Memo to the incoming government
The headline economic trends are promising, but dive deeper and the prospects for low income families are poor. Sharp increases in the price of essential goods alongside falling incomes pose a huge challenge to those families who have the most ground to make up following the recession. Costs, incomes and state support – each exerts a powerful force on living standards and all require a response. For people experiencing poverty, spending and regulatory choices will be important. But governments’ convening power can also make a difference.
I think there are three priorities. On costs it is worth drawing on the recent experience of developing the fuel poverty strategy, extending the method to other markets that affect people such as food and public transport. We need robust, transparent analyses of the interaction between commodity prices and policy choices (public and corporate) as the basis for a more informed dialogue between consumer groups, suppliers, intermediaries and civil society.
Similarly social housing needs far more attention. Currently the claims of private developers seem to dominate policy bandwidth, which is understandable given the focus on unlocking supply. However social housing has a continuing essential role to play supplying stable housing for people on low incomes, as much to provide springboards as safety nets. To be credible, national housing policy must set out more clearly what is expected of this crucial asset base, and what it can expect in return.
On incomes employers should be challenged to start meeting the state halfway. In exchange for the investment in skills, corporate tax breaks and light touch labour market regulation it is reasonable to expect firms do more to provide real opportunities for their lowest paid staff. In part this is about mentoring, career ladders and training. But it is also about reforming business models: opting for the high road of skilled staff providing high quality goods and services in exchange for a price (and thus wage) premium over the low road of low pay and low productivity. In the UK too many firms opt for the low road, and we all end up paying the price through tax credits and other income top ups.
Finally the costs of essentials, (housing being the major exception) are roughly the same between regions. New job opportunities clearly are not. There is a strong argument for reintroducing the link between working age benefits and inflation. Staying with welfare reform there is room to think more imaginatively about the design of job seeker support programmes. Too often we act as if we have a national labour market. The reality is considerable variation yet councils and other local agencies have little influence over how the relevant public funds are spent in their area.