- Labour market reform: introduce a national ‘good jobs’ strategy, as part of sector deals with low-paying industries; increase the regulation of zero-hours and variable-hours jobs; end tax incentives for employers which incentivise self-employment and very short hours; increase and broaden the national living wage unless there is clear evidence of negative employment impacts; re-design universal credit to make work pay for mothers; increase support for disabled workers to retain jobs.
- Worker collectivism: increase powers for trade unions including unimpeded access to workplaces and electronic balloting; introduce workers on boards and sector-level partnerships between employers and unions; government support for new forms of collective organisation, especially for the self-employed, and for alternative models of business ownership which give workers more control and reward.
- Regional policy: devolve strong economic powers to local and regional authorities; distribute public investment fairly across the country; encourage public bodies and other local ‘anchor’ institutions to spend their money locally and include employment conditions in procurement contracts; create a 10 Downing Street ‘local wealth unit’ to drive stronger local leadership capacity.
- Industrial strategy: design industrial strategy around national missions; support manufacturing supply chain development; seek to significantly increase public and
private R&D spending; maintain strong environmental regulation and targets to promote world-leading green technologies; develop sectoral strategies for ‘everyday’ jobs; establish a network of regional investment banks.
- Redistribution: rebalance the tax system to raise more from rich individuals and large corporations; review all tax reliefs and allowances; end social
Raising the Bar includes contributions from Torsten Bell, Dustin Benton, Craig Berry, Anneliese Dodds MP, Alexander Guschanski, John Mills, Özlem Onaran, Chi Onwurah MP, Rachel Reeves MP and Geoff Tily.