Plan B: the ideas designed to restart a stalled UK economy
Chancellor George Osborne is committed to Plan's A fiscal austerity. But a new report challenges those assumptions
Last October, George Osborne confronted the issue of whether, if the worst come to worst, he had a Plan B for the economy. There wasn't one and there wouldn't be one, the chancellor told Radio 4's Today programme. "People in the Labour party keep saying: 'Where's your Plan B?' I've got a Plan A… This country didn't have any plan at all a few months ago. We have got the plan," he told the nation.
It was the morning after the chancellor had announced, during a tour de force speech in the Commons that echoed to the cheers of backbenchers, £18bn worth of cuts in spending on welfare, higher education, social housing and elsewhere. The harsh medicine was necessary, said Osborne, to take the country back from the "brink of bankruptcy".
A year on, unemployment is at its highest in 17 years, GDP growth continues to be profoundly underwhelming, living standards are falling and a poll from the Resolution Foundation is expected to show that Britons are increasingly cutting back on spending and becoming more anxious about job security. Ministers are bracing themselves for more bad news when the latest GDP figures are published by the Office for National Statistics. Osborne remains resolute. Elsewhere, the search for economic alternatives has begun in earnest.
It was an Eton-educated former banker who inadvertently sparked the research and discussion that has led to the publication of "Plan B, a good economy for a good society".
Jesse Norman, whose book Compassionate Conservatism has been described as "the guide book to Cameronism", was attending a seminar in May of political anoraks from the left who had gathered to moan about the government. The Tory posed a simple question: "Where is the left on the economy?"
For all the constant griping about the government's policies, and a despondency over the perceived flaws of Osborne's austerity prescription, Neal Lawson, chair of the centre-left pressure group Compass, had to admit to himself that they were nowhere.
"When Jesse said that I just thought, yep, we need to stop just talking about this stuff and get down to sorting out an alternative plan," Lawson said.
Stirred by the chiding of the Tory MP for Hereford and South Herefordshire, Lawson brought together an umbrella group of non-affiliated university-based academics, economists, political thinkers and experts. After six months of work – often conducted in a cafe opposite the TUC building on London's Great Russell Street – Plan B was formulated.
The group identified what they believe needs to be done now to kickstart the economy and, more fundamentally, what needs to be done to transform the way the economy functions so it works better for all sections of society.
In the words of the document: "For the first time in a generation the context exists to replace the political economy of market fundamentalism with a political economy for a good society."
According to the authors, cuts in public spending are driving the UK into another recession. Attempts to clear the structural deficit have been an exercise in "economic sadomasochism". A policy of cuts in public services merely hits spending, which then hits jobs, and that damages business. Placing more people on benefits rather than in productive work will ensure that Plan A fails on its own terms because of the need to spend to look after the newly unemployed.
The Plan B authors propose investment that would be made possible by a new round of quantitative easing. Beyond the usual suspects, such as transport and housing, the main plank of the plan would be the development of a Green New Deal, and the job creation that would come with ensuring the UK was the most environmentally friendly country in the world.
A second unlikely subject of investment would be the welfare state. The plan proposes to "raise benefits for the poorest families such as the working tax credit and jobseeker's allowance" to ensure that money goes to people who most need it, and who will spend it. The authors also suggest that Downing Street should look towards the Asian model of an enabling state where the government channels funds into particular industries to spark innovation and promote the private sector, while meeting the wider goals of the national economy.
The most radical proposal suggests a change in how the government judges the effect of its economic policies. Success, they say, should not be measured in GDP growth but in new catch-all criteria to take into account the desire for minimal unemployment, work-life balance, economic and social stability, and job satisfaction. Not just productivity. The ambition is marked. But for now, both George Osborne and the authors of Plan B would probably just settle for any signs at all of an upturn.