Public Finance Choices for the Left

There is a significant prospect of a Labour government in the next few years – and of one that is not afraid of challenging the public policy orthodoxies of the recent past. This project explored the public finance dilemmas and options which might face an incoming government, in anticipation that Labour ministers may soon be in power.

Throughout June and July 2018, the Fabian Society and ICAEW assessed how Labour can realise the aspirations set out in its 2017 manifesto, in the context of a sound financial stewardship of the UK’s economy.

During this time Andrew Harrop (Fabian Society general secretary), Ross Campbell (ICAEW director, public sector) and other policy practitioners and experts shared their thoughts on:

1. How can the Labour party achieve higher public spending and fiscal sustainability?
2. How can fiscal and accounting rules be reformed to support investment and the public ownership of assets?
3. What approach should be taken to the devolution of public finances, local taxes and geographic fairness?

This analysis was brought together and discussed at a roundtable event, attended by key Labour policy makers and representatives from industry on 11 July.

Insight

1. How can the Labour party achieve higher public spending and fiscal sustainability?

Radical but tough, Dan Corry

The austerity shortfall, Howard Reed

2. How can fiscal and accounting rules be reformed to support investment and the public ownership of assets?

Towards transparency, Gemma Tetlow

Rules aren’t made to be token, Catherine Colebrook

3. What approach should be taken to the devolution of public finances, local taxes and geographic fairness?

Fairness and its many faces, Iain McLean and Martin Rogers

Beyond tax and spend, Kate Bell and Geoff Tily 

The final report – The Fiscal Alternative

The Fiscal Alternative is the final report of this six-month project, and presents recommendations to both a future Labour government and today’s Conservative ministers.

The final Fabian Society report recommends that:

• The Conservatives should adopt fiscal rules similar to those of the Labour party in order to end austerity
• Labour should plan to increase public spending by at least 4 percentage points of GDP
• Public finance rules should be reformed to end the bias against public sector activism
• Taxes should be made more progressive to redistribute money around the UK
• The geographic allocation of public spending should be reformed and spending should be devolved so that localities can run their own single public service budgets.

Read the full report here.