Andrew Grice writes:
Every new economic statistic is
now seized on by supporters or opponents of Brexit, either as a boost for their
cause or a setback for their enemy as they continue their neverendum campaign.
They miss the big picture: the Brexit vote and
the June election were both rejections of the economic status quo.
No wonder: a
decade of wage stagnation means the crisis that began in 2007 is not over for
millions.
Yet the political class has been remarkably
slow to realise it, as epitomised by Theresa May’s disastrous decision to call
the election and then barely mention the economy during the campaign.
She
should have known better; she recognised after last year’s referendum that the
vote was not just about the EU, but also the “left behind” and “just about
managing.”
At the election, Jeremy Corbyn’s anti-austerity message
caught the public mood; not only have people’s incomes and benefits been
squeezed, but their public services have deteriorated.
Above all, the fruits of
the so-called recovery since the financial crisis have not been shared fairly.
Young people are poorer than their parents;
many have little hope of getting a toe on the housing ladder.
The
London-centric political class kept the economy unbalanced; the North is still
fighting for its fair share of investment.
No region outside London and the
South East has seen output per person return to its peak before the crisis.
The
economy isn’t working.
Corbyn departed from the Tory-Labour consensus
on the economy that has existed since the Margaret Thatcher era.
But Labour’s
manifesto, inevitably thrown together for the snap election, did not offer fundamental
reform.
Reversing Tory privatisations was hardly a new idea. Indeed, since the
1980s, Labour has been more interested in social rather than economic change.
To meet the huge challenges of Brexit, an ageing
population and automation, the country needs a new economic policy that turns
into reality our politicians’ rhetoric about “an economy that works for all”
(Tories) and one “for the many, not the few” (Labour).
Radical reforms after
the Second World War and then under Thatcher did last but the failure to
achieve prosperity and fairness since the crisis shows that another rethink is
needed.
Thankfully some fresh ideas will be offered
early next month in an interim report by a Commission on Economic Justice set
up by the IPPR think tank.
It will contain a powerful analysis of the failings
of the British economy and will set out a new vision for it.
The commission
includes the Archbishop of Canterbury; the bosses of John Lewis, Siemens and
McKinsey; City of London representatives; entrepreneurs; academics and trade
unionists.
That its impressive 24-strong cast list all recognise the need to
rewrite the economic rules is quite a comment on the state we’re in.
It will
produce its final report next year, and aims to be the most significant review
of economic policy outside of government this decade.
Although the IPPR has always been close to
Labour, there was a time when Theresa May looked more likely to pick up and run
with the commission’s ideas.
Her guru Nick Timothy, who resigned after the
election disaster, had been taking a close interest in the commission’s work.
It dovetailed with his striking language in the Tory manifesto, which declared:
“We do not believe in untrammelled free markets. We reject the cult of selfish
individualism. We abhor social division, injustice, unfairness and inequality.”
Timothy’s departure, May’s fight for her very survival,
the all-consuming Brexit process and her lack of a Commons majority mean that
such words will not be turned into action.
A promised cap on energy prices has
been dropped and next week May is expected to dilute proposals to force
company boards to hold binding votes of shareholders on executive pay.
A
progressive social care funding plan was abandoned after it was appallingly
presented.
May’s brief tack to the left seems over; the
Tory right is in the ascendancy again, declaring that capitalism is working and
demanding yet more tax cuts – even though the £9bn frittered away in
corporation tax cuts would have been better spent on the NHS, social care and
education.
Perhaps May’s successor as Tory leader will be
more interested in the commission’s blueprint.
The younger generation of Tory
MPs are more open to radical thinking than their elders and know the party must
appeal to younger voters.
In the short term, the field will be open for
Labour to harvest the commission’s work.
It might just provide the first draft
of the new economic settlement we need.
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