What would a fairer economy look like? Time for detailed policy from Labour

With the Labour conference approaching, Labour must decide whether to support a Robin Hood Tax, finical transaction tax. and British Investment Bank.


Richard Carr is a Policy Adviser at Stamp Out Poverty

After more than two years of a coalition government which has contracted our economy and slashed public spending to the detriment of both jobs and services, people – judging by the opinion polls – are once again willing to listen to what Labour’s vision is for a fairer economy.

Yet, sporadic exceptions like the 5-point plan for economic growth aside, detailed policy has not yet formed a major part of Labour’s contribution to the public debate. That is partly the lot of an opposition in the first two years after a long period in government – but it is fast approaching the point where Labour will need to give people a more concrete sense of what they would do in office.

With that in mind, Compass, the Co-operative Party and the Robin Hood Tax campaign are holding a fringe event at Labour Party conference (1st October, Manchester Central, 8pm) to debate what specific ideas Labour’s economic message should include.

On the panel will be the Shadow Financial Secretary to the Treasury Chris Leslie MP, Larry Elliott and Polly Toynbee from the Guardian, Frances O’Grady (TUC), Neal Lawson (Compass) and David Hillman (Stamp Out Poverty).

There is much for our panelists, and the wider Labour Party, to chew over. In these days of coalition-induced low or no growth, stimulating new investment is clearly part of any offer Labour will make to the electorate.

The British Investment Bank – a state-owned institution designed to lend, and facilitate the lending of other banks, to small business and infrastructure projects – has been around in Labour circles for 2-3 years now, yet serious questions remain on the details; where will its start-up capital come from (and how much will this be), where will it lend, how far will central government influence its operations on a day to day basis?

Another debate, particularly in the wake of the Libor scandal, is over further taxation of the financial sector – both as a mechanism to curb unwanted speculation, and to raise revenues. A broad based Financial Transaction Tax on shares, bonds and derivatives offers a potential new annual revenue source of £20 billion, money which could be invested into delivering growth and rebalancing our economy.

With leading European economies like France and Germany pledging to implement a multi-national FTT by the end of 2012, Labour will need to make a decision on this policy relatively soon.

Old arguments about trade fleeing to New York as a result of an FTT simply no longer stack up, if they ever did. As European countries are showing, if you design the tax well (ironically through using the model of our own stamp duty on shares) the geography of a trade becomes irrelevant to the capture of FTT revenue.

Claims that any British FTT on bonds and derivatives would need to ensure the simultaneous participation of the Obama administration or the entire G20 are, in reality, little different from the ‘global or nothing’ line peddled by George Osborne. But, despite this, has Labour been fully converted to the FTT? And, were it to adopt the policy, where would it spend the revenues? These are questions worth probing.

Meanwhile, in terms of public services, Labour has opposed the top-down reorganisation of the NHS (which indeed runs contrary to the Conservative manifesto), protested the closure of Sure Start Centres, libraries and community buildings, and has condemned the further encroachment of the private sector into various areas of public policy.

But where would the party draw the line in office – given all parties concede spending cuts will continue to 2017 at the least – and would Labour fund a meaningful reversal of present coalition policy? Doubtless the coalition has made some bad calls, but what would Labour do about the tough challenges facing, for example, public health?

If funding streams have been cut, one area the current government has been keen to publicise is its devolution of powers to local authorities, and Labour will need to mark out its own territory here.

Hilary Benn has spoken of his ‘English Deal’  – where local authorities of all shapes and sizes come to Whitehall and negotiate the ‘devolution of powers’ over transport, infrastructure, skills, economic development, and other areas. But what powers do councils want, and how far would a Labour government really let go? What are the trailblazing councils and innovative work carried out by local government that Labour should be saying more about?

These are just some of the questions that will need to be hammered out to help shape the responsible capitalism agenda and ensure we really do see a fairer economy after 2015. All are welcome to our fringe, and any questions for the panel both before and during the event can be directed to #fairereconomy.

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