A Social Democratic Future

Policy paths towards equality and efficiency

Beveridge 2.0

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The LSE is holding a conference February 2018 focused on how the future development of the welfare state can best overcome the challenges of globalisation, ageing, technological change and automation, income inequality, and related pressures on demand for services, their costs, and public capacity and willingness to pay for them.

The new director of the LSE has provided a broad but succint summary scoping analysis in

Asocialdemocraticfuture will aim to contribute to that debate through its
policy and research area.

Labour and the Single Market

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The EU decision early this month that sufficient progress had been made in the brexit stage 1 negotiations to proceed to stage 2 was predicated on the May government, in effect, recognising that the UK will continue to adhere to adherence to customs union (CU) and single market (SM) processes during the anticipated two year post-March 2019 transitional period, so staving off the imposition of a hard Eire/NI border.

Many in her party are still wedded to the illusion that it can be avoided without continuing de facto continuing SM and CU membership post 2019, or find it convenient for their own purposes to pretend that is the case.

In response, Keir Starmer(KS) has suggested that the UK is moving to a Norway European Economic Association (EEA) arrangement, implying continuing FOM, UK membership contributions, and fealty to ECJ jurisdiction. Meanwhile John Mcdonnell(JM),while also highlighting the advantages of continuing adherence to SM, rules out continuing FOM.

Quite likely both front benchers are flying mutually understood kites, but JM risks mimicking the hubris of the government brexit approach by holding out that the UK can maintain the benefits of the SM, while ditching free movement.

As suggested in a hybrid option where the UK proceeds into the medium term on the basis that it will proceed to negotiate a CFTA while maintaining adherence to CU and SM processes, appears at present most likely as that would avoid the economic damage of a disorderly exit, but would allow the political can to be kicked beyond a 2022 election.

Brexit Phase 2 options

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The UK faces either a Comprehensive Free Trade Agreement (CFTA) based on the recent EU-Canadian agreement that will still disadvantage UK services, and which – on current information – would take us well past the two year transitional period post March 2019 legal exit, ending early 2021; or a long-term Norway European Economic Association (EEA)-type arrangement involving continuing adherence to the single market with its four freedoms, including FOM, as well as continuing membership fees and fealty to EoJ jurisdiction on SM matters.  

The former would inflict continuing economic damage while the latter is logically absurd (why not just stay in and retain influence) and is likely be politically unacceptable due to the self serving unwillingness of the political class to ‘disrespect the will of the people’, despite the population being sold brexit on a false prospectus, or more kindly, one that was based on imperfect and incomplete information, a deception that is now steadily and surely emerging.   

A hybrid of these two options, perhaps – the author of this post, like others, suffers from imperfect information on this complex, technical and unfolding story – is more likely: extended de facto continuing UK CU and SM adherence until a CFTA is agreed sometime mid-next-decade. This could allow UK exit from the CU, while allowing continuing indefinite UK SM  involvement for services. Such a hybrid would allow the political brexit can to be kicked down down the road past a 2022 election
[Read more…] about Brexit Phase 2 options

Is there a housing shortage?

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The issue is one of the deficient supply of affordable housing: a problem concentrated in London and other high cost areas, but still present elsewhere.  And, although new net supply  increased to 217,000 in 2016-17, that figure is likely to prove  a peak and still below projected demographic growth levels, leaving aside the impact of the supply backlog that has built up since the GFC.  Recent supply totals comprise mainly homes built at prices way beyond the means of first time buyers with even less than upper quartile earnings in some areas, let alone average or below average earnings.  The private housing market is broken, suffering from multiple housing and land market failures. That has significant and  extensive deleterious macro-economic, as well as social, impacts, noted and highlighted by FT commentators, such as Martin Wolf and Chris Giles, to name just a couple. It  needs to be replaced by a partnership model where 70,000-100000 dwellings are provided for either affordable rent or discounted home ownership terms accessible to those that cannot purchase. Deflating the cost of land directly should be an essential ingredient of such a partnership model, and would help to reduce its public expenditure cost.  Insisting on at least 40% of all dwellings provided on new developments (beyond a minimum size) to be affordable as a mandatory, certain and transparent requirement would serve to reduce land costs; that change could be backed by changes in the compulsory purchase rules allowing public authorities to compulsorily purchase land at existing use values as a last resort in order to provide affordable demonstrably needed in their local areas.