Incentivising an ethical economics: A radical plan to force a step change in the quality and quantity of the UK's economic growth

Our analysis looks at previous periods of British economic history to identify the enabling conditions for our most successful episodes of economic growth, noting the crucial importance of large-scale improvements in welfare and human capital to their success, and the negative impacts when these policies were reversed. In its own prescription for kick-starting growth, IPPR calls for a rebalancing of power to move the economy out of its current low wage/low productivity equilibrium. This, IPPR’s Commission on Economic Justice argues, requires a shift in power from: corporate management to employees/trade unions; short-term financial interests to long-term investors; dominant companies to entrepreneurs; Westminster to the nations and regions; and households with great wealth to those with little. We agree wholeheartedly that such structural and institutional change, including a greater emphasis on localities, allied to significant revenue-raising tax and wealth redistribution, is essential to deliver a step change in the quantity and quality of economic growth. We argue that this must be achieved through reconceptualising the welfare system as a growth promoter. Our radical proposal provides a general, motivating mechanism to achieve this.