Shift from ‘consolidation state’ towards ‘investment state’

A new report has argued that austerity has failed economically, fiscally and socially, and has urged for a fundamental shift away from the ‘consolidation state’ towards an ‘investment state’.

There is an alternative: Ending austerity in the UK, published by the Institute for Public Policy Research, suggests that policy makers will have to make two key shifts in policy to improve levels of care, skills, health and security,

Firstly, people on middle incomes will have to feel that those on higher incomes are paying their fair share of taxation before they are willing to pay more themselves. The IPPR is therefore calling for increases in corporation, wealth and income tax on high earners – together raising as much as £57 billion in revenues per year – in the short run.

Additionally, everybody will need to benefit from high quality public services in order to create a coalition in favour of the ‘investment state’. This will require a shift towards more universalist public services and welfare provision. The report calls for the additional funding raised in the short term to be invested in universal childcare, social care and mental health provision – as well as reversing cuts to universal credit, adult education and public health.

John McDonnell, Labour’s Shadow Chancellor, commented: “The failure of austerity on all counts is now widely accepted and it’s important that the IPPR is highlighting the deficits in health, care, skills and income security. We need bold thinking about how to fund the things we all need.

“It’s a depressing comment on the state of the Conservative Party that instead of rebuilding our scarred public services and social security system they are fixated on 1980s-style swingeing tax cuts.”