The report called for spending to reach European levels, funded by taxes on high and middle-income earners
A report by the Institute for Public Policy Research (IPPR) has said that ending austerity means investing in care, health, skills and income security.
This should be funded by increased taxes on high and middle income earners, the report said.
The IPPR said that ‘ending austerity’ does not just mean ending cuts or even reversing cuts, it means shifting from a ‘consolidation state’ to an ‘investment state’.
In particular, the report’s authors said:
“The state must have a bigger role – and must invest more – in four killer ‘social deficits’: care, focused on the young and the old; skills, addressing low pay and productivity; health, in particular inequalities and rising mental ill-health; and security, to end poverty, growing levels of debt and
economic insecurity.”
The report said that similar countries to the UK spend more on health, education and welfare.
Those countries also tend to have better health, life satisfaction, education outcomes and equality and less poverty.
“There is also a growing evidence base that suggests higher levels of social investment can act as a catalyst, rather than a drag, on economic growth”, the report added.
To match European levels of social spenidng, the IPPR said the government should increase the size of the state by 0.7% a year.
By 2030, this would mean £280 more a head being spent each year on education, £450 more on health and £930 more on social protection.
This increased spending should be funded through increased taxation, the report said.
To make increasing taxes politically possible, people on middle incomes will have to feel that those on high incomes are paying their fair share of tax.
So the IPPR recommends increasing corporation, wealth and income tax on high earners – before raising taxes on the middle classes.
To make this politically possible, middle and high earners will have to feel they are benefitting from increased spending, the report said. It added:
“This will require a shift towards more universalist public services and welfare provision.”
“We therefore call for the additional funding raised in the short term to be invested in universal childcare, social care and mental health provision – as well as reversing cuts to universal credit, adult education and public health.”
“These priorities should be funded before more regressive universalist policies such as free tuition fees are considered.”
The report was welcomed by Labour’s shadow chancellor John McDonnell, who said:
“The failure of austerity on all counts is now widely accepted and it’s important that the IPPR is highlighting the deficits in health, care, skills and income security.
“We need bold thinking about how to fund the things we all need. It’s a depressing comment on the state of the Conservative Party that instead of rebuilding our scarred public services and social security system they are fixated on 1980s-style swingeing tax cuts.”
Joe Lo is a freelance journalist and reporter for Left Foot Forward
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