Political Promise

The Big Business Society

In Jonny Roberts on August 25, 2010 at 6:49 pm


Moving the burden of socio-economic responsibility away from the state and on to the markets, says Jonny Roberts

Rather than cede its traditional ground of organising and community the Labour Party must embrace the Big Society ethos and build upon it, with the government putting to needs of the most vulnerable the hands of this experiment it should be sacrilegious for Labour to hope for its failure. Cameron’s proudest policy has limited the role of the markets and business to philanthropy and is being used as cover for cuts in public services. For a Big Society to thrive it must be an agreement between all stakeholders of society – the citizen, the state and the markets. All three constituent parts must hold responsibilities as well as having needs to be met; society will work better when the three embrace their responsibilities and work together to meet their needs rather than pitting one against the other. A truly great society (if that is what we can assume the Big Society aims for) needs wider reform than encouraging a third-sector boom. Ed Miliband’s language towards the Big Society so far has been to dismiss it out of hand as rubbish simply masking the ideological Tory cuts, yet of all the Labour candidates he is leading on a fundamental part of a Labour Big Society – a Living Wage.

All the Labour candidates have pledged since to back a move towards a Living Wage but only Ed has outlined plans in detail. He calls for businesses that pay a £7.60 Living Wage minimum to receive ‘compensation’ in the form of lower corporation tax. The maths used by the younger Miliband come from the Institute of Fiscal Studies who identify huge cuts in welfare payments which would match or even go further than the coalition’s proposals but not hit any claimant in the pocket as their employer takes on the responsibility for their staying out-of-poverty. The resulting cuts in corporation tax would cost the state half of what it costs to pay in working tax credits and other support payments for the lowest paid.

Higher wages lift people out of reliance on the state. In the bust times, as we are seeing now, the state cannot afford to pay welfare bills to which many of come to rely upon, a living wage can liberate the individual and protect them from the ups and downs of the market – the government will only need to dig deep during recessions to pay for increased unemployment. Under this system the state will still provide welfare payments to supplement the lowest paid with the additional costs of having a child, likewise as mentioned, the state must continue to provide Jobseeker’s Allowance for the unemployed but the incentive to work will be much higher – being in work will immediately empower the individual with enough money for a good life. A £7.60 wage would create an annual wage of no less than £13,832 pre-tax (on a 35 hour working week), with the admirable Liberal Democrat goal of raising the tax allowance to £10,000 by the end of this parliament that would leave around £12,600 after tax, that might not be a lot to many people but to those living on the current minimum wage it’s nearly £3,000 better off.  This is why Ed is right to champion a living wage, it’s also why, if he leads Labour, he must call on his party to support Nick Clegg’s push for higher tax allowance – their combination could radically change Britain from a country where you have to work well over 40 hours to get enough money to live on to one where work-life balance is a luxury afforded to even those in the lowest paid jobs and no one lives in poverty.

Ed Miliband is right to call on business to take on their social responsibility in the form of a living wage but he should recognise that this can his version of a Bigger Society, one that realises business is a fundamental part of that society from big business providing thousands of jobs paying a living wage to medium sized co-operatives sharing their wealth to encouraging entrepreneurs to start up their own businesses to provide for their communities needs, diversify the choice in the local market and provide income for themselves. Ed’s vision should go beyond simply a living wage to a society where the government pays subsidies and provides support for the smallest businesses, encourages growing companies to consider the co-operative model and call on larger businesses to offer staff half-price shares. After all, as Mr Cameron likes to say, ‘we’re all in this together’.


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