Good morning from New Economy Brief.
The concept of economic security is gaining traction in British politics. The Labour Party have made ‘securonomics’ a central frame for their green industrial strategy, and more of the public, particularly swing voters, are longing for more secure personal finances.
But, aside from energy, what would policy that backs up this rhetoric look like? Couldn’t improving economic security be a successful political frame for a holistic economic strategy to build more secure workplaces, secure childcare provision, secure housing, reformed social security, and more?
This week’s New Economy Brief explores a new paper from JRF’s Graeme Cooke, who proposes economic security as “a lens through which we can diagnose where we’re falling short as a society, and for inspiring and guiding a project of social reform in response”.
‘Securonomics’ and secure personal finances. Rachel Reeves made ‘securonomics’ a central plank of Labour’s economic policy platform earlier this year, referring mainly to the use of a more active and interventionist state to improve the resilience of supply chains and disperse opportunities for economic growth across the country. (See our explainer here.) The New Statesman’s Anoosh Chakelian documents how the concept of security has spread around the Labour leadership’s communications and policy development. And now, a new paper by Joseph Rowntree Foundation’s Graeme Cooke argues that improving economic security for individuals could be a valuable frame for a political strategy of social reform and electoral success.
Policies for improving economic security. In policy terms, a strategy for expanding economic security combines “defensive action to protect against harmful insecurities, by placing limits on markets and entrenching state-backed minimums”, with “positive action to advance the foundations of security”. Cooke argues that longer term trends have undermined the foundations of security - such as precarious employment, wealth inequality, rising poverty and the crisis in care services - and proposes various social reforms for a government to protect personal finances in response. Let's take a look at some of these:
Security as a frame for a ‘retail offer’. The concept of economic security is an interesting political strategy that justifies ambitious interventions in markets, whilst aligning with how the public’s views have changed after successive economic crises and linking to their day-to-day concerns about their finances. NatCen’s latest Society Watch has found that concern about money or debt, mental health and work-life balance have all risen since 2018, where 40% of Brits are now “very or extremely worried” about money or debt. A political programme and economic strategy to improve economic security could be a helpful frame for pinning a ‘retail offer’ to voters on the cost of living. Crucially, this framing can help to place the burden of risk onto the status quo, meaning that solutions that might otherwise seem radical are seen in a different light by voters.
Break the rules. The UK should move away from rigid fiscal rules and prioritise investment, argues former Conservative Treasury Minister Lord Jim O’Neill in a piece for the Independent. O’Neill argues that only by taking a longer term view of the value of investments can the UK economy return to growth, and notes a growing number of economic thinkers beginning to voice this view.
Spanish example. The UK should look to Spain for an example of how to use fiscal policy alongside monetary policy to manage inflation, argues the IPPR’s Carsten Jung in a piece for the Guardian. Jung argues that the Spanish government’s more “forceful” management of the economy - including energy price caps, subsidised public transport, and rent caps - helped avoid inflation spreading through the economy and has led to Spanish inflation falling back to the 2% target. (For more information on Spain’s policy response see our recent briefing.)
Dangerous debt. The cost of living crisis has entered a “dangerous new phase” with the combination of the growth of unsecured debt among families and the rapid rise of interest rates that makes such debt harder to finance, according to new research. JRF’s Alfie Stirling sets out how 5.7m families among the poorest 40% have a total of £14.2bn in unsecured debt (excluding mortgages and social security debts) costing around £680 per household on average to finance.
Energy profits. Energy suppliers could be set to make £1.74bn in profit from customers over the next 12 months, finds new research from the Warm this Winter campaign. The campaign point out that the profit energy suppliers make per customer more than quadrupled in recent years, and is still over double the level it was in 2017.
Pension plans. The UK pension system needs a “radical reimagining” in order to guarantee economic security and dignity in old age, according to a new report from Common Wealth. Arguing that the current system is defined by financialisation and instability, the report recommends a suite of policy measures based on the insight that pension risk is inherently collective in nature.