Welby laments ‘profound state of economic injustice’ and calls for fundamental reforms

06 September 2017

PA

THE Archbishop of Canterbury has said that the British economic model is “broken” and in need of fundamental reform.

Writing in the Financial Times on Wednesday, Archbishop Welby described “a watershed moment where we need to make fundamental choices about the sort of economy we need”. He warned: “We are failing those who will grow up into a world where the gap between the richest and poorest parts of the country is significant and destabilising.”

The article was written to launch the interim report of the Institute for Public Policy Research’s (IPPR’s) Commission on Economic Justice, which the Archbishop joined last year (News, 25 November).

The report laments that Britain has “lost the spirit of possibility” and calls for “fundamental reform” of the magnitude of that instituted in the 1940s and 1980s, to address “deep and longstanding weaknesses” in the British economy.

Our economic model is broken,” writes the Archbishop in his article. He refers to “the runaway nature of high pay among the richest and most powerful”, in contrast to the fall in pay in real terms for many workers, and to geographical inequality.

“In local communities where I have worked in Liverpool and the North East, living standards have actually fallen,” he writes. “What we are seeing is a profound state of economic injustice.”

He lists five “building blocks” to deliver an economy “wired for both success and justice” by 2030, including a better education and skills system, higher tax for the wealthy, a decarbonised economy, efforts to raise wages, and more housing.

A consensus exists, he suggests: “I am convinced that most people in Britain want the same things from the economy: a system in the service of human flourishing and the common good, where all are valued and all have a stake, regardless of their perceived economic worth and ability. That is the heritage of our culture, the outcome of our great historic values, and emerges for me from the teaching of Jesus Christ.”

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The IPPR is left-leaning: it was founded by Clive Hollick, now a Labour Peer, and its Commission on Social Justice, which ran from 1992-1994, influenced the policies of New Labour. Its interim report published on Wednesday is critical of governments’ responses to the financial crash of 2007: “Fiscal austerity . . . has left the UK’s recovery in this period slower than almost all of our major competitors.” It refers to “needlessly aggresive deindustrialisation”, and a “steep increase in inequality” in the 1980s, and suggests that higher taxation may be necessary, noting that “the British public aspires to Scandinavian levels of public services but American levels of taxation.”

It argues, however, that “many of our most serious problems have roots in deliberate choices made by policymakers over the past three decades”, and that redistribution is “in one sense, a measure of failure . . .The more it is needed, the more unfair the economy is in the first place.”

“There isn’t a single system of capitalism; there are many,” it says. “We should not be looking to universal, idealised policies that rest on abstract understandings of the economy.”

Archbishop Welby has spoken frequently on the economy, capitalism, and banking, including as a member of the Parliamentary Commission on Banking Standards in the wake of the financial crash (News, 2 November, 2012). In 2013, he said that a “culture of entitlement” had polluted the banking industry (News, 3 May, 2013) and that banks needed “the fear of hell and the hope of heaven” (News, 14 June, 2013). But he has also defended wealth creation and argued that the market is a “hugely liberating” mechanism, and that alternatives have always led to “inhumanity or even tyranny” (News, 6 February, 2015).

His tendency to marry economics with morality in his pronouncements is echoed in the report, which sets out a vision for “the good economy [that] values people for who they are as much as what they do. It is judged not only by its results but also by the conduct of those within it, and is concerned with reciprocity, generosity and kindness.”

Evidence marshalled in the report includes the longest period of earnings stagnation for 150 years and analysis showing that the share of national income that goes to wages is now the lowest it has been since the Second World War. It refers to “an economy in which too much power is concentrated in too few hands”, and says that too many sectors have fallen into a “low-pay, low-productivity equilibrium”. One-third of employees in the UK are overqualified for their job, the highest proportion in the EU.

Its vision for 2030 includes “seizing the opportunities of technological innovation” to address Britain’s productivity problem, and produce better jobs with higher wages and shorter working hours. It envisages an economy “in which all the nations and regions of the UK thrive . . . in which successful and responsible businesses, a smart and accountable state, strong trade unions and a vibrant civil society work together for the common good.”

”Critics will no doubt say that such a vision is utopian,” it says. “But there is no reason why we cannot build an economy like this if we have the will.”

A Treasury spokesman pointed to government efforts to improve the economy, including the investment of £23 billion in infrastructure, research and development, and housing, and the reform of technical education.

The membership of the Commission is varied and includes the heads of John Lewis, McKinsey and Siemens UK, and Frances O’Grady, General Secretary of Trades Union Congress. Earlier this year, Ms O’Grady co-authored a Commission report with another member, Dame Helen Morrissey, head of personal investing at Legal & General Investment, calling for reform of corporate governance.

Another member is Sara Bryson, community organiser for Tyne & Wear Citizens, Citizens UK, who described at last year’s launch how cheese had become a currency on one Newcastle estate.

Testimonies provided by trade unions and Citizens UK include that of Chris, a clothing warehouse worker in Barnsley, who wrote: “My job is standing in one place, eight hours a day, sometimes ten hours, inducting clothes into an automation system. At the end of each day my feet and legs hurt. No one is allowed to sit unless they are pregnant.”

Read the full IPPR report here.

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