A new report from the IPPR

The Institute for Public Policy Research’s Commission on Economic Justice has published its final report, Prosperity and Justice: A plan for the new economy

As the IPPR says, the report

argues that the economy is not working for millions of people and needs fundamental reform. Average earnings have stagnated for more than a decade; young people are set to be poorer than their parents; the nations and regions of the UK are diverging further. Many of the causes of the UK’s poor economic performance – particularly its weaknesses in productivity, investment and trade – go back 30 years or more. Fundamental reform has happened twice before in the last century following periods of crisis – with the Attlee government’s Keynesian reforms in the 1940s and the Thatcher government’s free market reforms in the 1980s. Ten years after the financial crash, change of this magnitude is needed again.

The report argues that a fair economy is a strong economy: prosperity and justice can, and must, go hand-in-hand. But it is not sufficient to seek to redress injustices and inequalities simply by redistribution. They need to be tackled at source, in the structures of the economy in which they arise. Economic justice needs to be ‘hard-wired’ into the way the economy works.

Setting out a wide-ranging and integrated ten-part plan for economic reform, the report argues for a new vision of the economy and a rebalancing of economic power. Together, its more than 70 recommendations offer the potential for the most significant change in economic policy in a generation.

It is an excellent report, and given the Commission’s broad agenda it was arguably justifiable not to tackle the benefits system. The report recognises the injustice of different marginal tax rates applied to those receiving income as dividends, those who pay Income Tax and are not on means-tested benefits, and those on means-tested benefits (p. 205); it argues that the idea that redistribution restricts economic growth is unevidenced and outdated (pp. 26-29); and it suggests that ‘work-related benefits and support should be extended to people who are self-employed’ (p.119) – but otherwise the benefits system is treated purely as a means of redistributing household incomes and is therefore not discussed.

However, the benefits system is a lot more than simply a method for redistributing household income. The system affects households’ employment, relationships, housing, and financial decisions, and those decisions have significant economic and social consequences and therefore contribute to the levels of economic justice and injustice in society. The commission recognises this in relation to the tax system, but not in relation to the benefits system.

At the launch of the report on the 5th September the IPPR announced that a new Centre for Economic Justice is to be established to continue the work of the Commission. The benefits system should be on its agenda, along with options for its reform.