When is austerity an appropriate economic policy?
Labour’s National Investment Bank - a valuable initiative
The results of the consistent application of austerity policies – cuts in public expenditure and/or increased taxation – since the Conservative-led coalition government came to power in 2010, do not make for encouraging reading. Although politicians have claimed that austerity means “living within our means”, the reality for the vast majority of British citizens is very different.
Austerity has also failed to deliver its stated objectives. But the fundamental question isn’t whether austerity is a “good” or “bad” policy. Rather, it is whether austerity is an appropriate policy, given a particular economic situation.
The limits of market-based reforms in the English NHS
The private financial system on its own cannot perform well to support the real economy or implement a new industrial strategy. It does not fund sufficient long-term investment in risky innovation, neglects key sectors, including both physical and social infrastructure, and fails adequately to support small and medium sized enterprises. Therefore the National Investment Bank (NIB) will be a valuable instrument for a Labour (and other future) governments to help achieve increased investment for making the UK economy more dynamic, greener and fairer.
Public Sector Borrowing
This policy brief examines the rationale, difficulties and effects of introducing market-like mechanisms into the English National Health Service (NHS) since 1990; and it puts forward an alternative hierarchical institutional structure for healthcare governance.
Using the Budget to Manage Employment & Output
It has long been assumed that government spending is financed by taxation. This should be challenged, because it is not true. A clear understanding of the mechanisms for funding public expenditure is essential to implementing a sound fiscal policy. The question to be asked is this:
What is the appropriate and effective mechanism for funding public expenditure?
Cancelling Brexit via the Vienna Convention on the Law of Treaties
After the economy showed strong recovery in 2009 and 2010, eight years of austerity policies by Conservative governments brought recession, stagnation and faltering growth. What policy framework should a Labour government use to maintain a high and stable level of employment and output?
It is argued both in Britain and on the continent that the Brexit process has advanced so far that it is irreversible. But others argue that the Article 50 notice of the intention to leave the EU can be unilaterally withdrawn, drawing inter alia on the provisions of the Vienna Convention on the Law of Treaties.
A Sustainable Economy
Rail privatisation has failed to deliver better value services, capital investment, and reductions in public subsidies. Despite this, successive rail reforms have been unable or unwilling to renationalise the railway network and address the underlying problem of financing rail infrastructure even with broad public support for policy change./
Tackling Britain’s private debt crisis
Economic growth remains the predominant policy goal in the UK. However, the pursuit of economic growth stands at odds with environmental sustainability, and it is not needed to achieve social objectives such as full employment and improved quality of life.
A fundamentally different approach to managing the economy is required that puts people and the planet ahead of growth in GDP.
National Investment Bank and small & medium businesses
As of July 2017, the Bank of England measured the stock of private debt held by individuals at £1.548 trillion; making household sector indebtedness one of the biggest problems facing the United Kingdom’s economy and society.
Is this level of private household debt a problem requiring action by an incoming Labour government? And can public policy address the unprecedented levels of household debt?
Procurement & the Third Sector
The 2017 Labour Manifesto calls for a National Investment Bank (NIB) and a network of regional development banks. A ₤250 billion “National Transformation Fund” would be focused on infrastructure and housing, and NIB would provide ₤25 billion/year lending to small businesses, including coops, and to contribute to “transforming our financial system”.
But how best to ensure that access to affordable credit is provided to the small and medium enterprises most in need of it?
Universal Basic Income
For public sector workers, outsourcing to third sector organisations of local government and NHS delivery represents as big a threat as the private sector.
A Labour government should consider returning cooperatives, mutuals, social enterprises and third sector organisations to their original function of employment provision and generation, community support and self defence.
Control of the Energy Sector
A universal basic income (UBI), tax-free weekly income to every individual, provides an administratively simple method to resolve a range of social problems. A modified scheme that provided a universal and unconditional income at a moderate starting level, leaving much of the existing system intact, would be feasible, affordable and beneficial.
Changing Occupational Pension Funds
In its 2017 manifesto the Labour Party promised to bring energy sector back under public control through a phased approach, which is most sensible. The transition phase is likely to be challenging and will need effective management.
Public policy in the energy sector should target new capacity creation rather than taking over existing and potentially overvalued capacities.
Wage policy & public investment for sustainable development
British employees have traditionally relied on occupational pension funds in addition to Pay-As-You-Go State pensions to provide retirement income. These workplace funds are becoming less able to provide income security for all, let alone promote economic growth and financial stability. A change in state benefits must form the core of any retirement income provision system. If occupational pensions are to form a meaningful part of the change, a number of problems need to be addressed.
Successful Macroeconomic Stimulus
Decades of neoliberalism leave Britain with high inequality and the worst investment and productivity performance in the developed world. Reconstructing this broken economic system requires a comprehensive policy mix based on public investment and labour market policies for equality-led growth.
Replacing Universal Credit
Modern economies can be stimulated by macroeconomic policies that increase purchasing power. If the stimulus is deficit-financed, the resulting increase in national debt can be accommodated within broad limits.
This policy brief looks at the conditions that allow for successful implementation of macroeconomic stimulus programmes appropriate for a progressive government.
Citizens’ wealth funds
The Conservative Government elected in 2015 declared an objective of reducing expenditure on working age claimants by £12 billion a year – that is £12 billion from the unemployed, the chronic sick and the low-paid (and their children). The then Labour leadership decided to abstain on the issue. There could be no better example of the bankruptcy of mainstream politics in Britain.
It is doubtful whether existing policies could in fact secure such a reduction in the near future.
Since 2008, the question of inequality has moved up the political agenda. This rising concern has yet to translate into policy action. The UK continues to sit towards the top of the global inequality league, while leading forecasters predict a deepening economic divide until 2020.
Citizens' wealth funds offer a positive opportunity to tackle the twin problems of rising inequality and under-investment.
Labour Mobility in UK and EU
For four decades British governments have placed priority on maintaining low inflation. Under Conservative governments this functioned as the central macroeconomic policy goal. A Labour government will come under strong pressure to maintain this priority, though it is frequently in conflict with other objectives such as economic growth and full employment.
Free movement of labour and migration/immigration are hotly debated throughout Europe, especially in election campaigns. Some of these discussions and even political initiatives ignore important facts and arrive at unrealistic, unpractical or unfair conclusions.