Catch Up: Wealth Inequality is Rising and is Set to Rise Further

IPPR: Time for Reform to Stop Greater Inequality

The scale of wealth inequality in the UK is neither fair nor economically efficient. Without a change in policy direction, wealth inequality is expected to worsen, with acute and deepening divides in wealth between regions, generations, and households. The IPPR Commission on Economic Justice is exploring ways to create more broadly shared wealth and a more equal distribution of existing wealth, as well as ways to rebalance the economy more generally. It seeks to ensure that all the people of the UK share fairly in the country’s prosperity. Reforms the Commission is considering include:

  • Fairer, smarter and simpler wealth taxation The Commission is looking at how wealth, including land and property wealth, can be more fairly taxed. This will include potential reform of capital gains tax, stamp duty and inheritance tax, as well as new taxes such as a gift tax or land value tax. We are also considering how tax avoidance and evasion can be reduced.

  • A Sovereign Wealth Fund for the UK The Commission is exploring whether a national sovereign wealth fund should be established, to enable the collective sharing of national wealth. We are examining different possible objectives and structures for such a fund, innovative ways to capitalise it, and the different ways its dividends might be used.

  • Supporting different models of ownership to share returns to capital We are examining the case for giving employees stronger shares in the ownership of companies. Possible mechanisms might include mandatory employee profit sharing for companies above a certain size; the creation of employee ownership funds paying out an annual dividend on top of wages; and the promotion of cooperative and mutually owned enterprises.

  • Effective housing policy The Commission is considering how housing policy can be redesigned in order to avoid house prices rising more quickly than incomes and to avoid diverting investment away from productive assets. This will include considering reform of demand-side housing policies as well as how national and local government can increase the number of high-quality and affordable homes being built.

  • A greater focus on wealth inequality in public policy making. The Commission is considering new measures to ensure public policymakers, including the Treasury and the Bank of England, better consider the potential effect.

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The New Economics Foundation: A Manifesto for Towns

“The vote to leave the European Union in 2016 laid bare some of the urgent problems in our economy. For millions of people, these problems are expressed most clearly in their home towns.

“Many towns are being left high and dry, disconnected from global growth and sidelined by our economy. These are places which people call home. They are infused with history and meaning, they serve as anchors for people’s identity, and yet they are being left behind.”

RECOMMENDATIONS

1. Build up local supply chains: Local supply chains can give towns greater economic prosperity and cultural identity. They reduce the flight of resources away from an area, increasing their local retention and giving more ‘bang for every pound’.

2. Improve the quality of jobsin the ‘foundational’ economy: The foundational economy – those parts of the economy on which we all rely every day, and in which much of the workforce is employed – exists in almost equal relative measure in towns as much as in cities. Any industrial strategy or regional development plan which takes the foundational economy seriously – and indeed which prioritises foundational approaches over the more traditional hi-tech, city-centre led approach – would therefore be a huge boon to towns.

3. Build local infrastructure that supports thriving towns: For towns to thrive, the infrastructure that sustains them – particularly housing and transport – must be focused on drawing people into the town and not out of it. Infrastructure should create connections between economic sectors in a town and economic sectors in other places, rather than shifting activity out of town centres or into neighbouring bigger cities.

4. Develop more decentralised political institutions: Genuine devolution needs to occur. But this can only come from the centre letting go, which would then create opportunities for local government and local institutions to engage citizens in meaningful and innovative ways. These could include participatory and deliberative policymaking processes like participatory budgeting, which can connect the social justice agenda with democratic renewal.

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LSE Blogs: Is the EU More Protectionist Than America?

Is the European Union really “very protectionist”, as US President Donald Trump tweeted in July? Would the UK, unshackled from European tariffs and regulations, be able to have much freer trade relations with other partners, most importantly with the United States? After all, the US buys 17 percent of the UK’s exports, making it the second-biggest trade partner after the EU. Australia and Canada have already announced that they stand ready to negotiate free trade agreements with Britain.

To answer these questions, we can compare the EU’s trade barriers with those of the proposed future partners. As usual, the picture is much more complex than the rhetoric of proponents of a ‘Hard Brexit’ lets on. Depending on what aspects of trade we look at, it turns out that the EU is no more protectionist than the US, and in fact is one of the most open economies in the world. Looking beyond trade to regulations for services and product markets, important EU member states are much less protectionist than other overseas markets. That doesn’t mean that the UK won’t be able to improve its trade relations with new partners, once the country starts negotiating its own trade agreements. But getting better access than what these countries offer to the European Union would require a herculean effort by the UK and a sudden outbreak of enthusiasm for free trade among these countries.

Mark Manger and Atom Vayalinkal, LSE Blogs

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