Wednesday, 30 November 2011

Labour’s Business and the Unions

One of a very limited run of Labour’s Business will be given to every delegate who attends our annual conference entitled The Economic Alternative on January 14th. Full details and how to buy your tickets can be found here. Please purchase your tickets early to avoid disappointment.

Mark Rowney has worked for several years as a senior finance lawyer specialising in transport, energy and infrastructure at Clifford Chance LLP.

On Monday, two well known Labour party activists (Luke Bozier and Alex Smith) launched a pamphlet entitled “Labour’s business: Why Enterprise must be at the heart of Labour politics in the 21st century”. It aims to be not “a Labour manifesto for business”. Instead recognising that “in twenty-first century Britain, business must be at the very core of what it means to be Labour”, it aims to “inform future work on how Labour can become the party of enterprise”. When so far to date, Labour’s business policy is the incomprehensible distinction between so called predators and producers, and with yesterday’s budget statement offering little hope for the future, “Labour’s business” is a very welcome development.

Chapter Two of the pamphlet acknowledges the extremely important and valuable relationship that Labour has with business through the unions. Mark Glover is to be commended for giving thoughts on how Labour should embrace this relationship rather than give the tired and dated argument that comes from the right of the party for distancing Labour from the unions (not so say that many of Rob Marchant’s points in Chapter Three, such as weakening the hold unions have over candidate selection aren’t valid).

It’s understandable that many in Labour want to distance themselves from the unions. The unions, on the whole, have failed to modernise their public perception and relationship with the public. As a result, public discontent with the unions tars the image of Labour. However, Labour should help the unions to come up to date, not distance itself from its founding associations.
With polls showing that only 38% of the public back today’s strikes, it is clear that despite the simplicity and eloquence of the unions’ message, it does not get through. Hand on heart, the best I can empathically say for the unions is that if you kick a dog, don’t be surprised if it bites back. I know I’m factually wrong on that metaphor, but it’s what I feel.

Unions exist to support their members but their definitions of “support” and “members” seems weak. I have no idea if the day after Gaddaffi died, union members started sending recruitment and development teams to Libya, but they should have. Supporting members means growing in membership, targeting the 81% of people in the private sector who aren’t members. It means spreading the values of basic employment rights, non-discrimination and health and safety laws, to other developing countries. It means sitting on the board and taking responsibility for social corporate responsibility. It means being seen to be a positive force for business and change in society, not a barrier. Labour should help the unions achieve this goal.

“Labour’s business” doesn’t just talk about the internal relations of Labour with business and aims to be a jack of all trades. By its very nature, the pamphlet is superficial but that is its strength rather than its weakness; it aims to promote debate rather that set out a detailed line of argument. With eighteen chapters written by twenty different people and edited by two, the pamphlet varies in its tone and thought processes. Conflict in the thinking inevitably and happily arises.

Yet my suggestion for the initial focus for debate is to be found in Section One of the pamphlet. For as Section One argues, how can Labour really have a serious policy for business if it first does not have the internal relations with business and the capacity and culture for those relationships to develop and grow?

The Fabian Society would like to thank Alex Smith and Luke Bozier for their kind donation of the book.

Tuesday, 29 November 2011

Autumn Statement 2011: the Fabian reaction

George Osborne must be secretly delighted at the Eurozone debt crisis. Not only can he pass on the blame for a UK slowdown that is largely home-grown but, more importantly, the prospect of irrational bond markets turning on the UK offers the only possible justification for the fiscal stance he reaffirmed today.

That is the thin veneer masking the truth of this Autumn Statement. Standing back from the detail this was a ‘no change’ budget. Yet everything has changed in the last year. Osborne’s deficit reduction plan was written when the Chancellor had reason to hope for a V shaped recession and recovery. Now we know this will be an L shaped depression. It is already inevitable that British GDP will sit below its pre-crisis peak for longer than in the 1930s. On top of that comes the Eurozone debt crisis and political stalemate in Washington. No wonder that despite the cuts Osborne will now borrow more than Alistair Darling ever planned.

All our economic history suggests the only route to recovery from such dire straits is to stimulate domestic demand. But instead the Chancellor is persisting in sucking public spending out of the economy. His proposals for encouraging more private sector consumption and investment are well meaning enough, but totally inadequate for the task at hand. To kick-start the economy we need a big increase in business investment, financial sector lending and spending by asset-rich households. But none of that will be enough to resist the double headwinds of fiscal contraction and global economic turmoil. Osborne is becoming the counter-Keynesian chancellor, content to see pro-cyclical fiscal policy that actually exacerbates stagnation.

So those are the headlines. Here are some of the details that lept out for me:

(1) The Liberal Democrats deserve credit for preserving inflation indexation of out-of-work benefits. Low income groups find it hardest to cope with rising prices and we must remember that over the last 30 years the value of benefits in comparison to median earnings has plummeted. It’s only fair that, on the rare occasion that inflation outstrips earnings, poor households see the benefit.

(2) The flip-side is that the big reduction in tax credit payments will hit low and middle earners hard, reducing overall consumer demand and worsening work incentives. Although the poor are protected for now, these reforms further undermine the universalist principles of our welfare system. Fabian Society research indicates that tightly targeting welfare on low income families and reducing entitlements for mid and high income groups stores up problems in the long run. Evidence from across the OECD shows that because public consent is so important for sustaining welfare, systems which support higher income groups are also the most effective at preventing poverty. It is depressing that ‘anti-universalist’ sentiments seem to be dominant within both Coalition partners, even though each party contains proud universalist roots (Beveridge and Macmillan spring to mind).

(3) The fresh cuts to current spending are particularly concerning, given that they will pay for capital spending which may not come on stream for some time. This risks sucking money out of the economy at a moment of crisis. The idea of using public money to leverage in private investment is good in principle, but the rumblings in the press suggest that the deal is far from sealed. The Treasury will need careful watching to see if the pension funds and sovereign investors really come up with extra infrastructure spending.

(4) A final thought on State Pension Age. The chancellor seems once again to have pre-empted consultation on what is a key change to welfare entitlements. In principle I support increases to State Pension Age, if they are sufficiently gradual that each generation can expect to draw a pension for the same share of their adult life as the last. But there is a big caveat, which I wrote about a few weeks back. With health inequality rising, any increases to State Pension Age have a disproportionate impact on low income groups. On average men in the poorest fifth of English neighbourhoods become disabled at 55. Until this public health disaster is addressed can the left really feel comfortable with a rising pension age?

Monday, 21 November 2011

Unlocking our housing wealth: a Keynesian stimulus on the cheap?

Andrew Harrop, General Secretary of the Fabian Society, outlines a proposal featured in yesterday’s Independent on Sunday for a time-limited voucher to incentivise people to unlock their wealth and get spending. A government cash-back deal worth £2,000 per home would see £100 million of public money turn into at least £2 billion of cash. The money would boost consumer spending and increase the volume of home sales.

The Government’s housing strategy, launched today, is intended to be a boost to economic growth. But by focusing entirely on the construction of new homes the Government has taken a very narrow view on how housing can stimulate the economy.  For owner-occupied homes are a huge reservoir of wealth which could be converted into higher consumer spending, if we get the incentives right.

British households own around £3 trillion in housing wealth. Just converting a tiny amount of this into cash could boost consumer demand by billions. For the sake of the economy there couldn’t be a better time for those with housing equity to run-down some of their assets and use it to maintain their standard of living. People can do this by moving to cheaper homes and using the proceeds or, if they want to stay put, they can take out either a second mortgage or an equity release product. Overall the result would be that households would own a little less of the nation’s housing wealth and the financial sector, awash with money from quantitative easing, would take on a little more.

To make this happen the Government should introduce a simple, eye-catching voucher to encourage people to cash-in while times are tough. It could be modelled on the car scrapage scheme which offered people £2,000 to upgrade their car. That was an incentive to persuade drivers to spend from £10,000 upwards on a new car. The multiplier effect would be much greater if a similar voucher was used to unlock housing wealth, as the sums involved tend to be a lot higher: an average equity release is worth £50,000 and when people downsize their home the sums are at least as much.

The voucher could be used towards the upfront costs of moving for anyone making the shift to a cheaper home, or it could be a cash-back offer to top-up a financial product. How would it work? If the first, say, 50,000 applicants were eligible for £2,000 each for unlocking at least £40,000, that would unlock a minimum of £2 billion of cash at a cost of £100 million. Schemes like this always have some ‘deadweight’ costs, but today far fewer people down-size their home or take out cash than might be considered economically rational (at the last count only 15,000 equity release products were sold in a year). The attraction of the scheme would be partly to publicise the benefits of cashing in on housing and this might have lasting behavioural benefits.

The immediate beneficiaries of the scheme would be people with existing equity, who are mainly in mid and later life. In itself this may be no bad thing as many ‘asset rich’ older people live off very low incomes and could in principle spend a lot more of their money. But the scheme would also help free-up our sticky housing market. A good proportion of the cash would no doubt pass to younger relatives to help them raise a deposit for a home; meanwhile when older households downsize they would free-up larger homes: two different routes to boosting the volume of housing transactions, with all the wider economic activity this implies.

The obvious pitfall for this scheme is that it is regressive by design: a cash incentive to encourage people with wealth to spend it (although perhaps a mere £2,000 would not be much of an incentive to sell-up for the genuinely rich). It would only be distributionally fair as part of a broader package with more progressive elements (such a great deal for the Daily Mail reading classes might even buy political cover for other pro-poor elements of fiscal stimulus). Even if it were introduced on its own however, the very strong multiplier effect of the voucher means Keynsianism should beat socialism on this occasion. And if the scheme was successful in boosting house sales it might even be self-funding, through the proceeds from all that Stamp Duty.

Friday, 18 November 2011

Men-only policy debates must go

A new campaign to end all male panels was launched this week. The campaign is promoted by a growing group of women from many walks all life, including politics, think thanks, charities and academia, all involved in promoting gender equality as the way forward to build a more progressive, sustainable and fair Britain.

The campaign is timely, as we are witnessing the dire consequences multiply of a world long dominated by men and by masculine visions. The finance empire, which has collapsed dragging Europe into darkness, was built on short-lived money and little or no interest in a long-term outlook, is a key example. The crisis in the EU, far from being simply a crisis of the Euro, is, to me, the crisis of an ideology which has pervaded for too long.

Women, and women’s approach to development and growth, can drive radical change. It is not by chance that women do often manifest change and progress. The recently elected female-led Denmark’s government, just to name one. Or the leading female figures in Latin America. This is why it is appalling that some organisations could even conceive an all-men panel in a policy roundtable. These gentlemen’s conversation can no doubt be lively but they are history in reverse.

A few months ago we launched Fabiana, the new magazine of the Fabian Women’s Network to respond to a new way of feminism which is surging across the UK. We realised that women’s presence is necessary, but just the starting point: women need to be driving change at all levels across public life, from politics to businesses.

We see the next vital step is creating policies from a feminist perspective, and how that perspective can shape a vision for Britain and the world. To achieve that, it is essential to establish a fresh dialogue between genders: for this reason, Fabiana hosts both female and male voices to deepen understanding and debate of foreign policy, welfare state, and financial markets. We want to encourage this dialogue between women and men who share the same conviction that female presence and ideas are the way forward to create the innovative policies we need to modernise our world.

I grew up in Italy, a country where all-men debates are quite common, to put it mildly. Once in a while – the best case scenarios – I would hear frantic conversations followed by the afterthought: ‘We need a woman, let’s find one’, as if it were only a matter of courtesy or some tedious formality. The country where I grew up and where I have been involved in politics for ten years before moving to the UK in 2008, is now in the public eye because of the downfall of its misogynist PM (Silvio Berlusconi). Being a feminist in Italy – together with many others – has been challenging, but has taught me a great lesson: that women need to remain vigilant at all times, as their rights and achievements are always a slippery slope.

With that conviction, together with Seema Malhotra and many others, I supported the idea of reacting and firmly saying we will not attend any all-men panels policy debates, without exceptional reason: there is simply no space for this in today’s world.

We live in a difficult age, and history shows us that financial crises are always hard times for women. Not just financially, but also in terms of ethics and the erosion of progressive values. In addition, women are bearing the brunt of the reckless cuts perpetrated by the Coalition government, being pushed out of the workforce, seeing their income driven down whilst cuts to legal aid undermine their access to justice and make them less protected from violence.

Let all progressive men stand with us women, and join us in our campaign. All-men debates are a worrying sign of sickness. Let’s stop it now, for the sake of women, men and Britain.
To join, you can sign here.

Ivana Bartoletti
Editor of Fabiana
t. @IvanaBartoletti

Thursday, 17 November 2011

Fabian New Year Conference: Looking back (and ahead)

Labour’s storming victory at the first by-election of the Parliament in Oldham East seems a long, long time ago. It was just after that Ed Miliband gave his speech to the Fabians New Year conference.

Looking back now. It’s clear to see how much of what happened in 2011 for Labour was sketched out in this speech. Talking to a packed hall of Fabain members, Miliband set out the three challenges Labour must face to win back power.

The first challenge was the need to understand why our economy has stopped working for the majority of people. This line of argument showed clearly the thinking that led to the good/bad capitalism theme that formed the centrepiece of Miliband’s conference speech. This theme is now at the heart of political debate.

From Peter Oborne to the Occupy LSX movement, discussions about the failure of our economic system and its effects on people are taking place across the political spectrum. But looking back to Janurary 2011, Fabian New Year Conference was talking about and debating these issues indoors long before we saw the steps of St Pauls occupied.

As well as the economy, Ed Miliband set out two further challenges in that speech: How to move away from managerialist policy-making and reconnect with our communities; and the third was about moving politics away from vested interests and renewing our democratic spirit.

The Blue Labour agenda, one of the most colourful internal Labour debates was precisely about the need to reconnect with communities. This was about identity politics. The Fabian Society continue to be at the heart of this discussion. How we reengage locally without dismissing the important role that the active state can play will be a major focus for the Fabians and the Labour party in the coming years.

The challenge of taking on vested interests was seen no more clearly than in the phone hacking scandal. Ed Miliband’s capturing of the public mood over the summer gave the ultimate platform to this central challenge. It’s a challenge that is now also a central part of the economic message. Vested interests, asset strippers have been identified as part of the problem.

Renewed democratic participation and wealth creators are some of the solutions we now explore. Whether this was in the refounding Labour process or laying out the challenge for taking on monopolies in the energy industry - the agenda was set out at New Year Conference 2011.

Today, as we reach the last few weeks of the year, the news is that we are to miss our deficit reduction targets. In addition, youth unemployment has hit 1million. We are also hearing murmurs of contagion fears in the Eurozone crisis. The coalition said there was no alternative. But one is very much needed. It is against this backdrop that we prepare for Fabian New Year Conference 2012: The Economic Alternative where Ed Balls and a host of other leading commentators will set out their stall on what that alternative should be.

How we engage with the big questions on the economy are now the key to being seen as a credible government-in-waiting. Once again, if you want to be at the heart of the debates driving Labour in 2012, there is no better place to start than the Fabian Society New Year Conference.

Tickets for the The Economic Alternative are on sale now and going fast. Don't miss out:

Wednesday, 16 November 2011

The Minimum Wage is Not Red Tape

Dominic Raab framed his Conservative Home article today with this statement: “Gloomy unemployment figures out today show unemployment at 8.3% and, more disturbing still, youth unemployment at 21.9%.” 

Aside from using the word unemployment three times in one sentence, what else is wrong with this picture?

The answer lies in Raab suggests as a means by which to address the problems he cites. Here are some of the main ideas he puts forward for young people out of work today:

- Allow small businesses to pay below the minimum wage for 16-21 year olds
- Make it easier for employers to fire people
- Abolish the need to employers to invest in their workforce and offer training

These are just three of the ideas from the Centre for Policy Studies’ ‘Escaping The Strait Jacket – Ten regulatory reforms to create jobs’ published today. This publication looks at how red tape is holding back the UK economy.

Let us be very clear about something. The minimum wage is not a form of red tape that holds back growth in the economy. The minimum wage is one of the finest achievements by a Labour government that sought to raise living standards to build a better economy and society. The minimum wage is one of the most important policies for ensuring that work really pays.

Furthermore, employment laws are as such that it is already easier to fire someone in the UK than it is in the rest of Europe. Who would benefit from changes our system further in favour of employers? Working for less pay with less security is a horrible suggestion for solving our growth and jobs problems. Add in ideas like lessening investment in training and we have a viscous cycle of low-paid, low skilled workers with insecure jobs.

The sum total of all this policy is jobless growth. This is the kind of recovery achieved by the policies Raab is advocating.

The dividing lines with the solutions offered by the centre-left speak volumes about the space between the two main parties today. From the 5 point plan spearheaded by Ed Miliband & Ed Balls, number one offers a much better suggestion:

A £2 billion tax on bank bonuses. This would fund the building of 25,000 homes and 100,000 jobs for young people. This approach takes money from the sector in the economy that enjoys some of the highest pay and if banks won’t lend to small businesses, it is right and legitimate that we tax them to invest in jobs and growth.

The dividing line between Tory and Labour policy could not be illustrated any clearer than in Ed Miliband’s consistent support for a national living wage. The living wage would see living standards rise at a time when those in the middle are feeling the pinch of rising prices. This would truly increase the will to work by increasing the rewards of it. Raab offers instead to lower wages, and in turn lower living standards. 

There is plenty more depth and detail to the economic alternative emerging from Labour. The five point plan includes reversing the VAT rise and bringing forward long-term investment projects to stimulate the economy. An approach that top economists agree is now necessary to avoid a decade of high unemployment and slow growth. It is exactly this kind of economic alternative that we’ll be discussing in depth at this year’s Fabian New Year Conference. Make sure you’re there to be part of the debate.

Wednesday, 2 November 2011

Widening health inequalities signal trouble ahead

Last month brought depressing news for political observers of an egalitarian bent. The Office of National Statistics announced that the gap between life expectancy in the poorest and richest communities in the UK had widened, with men in Kensington and Chelsea now living on average 13.5 years longer than men in Glasgow.

This headline measure of health inequality actually masks an even worse story. For in recent years geographic differences in the length of disability-free life have increased more quickly than variations in life expectancy itself. In poorer neighbourhoods people not only tend to die earlier. They live with ill-health for longer as well. And the gap is edging higher.

This matters because health inequality is ultimately the most important dimension of social justice. Not only do most people value long, healthy lives above all else, but variations in health in middle and later life mark the culmination of lifelong inequalities. The overwhelming conclusion of the 2010 Marmot Review on Health Inequalities was that gaps in the incidence of long-term disability and then premature death are the result of enduring inequalities of money, power, educational achievement, employment opportunity, and environment. Stereotypical health-related factors, such as unhealthy lifestyles or industrial accidents, only explain a small part of the variance.

This is just the latest piece of bad news on inequality. Since 2007 income inequality has reached its highest level since records began. This has been caused not just by the well-documented excesses of the super-rich, but also by low income families failing to keep up with the middle. In hindsight, it looks like Labour's anti-poverty agenda before the crash was a heroic effort at running up a down escalator. Income inequality was stabilised through redistribution, but the underlying economic forces driving wider inequality did not go away. Now, with the economy still becalmed and the coalition's priorities elsewhere, the prospects for closing income gaps are gloomy.

Income and health inequalities are very different, however. Income is a snapshot (albeit a very important one) while health inequalities tell us about our whole life-course. In this respect looking at health is more like looking at our lifetime earnings profile. The gaps we see today are a result of the accumulated experiences of decades, not the period of office of the most recent government. Indeed, over the long-term, Labour's time in office may well turn out to have a positive bearing on gaps in lifetime health and wealth, because many of the key childhood inequalities, such as gaps in GSCE attainment, did close modestly. It goes without saying that it will be decades before we know what impact this will have on earnings differences let alone health inequalities.

Meanwhile the widening gaps in life expectancy should be ringing alarm bells within the Department for Work and Pensions (DWP). Ministers are about to consult on rapidly accelerating the planned increases to the state pension age. When you look at the averages, it is hard to quarrel with the proposition that the pension age should rise so that future increases in life expectancy are split fairly between working life and retirement.

But widening health inequalities make the argument far harder to sustain. If men in Glasgow can only expect to live to 73 and the rate at which their life expectancy is improving is not keeping up with the national average, why should their pension come later? The dilemma is then exacerbated by inequalities of disability. In the poorest fifth of English neighbourhoods the average man can expect to become disabled at 55, a figure that is rising gradually but by less than the nationwide figure. Can we really expect these people to wait longer for their pension, or will solutions to such tragic concentrations of ill-health need to come first?

The DWP may not like to hear it but its next wave of reforms will be a non-starter, unless the formula for increasing state pension age is firmly anchored on prior improvements to healthy life expectancy in poor communities. The prospect of savings to the massive pensions bill should be an incentive for all corners of government to work together to prioritise closing the health gap.

A version of this post also appears on

Homes for Citizens: the politics of a fair housing policy

The Fabian Society returned to the housing debate last week with an excellent debate at the launch of our collection of essays, Homes for Citizens; the politics of a fair housing policy.
Hillary Benn had his first outing as Shadow Secretary of State for Communities and Local Government – and judging by what we saw, Benn is looking like good news for progressive housing policy.

This is not the time for simple opposition to current housing reforms; but for imaginative and fairer solutions to real problems, across all tenures. These range from the scarcity of social housing, to the problems of an increasing unaffordable and often poor quality private rental sector, and to the thwarted aspirations of those who want but cannot afford to buy their own home.

These problems all require clear policy thinking – and we saw much of this at the seminar in the contributions of Brian Johnson of Moat housing association, and Duncan Shrubsole of Crisis. A flexible approach to tenure, allowing far more fluid movement between ownership and renting, is crucial if we are to meet people’s aspirations whilst providing real security and making the best use of stretched resources. That may mean, for example, that a social housing tenant’s rent increase as their financial position improves. But if we are serious about individual security and stable communities with a mix of tenures and incomes, we can never endorse a policy that forces these households to up sticks and leave their homes. Flexible rent should never threaten anyone’s sense of security in their own home.

There is also a desperate need for clearer policy thinking about the needs and rights of those in the private rental sector. Whilst there are many good landlords, there is very little obligation placed on those who – either through intent or simple lack of experience – do not offer a quality service. Disrepair and poor quality housing is all too common. Security, too, is a real issue. A six month tenancy offers no one a sense of stability in their own home.
But in addition to all this, policy must be embedded in a clear and principled political vision. The changes we need to make in British housing provision are wide reaching and challenging. Labour’s housing policy will not begin to be heard if it does not build on the common stresses and strains experienced by so many households, regardless of their tenure. Polling frequently shows that one in four adults, across all tenures, experience high levels of anxiety because of the seemingly ever increasing costs of all types of housing.

With so many households in this position, it is surely the right time to make housing a central pillar of Labour Party politics. And the aim should be not to speak to different group as if their problems were unique to the tenure they find themselves in, but to stress instead the interconnection of these problems. Better private and social rental sectors is not at the ‘expense’ of homeownership but a benefit to all, taking much of the heat out of the market for those that really do want to own their own home. There is no ‘zero-sum’ trade-off here – and no inherent conflict of electoral interests.

What we have instead is the potential for a wide coalition of interests – and potentially a deep consensus behind a far fairer approach to housing reform than is currently on offer. This, we hope, is the kind of message that Benn will take to heart, and it is a process of principled and practical change that we hope to have contributed to with Homes for Citizens.

James Gregory is a Senior-Research Fellow at the Fabian Society.

Tuesday, 1 November 2011

Vulture or dodo? - Expanding On Ed Miliband's Vision

A guest article by author Philip Monaghan. Philip argues that whilst Ed Miliband’s idea to reform the capital markets is well intentioned, it needs to be backed up with big and bold policy specifics if it is to boost UK prosperity

Philip Monaghan is a writer and strategist in the fields of economic development and environmental sustainability. He is the acclaimed author of the books How Local Resilience Creates Sustainable Societies (out February 2012) and Sustainability in Austerity (2010). Philip is Founder & CEO of Infrangilis

Whilst the response to the Labour leader’s conference speech has been mixed, Ed Miliband’s contentious attack on “predatory asset-strippers” and subsequent campaign against alleged overcharging by greedy energy companies has chimed with hardworking but struggling households across the social spectrum. Yet a nagging concern is that Miliband’s emerging remedy for the “fast buck” ethos of the market vultures is destined to go the same way as the dodo unless it is thought through a little more.

A call for “long termism” as part of a better capitalism is all well and good. But people will quickly want more specifics for this vision. To be credible it needs be able to withstand the charge it is anti-business. To be sustainable it must make best use of diminishing resources as we embark on a long and slow recovery.

As my new book sets out, core to this is an understanding that reform on how we get money to work for the people (as opposed to the other way around) is a complex situation that requires global and local interventions as well as national ones. It has to be about more than just letting big banks go bust next time or forcing the bailed out banks to lend to small businesses. These are necessary but not sufficient. Let me take two cases in point here, where there is a gap in the current thinking on key leverage points.

Reigning in the credit raters: firstly, at the global level, it is time to downgrade the racket of country credit rating agencies. Firms like Moody’s, Fitch and S&P are profit-motivated actors that have the power to make nations go bust. When they downgrade the credit worthiness of countries like the USA, Italy or France, the cost of borrowing goes up, this slows the pace of recovery from the recession but more than this hurts the poor the most. Yet it is these very same firms that gave AAA ratings to Lehman Brothers, with disastrous results, and so helped to create the global banking crisis in the first place. To solve this power imbalance and get big money working for the public good again we need to force Parliament to properly scrutinise and regulate this invisible but corrosive industry. As a first step, this must involve rating each of the raters according to the transparency of their decision-making, competency to operate and avoidance of conflicts of interest. But to work, this UK action needs to be part of a transnational effort with liked minded reformers in Europe and the USA, to ensure there are clear and consistent global rules.

Re-directing the £143bn of local authority pension funds to the green economy: secondly, at the local level, we need to make it much easier for local councils to access their own municipal pension funds for local regeneration schemes. It is legal to do so already, yet this practice is uncommon due to the regulatory red-tape and a lack of awareness and competency. We not only need UK government to make it clear that this is possible but that it is expected, and as such will be monitored. This should include the presumption that any low carbon regeneration projects (e.g. district reneweable energy schemes which generate clean power and a healthy profit) that meet their investment criteria shall take priority for these funds. As part of this, local ‘low carbon enterprise zones’ should be widely established through existing local authority planning frameworks (similar to the ones springing up in Manchester, Zaragoza and Baoding). This zoning involves nurturing clusters of low carbon business start-ups, including the promotion of local apprenticeship schemes to get young and unemployed people on the jobs ladder. Additional benefits of this intervention is that it make our communities more resilient against national energy price rises, and frees up some of the money earmarked for the coalition’s (well intentioned but delayed) Green Investment Bank for other frontline public services like social care and education that are under threat during a period of financial austerity across our town halls.

This is an aggressive and progressive approach to boosting the UK’s prosperity. It not only makes best use of scarce resources at a time when money is tight, it also provides a fresh injection of life into our flagging manufacturing base, whilst protecting the planet for tomorrow’s generations. Do not listen to the naysayers who will argue it is too difficult. Fighting and winning the Second World War was also difficult. This is all very doable, but only as long as we have the appetite for the fight and the collective nous to make it so – regardless of one’s political colours.