A new Fabian Society report published today sets out a comprehensive left-wing agenda for raising family living standards. Raising the Bar consists of nine responses to one simple question: how can we get household incomes to grow the way they used to?
The contributors include Rachel Reeves MP (chair of BEIS select committee), Anneliese Dodds MP (shadow Treasury minister), Chi Onwurah MP (shadow industry minister), Torsten Bell (Resolution Foundation), Ozlem Onaran (University of Greenwich), Craig Berry (Manchester Met University), Geoff Tily (TUC) and John Mills.
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, summarising the proposals in the report:
- 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 security cuts.
Andrew Harrop, general secretary of the Fabian Society and report editor said:
“We should judge our economy by the pace at which ordinary household incomes rise because the point of economic growth is to place prosperity into the hands of the people. Against this benchmark, the UK’s recent economic record is truly terrible with the living standards of working-age households only just higher today than in 2007.
“Raising the Bar challenges the fatalism of our economic policy makers and sets out a comprehensive six-point plan to get family incomes to grow the way they used to.”
In the report Chi Onwurah MP, shadow minister for industrial strategy, science and innovation writes:
“In government, Labour will take advantage of historically low interest rates to borrow £250bn for infrastructure spending over 10 years. We will set up a network of regional investment banks across the country. And we will create a National Education Service, allowing people to retrain throughout their lives. These are the foundations upon which we will get the economy growing and ensure family incomes start to rise again.”
In the report Geoff Tily, senior economist at the TUC writes:
“The attacks on public sector wages and public sector services were not only unjust, but also macroeconomically unsound. Reversing cuts should strengthen the private economy, permit wage increases and ultimately restore family incomes (as well as boosting government revenues and so repairing public sector finances). A more reasoned assessment of demand, and hence recognition of more spare capacity than currently understood, should also reduce the chance of interest rate rises.”
In the report Craig Berry, political economist at Manchester Metropolitan University writes:
“To close the regional gap in family incomes, we need to embrace a more grounded capitalism. This means, at a basic level, the recognition that capitalism needs to be managed sustainably – this is the quintessential tenet of industrial strategy, to which the British state remains resistant.”
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- Contact: Claire Sewell, head of media and communications at the Fabian Society
0207 227 4906 | firstname.lastname@example.org
- Download Raising the Bar
- Raising the Bar: How household incomes can grow the way they used to, is edited by Andrew Harrop, general secretary of the Fabian Society. This report represents not the collective views of the organisations involved but only the views of the individual authors.
- The Fabian Society is Britain’s oldest political think tank. Founded in 1884, the society is at the forefront of developing political ideas and public policy on the left. The society is alone among think tanks in being a democratically-constituted membership organisation, with over 7,000 members. It is constitutionally affiliated to the Labour party.
- The Fabian Society gratefully acknowledges the financial support received for this project from the John Mills Charitable Trust and the Dartmouth Street Trust.