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Ed Miliband unveils 'predistribution' plan to fix economy | |
(35 minutes later) | |
A Labour government would attempt to cut the welfare bill by ensuring poorer workers are paid better, Ed Miliband has said. | |
Instead of redistributing wealth through the tax and benefit system, there should be more "predistribution", the Labour leader said in a speech. | |
That meant better vocational training in schools - but also a change in attitude from business. | |
He called for more "responsible" firms that focused on the long-term. | |
In a speech in the City of London, Mr Miliband said as big a shift in thinking on the economy was needed now as had happened after World War II and in the late 1970s and it could take longer than a Parliament to achieve. | |
It would also require a major change in philosophy from the Labour Party. | |
"The redistribution of the last Labour government relied on revenue, at least in part, which the next Labour government will not enjoy," said Mr Miliband. | |
"The option of simply increasing tax credits, for example, in the way we did before will not be open to us. Of course, redistribution will always remain necessary and I continue to believe that, but we have learned we have got to do more. | |
"And fiscal circumstances will make it harder not easier." | |
'Higher wage economy' | |
What was needed, he said, was more "predistribution" - a phrase he has borrowed from an American academic. | |
"Predistribution is about saying, 'We cannot allow ourselves to be stuck with permanently being a low-wage economy and hope that through taxes and benefits we can make up the shortfall.' | |
"It's not just, nor does it enable us to pay our way in the world. | |
"Our aim must be to transform our economy so it is a much higher skill, much higher wage economy. | |
"Think about somebody working in a call centre, a supermarket, or in an old peoples' home. | "Think about somebody working in a call centre, a supermarket, or in an old peoples' home. |
"Redistribution offers a top-up to their wages. Predistribution seeks to go further - higher skills with higher wages." | "Redistribution offers a top-up to their wages. Predistribution seeks to go further - higher skills with higher wages." |
We have all heard of redistribution - to coin a phrase, taking from the rich to give to the poor. | |
But what in heaven's name is pre-distribution? | |
Well, the phrase was popularised - if that's the right word - by the American academic Jacob Hacker, who is close to the Democrats. | |
It's designed to answer, at least in part, the question of how centre-left parties can differ from their right-wing opponents in austere times when there is very little public money to spend. | |
In the British context, Labour will say that if re-elected, they could spend less on tax credits and welfare by ensuring people were better paid in the first place. | |
That means more investment in education and skills by the state. | |
But - and this is the bit Labour aren't saying too much about at the moment - it is also means putting more pressure on employers to pay higher wages. | |
For example by making government contracts dependent on a bidder's willingness to pay a "living wage", higher than the current national minimum. | |
That's pre-distribution - and while it's designed to save government money, economically it's not cost free. | |
Mr Miliband said the Labour Party was working with schools, universities and business to come up with new ideas to boost skills training for the 50% of young people who did not go on to higher education, but who still deserved the chance to build a career. | |
He also revealed he was in contact with Business Secretary Vince Cable, via text message, and was keen to work with the Lib Dems to change the government's economic direction. | |
Asked about how he could work with a party that spurned Labour in favour of a coalition with the Conservatives, he said: "They made a tragic mistake, but I welcome all people who recant." | |
The Labour leader was sharing a platform with shadow chancellor Ed Balls, who repeated his offer of cross-party talks on a "mansion tax" - the Lib Dem proposal to slap a levy on high-value properties. | |
But Mr Balls derided the government's latest plan to kick-start the British economy, by loosening planning regulations. | |
He told reporters: "It is a mouse when we need a lion to roar. We have got to get this economy moving. | |
"They should not be changing the planning rules on conservatories. They should have a cut in VAT of 5% done immediately, for 12 months." | |
He also called for "another bank bonus tax" to fund 25,000 new low-cost homes. |