What is the economy for?

July 20, 2019

In the wake of the 2016 EU referendum result, The Institute for Public Policy Research (IPPR) established a Commission on Economic Justice to better understand why 17.4 million Britons voted to leave the European Union.

Following the publication of the commission’s comprehensive report, Prosperity and Justice: A Plan for the New Economy, the think tank announced a series of events across the UK – the first of which took place at the Biscuit Factory, in Newcastle, last month. Attending the event, Richard Dawson spoke to Sarah Longlands, director of IPPR North, to get her perspective on what economic justice means for the North East

How do you define economic justice?

Economic justice is about coming back to the question of what is the economy for, and in whose interest does it work? What the commission on economic justice said in its conclusions was that the economy wasn’t working sufficiently well for ordinary people who live and work in the UK; it was working more in the interests of the financial system and those people who are holding the reins of power.

For me, economic justice is about people being able to live a life they have reason to value. And that’s about feeling in control. My theory is that the big cry about taking back control over Brexit was a lot about economic injustice and people not feeling in control, whether that’s with their work or at home. It’s that sense of not having a say in the running of their day-to-day lives.

What are your thoughts on this idea of inclusive growth?

I’m not a fan of the term ‘inclusive growth’. Economic justice is more fundamental. The problem for me with inclusive growth is that growth is seen as this kind of religion. There’s an assumption that if we get growth, everything will be fine. But first, there’s the question of what do we do in the meantime? And second, there’s the fact that when we do get growth, there’s no guarantee that everyone is going to benefit from it.

Inclusive growth is a useful bridging term, but it still only deals with the outputs rather than the system itself. I think I’d much rather talk about an inclusive economy because that’s the actual mechanism.

What kind of policies could be used to address the imbalances between the North East and the rest of the UK?

We’ve got to see a fairer redistribution of power and resources to the North East. Part of that is the devolution we’re starting to see in the North of Tyne but that needs to go much further. At the minute those powers are very limited. At IPPR North, we’re interested in what a really radical devolution settlement would look like. How could you push that devolution arrangement to start to make a step-change in people’s lives in the North East?

The other part is investment. On transport expenditure, we generally know that in the North there is a gap of £2500 per head of the population. We know that in education there is a gap. We know that in the North there are areas that
have a much lower healthy life expectancy than elsewhere in the UK. Things like education and health are foundational to a decent economy.

Given that powers are limited, how can devolution in the North of Tyne be successful?

There’s no substitute for real power and real money. But what is interesting is what the mayor can do when he uses his soft power to bring people together on the particular challenges the North East faces. I think that in itself is valuable.

The other interesting thing I’ve observed in [existing combined authorities] Manchester and Liverpool is the way having the mayoral figure has started to bring the conversation on policy into sharper focus locally. [Devolution] has provided the space to have those conversations about health, education and the economy in a way that would have otherwise happened at Westminster. I think that’s healthy; it gives people a sense of self- determination that they can do something to try and change their situation.

What role can businesses play in delivering economic justice?

I think businesses have got a massive role to play. We published a report a couple of months ago that talked about what responsibility companies have to support health and wellbeing in their local areas.

We identified a number of businesses that were doing proactive work and recognising that their responsibility as businesses went beyond just employing people and paying them a fair wage. It’s important that businesses take a wider responsibility to their area and recognise that if the area is doing well then that’s good for their business.

The second thing is about decent wages. Paying people a fair wage and giving them proper contractual arrangements is not just good for those people individually, it’s good for the wider area and businesses in the long-term.

IPPR North

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Supporting role: Michael Leather and Ryan Harrison