Communicating A Fresh Vision

Professor Kate Pickett writes:

Fourteen years ago Richard Wilkinson and I published our book The Spirit Level. Arguably, the onset of the financial crash should have been an auspicious moment for our work to hit the bookshelves. Just as old economic certainties seemed to have been discarded, we were arguing for a new approach to macroeconomic policy focused on reducing inequality, improving human wellbeing and safeguarding the planet. There could be no better time for a reassessment of the values embedded in and outcomes expected from our economic system.

Of course, the coalition and subsequent Conservative governments chose a quite different path. Motivated by political ideology over and above economic literacy, they opted for swingeing cuts, punitive social security and tax policies engineered to benefit a wealthy minority. It has left our country poorer, weaker and more divided. Healthy life expectancy has fallen, child poverty rates have increased and inequality has grown – and the pain seems only to worsen.

The lesson? Disruptions on the scale of the financial crash open doors to new ideas. These moments of soul-searching have to be seized by progressives or else the narrative will be told by those with less socially minded or ambitious intentions in mind. Labour lost the argument in 2010. I am concerned it is about to lose it all over again.

This is why I joined 70 other economists and human rights experts, and the thinktank Compassion in Politics, in writing a letter to Sir Keir Starmer this week urging him to reconsider his current, too-limited economic vision. My concern is not just that he is about to tie his colours – and the fate of the British public – to several more years of economic suffering. It is also because I fear he is closing the door on an unprecedented opportunity to reshape the economic agenda.

A recent report found that the public already think austerity has failed and weakened our public services. Starmer and other politicians need to build on this opportunity for change, not reverse it. While governments outside of Westminster are experimenting with exciting new ideas – doughnut economics, wellbeing economics, universal basic incomes, and a human-rights focused economic agenda, to name a few – Britain looks set for another four years of austerity (or at least austerity-lite) government. It’s like we are entering the 14th series of a programme that should have been cut right after the pilot.

We don’t have to go back too far in our history to see how differently things can play out. Immediately after the second world war, Britain’s economy was on its knees. Debt had risen to 270% of GDP (three times what it is today). Industries were devastated. Hundreds of thousands of British soldiers had been killed or wounded. International trade was in crisis.

The economic vision that won out has largely been attributed to the genius of John Maynard Keynes, who argued that straitened economic times call not for fiscal conservatism but a generous and ambitious package of public spending. Britain’s postwar economy needed investment to get it back on its feet. That had to be coupled – as William Beveridge argued and championed – with a social safety net that ensured everyone could lead a decent life. The spirit of collectivism that saw Britain through the war had its legacy in the political and economic agenda that followed it.

Fast forward three-quarters of a century and that spirit has, in many political circles, been forgotten. The UN’s special rapporteur to Britain, Philip Alston, remarked in 2018: “British compassion for those who are suffering has been replaced by a punitive, mean-spirited, and often callous approach.” Policies such as the benefit cap, the two-child limit on child benefits, the bedroom tax and the extensive use of sanctions to punish those already in need of financial support are the embodiment of that approach. One would expect that a party seeking its first electoral victory in 18 years would seek to distance itself from the pain and hardship that has been experienced by so many for too long.

And yet, the initial signs from Labour are that the party itself is now trapped, spellbound by an economic argument that is as empty in ethics as it is destructive in impact. Starmer has said the party will maintain the two-child limit on child benefits and the shadow chancellor Rachel Reeves recently ruled out a wealth tax. Like the Conservatives in 2010, they are pursuing a political rather than an economic agenda – believing that by aping Conservative arguments on spending they will march their way to No 10.

And then what? Find they have no mandate to introduce the kind of changes this country desperately needs. This period of opposition should be one in which they can influence the public narrative on the economy. They can use it to explain why spending actually benefits everyone and stimulates the economy, rather than holding it back. They can make the moral case for progressive taxation. They can debunk the myths that the national economy is in any way analogous to a household budget. And they can tell voters why our shared humanity dictates that we must increase social security and ensure that everyone can lead a good life.

But our letter was about more than just urging Starmer to do better. It’s also an invitation. We know that he has to balance political expediency with economic need. We know that it isn’t easy communicating a fresh vision. We can be an ally to any party that has the courage and wisdom to commit to change. We hope Sir Keir will take our offer seriously.