31 March 2015

Big Ideas on Making the economy fairer

The economy is always a hot political topic ("It's the economy, stupid") and fairness is a term that politicians love to throw around to justify whatever it is that they propose to do so, as somebody who is politically interested, a Big Ideas discussion on making the economy fairer was obviously an attractive prospect for me.

To be fair, a Big Ideas discussion on the economy or on fairness would have been good enough for me, so good is my experience of Big Ideas discussions, so getting the two together was like getting two slices of cake.

Our guide for the evening was Sukhdev Johal who lectured at Queen Mary, University of London. His research interests included how local authorities can promote economic democracy and rebuild local supply chains, which was one of the sources for the discussion. His main hypothesis was that Local Authorities could do more (if allowed by Central Government) to boost local economies and so help to counteract national trends.

Some of the following words are Sukhdev's,  most are mine, some are from the other people there, and any foolish errors are mine alone.

The problem is not economic growth, that is robust enough, the problem is the distribution of the benefits of this growth. For example, 40% of working households get more in benefits than they pay in tax, i.e. we have to subsidise work as many are not reaping the benefits of growth.

Labour raised the safety net for workers and business responded by lowering wages.

Also the majority of growth has been in the South East so there are large parts of the country that are losing out.

Some elements of the local economy remain strong because they are service we use every day and they need to be local, there is a limit how far somebody will go to get a pizza, shoe repaired or a newspaper.

If Local Authorities are to do more then they will need (some) more resources to do so. Land value taxes, e.g. a reform of the Council Tax or some form of a Mansion Tax, could be one source but there is an unwillingness to consider this for some reason. Another option is to leverage the power that LA's have through planning, e.g. if a new housing development is approved then a charge could be made against the local businesses that would benefit from this.

We struggled to identify other levers that LAs could pull and that may be a problem with the idea. And if those levers exist then why are they not being used?

The LAs do not have an unsullied history of meeting the needs of their citizens. They have been better at finding new ways of introducing charges and collecting fees than they have at providing new services. Similarly they have led the way on outsourcing and so devolving things like Health to LAs could be a short-cut to getting them privatised.

If LAs are going to take a greater role in locally then we need to think the democratic implications of this. Who defines what it is a locality needs.

A problem with localism is defining what we mean by local. For example, is it the Royal Borough of Kingston upon Thames, the town of Surbiton or the village (?) of Tolworth.

This was a somewhat looser Big Ideas discussion in usual in that we covered a broad theme, the role of localism in the economy, which produced a range of ideas from hippy to Stalinist without settling on any sort of framework to assess these against. I believe in frameworks so, while I enjoyed discussing the ideas, I found the debate lacked direction. Of course, pub discussions do not have to have a direction or purpose, other than to air the issue, so I cannot really hold that against it.

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