Act Now – Doing nothing is not an option!

Professor Matthew Johnson introduces an important new Report which was launched today

JUNE 27, 2024LABOUR HUB EDITORS

The Common Sense Policy Group (commonsensepolicygroup.com) comprises academics, policymakers, third sector leaders, community representatives, media figures and people with lived experience. We are all committed to creating a fair, equal and inclusive Britain through developing and influencing redistributive policy that addresses the inequality and exclusion that has come to define our nation. We present consensus on feasible, affordable and overwhelmingly popular evidence-based policies that can form the basis for a programme for progressive Government.

Chaired by Matthew Johnson at Northumbria University, the group includes: Danny Dorling (University of Oxford), Jamie Driscoll (Mayor of North of Tyne Combined Authority), Irene Hardill (Northumbria University), Cat Hobbs (We Own It), Elliott Johnson (Northumbria University), Neal Lawson (Compass), Jennifer Nadel (Compassion in Politics), Daniel Nettle (Northumbria University and Institut Jean Nicod), Kate Pickett (University of York, Health Equity North), Zack Polanski (Deputy Leader of the Green Party, London Assembly Member), Allyson Pollock (Newcastle University), Howard Reed (Northumbria University, Landman Economics), David Taylor-Robinson (University of Liverpool, Alder Hey Children’s Hospital, Health Equity North), Ian Robson (Northumbria University), Graham Stark (Northumbria University) and Richard Wilkinson (University of Nottingham and Northumbria).

Key policy points

Act Now: A Vision for a Better Future and New Social Contract is a Beveridge-style report published by Manchester University Press (£9.99) this week ahead of the 2024 General Election.

It is directly aimed at providing a Beveridge-style programme for government to end our era of crisis. It is the bare minimum for national renewal and has been tested extensively for feasibility, affordability and popularity.

We have a feasible, affordable and demonstrably popular plan to rebuild Britain as successfully as the Beveridge-inspired reforms of 1945:

• Basic income is the key distributive means of securing society that makes the rest of a new social contract possible, including by reducing pressure on health care and disruption caused by transition to net zero.
• A properly funded Green New Deal, with a  quadruple lock to protect workers in carbon intensive industries, is fundamental to creating jobs and securing our future
• Nationalization of energy and water are essential means of securing Britain and protecting the country against international volatility
• Health and Social Care can only be cost-effective when nationally owned and operated
• Early years and educational investments are critical to reducing pressure on our criminal justice system and increasing productivity as we transition to a new economy
• We can build our way out of the housing crisis and gradually remove the state-led transfer of wealth to private landlords and speculators in the process
• Our infrastructure can be transformed through targeted, regional control of transport
• Democratic reform to control lobbying and corruption is in the interests of progressive parties
• We can fund an expansive programme through wealth, carbon and corporation taxes, massively increasing our tax base and yield (£544.6bn) and productivity sufficiently to create a Britain that leads the world in quality of life, equality and security within ten years.

Failure to adopt such a popular programme and restore faith in politics will leave open the possibility of a right-wing takeover in 5 years’ time.

Costings, productivity and taxation

The policies in this programme have been costed using standard costing mechanisms. The reforms outlined have been analysed using a model of the relationship between gross value added (a measure of economic output) and public and private spending on services and investment at the regional and local levels in the UK and constituent countries. We assume that the capital spending commitments in our recommendations will have positive impacts on productivity via multiplier effects. We use multipliers estimated by researchers at the Institute for Innovation and Public Purpose (IIPP) at University College London using data for a set of European countries between 1970 and 2016.  The IIPP estimates suggest that the multiplier for public investment in infrastructure after five years is between 2.43 and 3.12 (depending on the precise model used). We use the IIPP central estimate of 2.74 for the estimates in this book. A multiplier of 2.74 implies that an increase of £1 million a year in public spending on infrastructure produces an increase of £2.74 million in GDP.

The initial spending commitments in this book total approximately £377 billion a year, of which just over 80 per cent is current spending rather than capital spending. However, current spending also has multiplier effects. For example, additional spending on the NHS contributes to a healthier workforce with lower levels of premature mortality and morbidity and better mental health. Basic income also has positive multiplier effects on health. We assume that the multiplier impact of current spending is equal to one- third that of capital spending, that is a multiplier of 0.91. The estimated increase in GDP due to higher capital and current spending generates additional tax receipts from taxes on earnings and corporate profits, as well as receipts from consumption taxes due to higher spending. In line with the current share of tax receipts in UK GDP, we assume that tax receipts increase by an amount equal to 40 per cent of the increase in GDP.

According to our modelling, taking second-round productivity impacts into account results in an increase of just over £206 billion in tax receipts. This increases the total amount raised in tax from around £339 billion to £545 billion. This £339 billion in tax receipts is enough to fund the £308 billion of current spending commitments in our plans – including the starter basic income scheme (£182.8 billion) – with £31 billion left over. With an additional £206 billion of tax receipts after taking second round impacts into account, it is possible to fund basic income scheme 2 (that is, the ‘halfway to MIS’ scheme – an additional £210.8 billion compared with the starter scheme) with almost £26 billion to spare. Given longer- term positive productivity effects of this basic income scheme and the other spending plans in this report, there is every reason to think that the UK would be able to afford basic income scheme 3 – payments to all individuals in the UK at the Minimum Income Standard level (currently an additional £276.1 billion) – at some point in the not- too- distant future. This would be a huge and welcome achievement.

It also demonstrates the fundamental importance of running Britain like a business. If we invest in the right areas, we generate wealth that cannot otherwise be generated. When we distribute that wealth effectively, we not only produce gains in those regions and among those communities and individuals that need it most: we grow radically as a nation. If we want Britain to survive and thrive, we must invest.

The programme in five minutes

We live in an era of permanent crisis. We have become accustomed to conditions that once would have felt life-threatening. Millions of people in work are unable to afford to heat their homes or pay their mortgages and waits for urgent hospital treatment are now often measured in years. Former Chancellor George Osborne was fond of saying that austerity was needed to fix the roof while the sun was shining. Instead, we are left with a national house that is close to being condemned.

But it doesn’t have to be like this. In the 1940s, with the country facing the devastation of the Second World War, Lord Beveridge proposed changes to public services that would transform the country for the better. Now facing our own 21st Century crisis, in this report we propose commonsense solutions to key problems in British life. From health and social care to transport and education, we show how we can make public services much better and the economy much more productive. We also show that we can do so without breaking the bank.

The authors come from different walks of life and have different political perspectives, but the policies presented here are based on evidence and can, and should, be adopted by parties across the spectrum. The findings of the report are just as compelling as those of Beveridge eighty years ago: we can solve our structural crises through evidence-based policies that are highly popular and that can create a better, wealthier future quickly. We must Act Now.

What do we propose?

We propose that we every national policy should be scrutinised on the basis of five principles:

1. increase equality?
2. promote freedom from domination?
3. tackle the social determinants of health?
4. build community wealth?
5. level up places?

Social security: We propose reestablishing a social safety net that works for all of us by introducing a Basic Income for all permanent UK residents of £75 per week for adults and £50 for children, increasing to £185 per week for adults within five years (removing some conditional benefits) and a full Minimum Income Standard payment of around £295 per adult within ten years, which would remove most conditional benefits and housing benefit in particular. It is only an intervention with Beveridge-scale ambition that can secure those of us in as well as out of work and rebuild our country.

Green New Deal: We propose investing a minimum of £28 billion annually through a National Investment Bank in decarbonising and expanding energy supply and reducing expenditure and emissions, while ending new oil and gas licences, with a quadruple lock for workers whose industries are affected. We propose leveraging further private investment through tax incentives.

We also propose taking full social control over energy, water and transport networks, devolved to community level in line with the community wealth principle and regenerating the countryside and creating marine protected areas in the interests of nature. Finally, we propose investing in a National Building Service to support decarbonisation efforts in housing, making energy efficient development mandatory and placing the costs of disposal and waste on the producers.

Public Utilities: In addition to the Green New Deal policies, we propose bringing the energy network and production back into public ownership while banning new oil and gas extraction and transitioning to clean energy in three years. We also propose progressive billing where users get a guaranteed amount of energy paid for and heavy users pay more. We would also trigger the English water companies’ 25-year notice period to bring them back into public ownership, legislate to cut that timeline and take failing water companies into special administration, while punishing others that perform poorly. Once public, we propose investment in infrastructure at large scale to reduce leaks and waste.

Health and Social Care: We propose legislating to ensure that health and social care is funded and delivered publicly, including nationalising GP Practices, integrating social care into the NHS, free at the point of need, bringing all outsourced contracts back in house and ending private provision through NHS facilities. We propose reinstating funding back to real-terms pre-austerity levels, doubling the number of training places for doctors nurses and dentists as rapidly as possible. Establishing a National Pharmaceutical Service to ensure that publicly funded research benefits the public and the public purse and end the drug manufacture shortages blighting the NHS.

Early childhood: Although many issues would be addressed by introduction of Basic Income, we propose investment to expand free school meals to all, ensure that schools can support child health, improve secondary and post-16 funding and expand Family Hubs, health visiting and children’s centres. We also propose embedding impact assessments for all policies, use devolved Citizens Assemblies that include young people in policymaking and pass the Wellbeing of Future Generations Bill to level England and Northern Ireland up to Welsh and Scottish standards.

Education: We propose increasing schools spending by 9%, sixth form by 23%, further education by 14% and higher education by 18% to return to pre-austerity levels. We also propose prioritising care, consideration and cooperation and reduce the cliff-edge implications of assessment that harm pupils’ health and wellbeing. We propose removing private school charitable status, prohibiting profit-making and merging public and private provision.

We propose granting Local Authorities direct control over admissions policy, ensuring a broad and balanced curriculum, introducing democratic structures in collaboration with experts, and ensuring that teachers are graduates with core academic capacities. We also propose removing further and higher education fees after five years and replacing the Education Maintenance Allowance during the transition.

Housing: We set out a fair Proportional Property Tax, introducing taxes on second homes, holiday homes and empty commercial property, and ending the spare bedroom tax. We propose enhancing the existing ‘right-to-stay’ into a ‘right-to-sell’, giving mortgagors the right to become tenants rather than face eviction. We propose using the previously mentioned National Building Service funded by the National Investment Bank to build as many publicly owned houses as capacity permits. We propose increasing the Basic Income payment and public housing availability enough that housing benefit can be withdrawn over time so that private landlords can no longer profiteer from public funds. We propose introducing rent controls and eliminating leasehold. We propose making squatting only to seek shelter a civil, not criminal, offence once again, while making illegal actions by landlords and bankers that deprive people of their home and shelter criminal, rather than civil, offences, since their actions demonstrably harm life. And we propose standards to build new homes that are planned to last for centuries, both for sustainability and value for buyers.

Transport: We outline a transformative programme of democratic control that turns government obsession with road building on its head. By fully funding from land value capture, salary sacrifice and pension investment in a Total Transport Network (TTN) of buses, trams and cycleways, with powers devolved to Combined Mayoral Authorities, we can eliminate the traffic jam and all the associated dead time.

Democratic reform: We set out forms of electoral and Parliamentary reform that increase competition and the ethos of public service and reduce in-built incentives for careerism and unwillingness to take risks for the public good. We argue that increasing consistency of administrative bodies across the UK while devolving greater powers to nations and regions is essential to making policy that is responsive. We specifically propose adopting Alternative Vote+ for the House of Commons and Single Transferable Vote for an Assembly of the Nations and Regions, as well as 500 constituencies with 150 top up seats allocated proportionally by Combined Mayoral Authorities across the UK. We also propose moving Parliament out of London to parts of the UK on a five-yearly basis in each location, ensuring that political candidates live in a constituency for two years before becoming eligible for election, and introducing a uniform structure of Scottish style Local Authorities and English style Combined Authorities across the UK.

We also propose  banning second jobs, paid lobbying and all foreign lobbying. We also propose funding political party work in the public interest through expanded Policy Development Grants, while banning donations to political parties by profit making organisations and individuals . We suggest tying politicians’ pay to the national median wage via a wage ratio of a maximum of 2 and introducing an independent Integrity and Ethics Commission.

Shifting the tax burden from work to wealth: The policies we outline throughout this report require significant funding, and we show that providing it through responsible capital investments and taxation on wealth, carbon emissions and profits advances a new economy that serves the interests of the vast majority of us and stimulates inward investment. The taxes we outline reflect public preferences and point towards viable, productive means of making the economy work for us. We use complex, cutting-edge microsimulation modelling to show the impacts of these reforms on measures of performance linked directly to our everyday experience, providing an overwhelming economic argument for the policies we set out above.

We want to run Britain as a business. By this, we do not mean running a country based on unsustainable pay ratios and offshoring labour that leaves most of us in a perpetual state of personal indebtedness and zero-sum competition for work. Rather, we mean a collective endeavour in wealth creation in which investments lead to an overall increase in resources and a distribution of those resources to those parts of our society that need them most to function. By addressing the historical anomaly of viewing income tax on work as the sole means of funding Britain, we set out a fairer and popular means of advancing each of our five principles of reform through our new economy.

We dispel the myth that smaller state spending produces growth and argue for investment in the structure of Britain in the same way as every business has to invest in order to generate wealth. We propose simplifying and limiting tax increases on income from work given the declining value of that income tax passive wealth and close the fairness gap by ensuring that income from work is no longer taxed at a higher rate than income from dividends. We would increase fundamentally affordable taxes, such as corporation tax, which is paid on profits, not overheads. We propose disincentivising through new taxes carbon-producing corporate activities that cost us more in the long-term than leaving the resources in the ground. We also suggest removing the enormous number of badly targeted or damaging tax reliefs.

Popularity: In our survey of Red Wall residents, we found an average level of support for the whole programme of 70.8%, with 61.7% among Conservative and 82.8% among Labour 2019 voters. Nationally, approval was 73.9%, with 51.3% among those intending to vote Conservative, 78.5% among those intending to vote Labour and 68.3% among those who don’t know who they will vote for or who don’t intend to vote at present. There is no appetite to do nothing!

Act Now has been widely endorsed. John McDonnell MP, former Shadow Chancellor of the Exchequer, said: “This is coherent, radical, and feasible manifesto for government. Given the chance, it would ignite enthusiasm, win the young back to politics, and enable people to enjoy security and freedom in their life with one another and with the powers that be. It calls us back to a realistic image of the good society.”

Matthew Johnson is Professor of Public Policy at Northumbria University.

Main image: Professor Matthew Johnson speaking at the launch of Act Now. Image in text: Other members of the Act Now team at the launch. Images c/o Labour Hub.

A real manifesto for change

Mike Phipps previews at Act now: A vision for a better future, by the Common Sense Policy Group, published today by the Manchester University Press.

JUNE 25, 2024

LABOUR HUB 

Common sense is an important feature of any election narrative. One of the ways in which Labour’s brilliant 2017 manifesto was able to dominate that electoral campaign and deprive Theresa May of her majority was to emphasise its common sense credentials – that austerity wasn’t working, that the definition of insanity was sticking with it and hoping for different results and that it was time to try something new.

This obvious point allowed Jeremy Corbyn’s Labour to rightly appear as the purveyors of common sense democratic socialist solutions and portray the Tories as swivel-eyed ideologues wedded to the stale dogma of failed neoliberal economics. By 2019, the Tories had swapped austerity for Johnson’s boosterist and ultimately fraudulent ‘levelling up’ agenda and Labour’s tactic of continuing to attack austerity was less effective, to put it mildly.

Keir Starmer may present himself as a common sense politician but you don’t have to delve too far into the Labour manifesto to realise its solutions fall short. Its main aim seems to be to make Labour as inoffensive to vested interests as possible. As a result, the ‘solutions’ presented to the multiple crises Britain is facing have been diluted and triangulated to such an extent that they barely scrape the surface of the problems we face.

Today’s new Report, compiled by a prestigious team led by Northumbria University’s Professor Matthew Johnson and including the prolific Professor Danny Dorling, North of Tyne Mayor Jamie Driscoll, We Own It Director Cat Hobbs, Compass Director Neal Lawson, health campaigner Professor Allyson Pollock and a dozen other academics and activists, has some excellent suggestions to fill this vacuum. These include:

• A basic income for all that would provide an essential safety net, an idea supported by nearly 70% of the population.
• A properly funded green new deal and nationalisation of energy and water, essential to producing national wealth. Two-thirds of the public support a green new deal and over 78% favour pubic ownership of utilities.
• Health and social care made cost-effective by being nationally owned and operated. Social care in particular saw local authority spending fall by half between 2010-11 and 2016-7, with poor quality care and low pay rife in the dominant for-profit sector. The Report also calls for an end to NHS outsourcing, private provision and subsidies. These ideas, along with the reintegration of social care into the NHS are also overwhelmingly popular.
• Early years and educational investments which are critical to reducing pressure on the criminal justice system and increasing productivity to support the transition to a new economy. Beyond funding, the authors also emphasise  a balanced curriculum, democratically accountable structures and a level playing field in Higher Education, pointing towards free provision for all.
• A national building programme to tackle the housing crisis – overwhelmingly popular – while gradually removing the state-led transfer of wealth to private landlords and speculators. Ending Right to Buy is central to this, and it should be noted that in Scotland and Walkes where this policy has been introduced, there has been no backlash at all.
• Infrastructure transformed through targeted, regional control of transport. Three-quarters of voters favour this policy.
• Democratic reforms to control lobbying and corruption. These included a fairer electoral system and a second chamber that would represent the nations and regions of the UK.
• An expansive programme of change through wealth, carbon and corporation taxes, increasing the tax base, yield and productivity sufficiently to carry through the programme outlined.

The authors believe the scale of the problems the UK faces requires a response which matches the ambition of the 1942 Beveridge Report. This tackled the five evils of idleness – through a programme of full employment; ignorance – by universal, free, compulsory secondary education; disease – through the establishment of the NHS; squalor – by a massive council housebuilding programme; and want – by a comprehensive benefits system.

Today all these achievements are undermined by the deliberate return of mass unemployment, the underfunding of schools and increasing costs of higher education, the relentless part-privatisation of the NHS, the selling off of public housing and swingeing benefit cuts.

To challenge this, the Report envisages a changed role for the state as a representative of the people rather than the interests of capital and a new emphasis on equality and community wealth building.

Greater equality is central to this endeavour, as recent studies reviewed on Labour Hub repeatedly underline. The Report states: “All of the ways in which children in the UK are worse off than children in other rich countries are strongly associated with the high level of income inequality in the UK.”

To address the scale of Britain’s economic decline, something which the Labour manifesto palpably fails to do, the authors propose a new economic approach on a fully costed and funded basis. At the heart of these reforms are a new National Investment Bank, a fairer tax system including a wealth tax and a combination of Basic Income and Universal Basic Services.

Will the Labour front bench listen to any of this? Probably not voluntarily. But the evident impatience of voters for drastic change stands in stark contrast with the timidity of Keir Starmer’s team, so any honeymoon an incoming Labour government hopes to enjoy is likely to be very short. As the leadership’s remedies to tackle the climate, cost of living and public services crises fall short of what’s necessary, the ideas in this Report can form a basis for united campaigning by trade unions and other social movements seeking real solutions to the mess we are in.

Mike Phipps’ book Don’t Stop Thinking About Tomorrow: The Labour Party after Jeremy Corbyn (OR Books, 2022) can be ordered here.