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GDP
growth gives us a limited view of how much more prosperity is being
created. Firstly, it is only a measure of current economic output and
does not include the wellbeing of a country’s population or reflect
how environmentally sustainable growth is.
Secondly, a country’s GDP only shows us how much we
are producing in total, and not who the gains of this production are
flowing to. If economic growth goes solely to the rich, a larger
economy will just mean more money in the pockets of the already
wealthy.
But even when measured against this government’s own
aims of delivering growth, these tax cuts will fail. They will lead
to dramatically higher inequality as tax cuts that disproportionately
benefit the rich don’t help the people who need it the most. This in
turn reduces growth, because the rich tend to spend less and save
more of their income as a proportion.
By contrast, those on low incomes spend a greater
proportion of their income than the rich – because the cost of meeting
their basic needs uses up the little money they have (or, in many
cases, outstrips it, meaning parents go hungry to feed their
children). More inequality, therefore, means less spending on goods,
and less economic output, while the wealthy simply accumulate more
savings in their bank accounts.
More unequal nations also see slower economic growth as they are less
healthy. Those at the bottom and middle are left
struggling under the stress of trying to make ends meet, making them
less productive at work.
In addition, countries with higher inequality have less educated
populations. Low-income parents who have to choose between
heating their homes or putting food on the table have fewer material and
psychological resources to invest in their kids. In other
words, when you’re skipping meals so you can pay your energy bills,
it’s much harder to sit down and read to your children or teach them
the alphabet.
Higher inequality is generally associated with lower
growth, as has been found by both the IMF and
the OECD.
As the temperatures drop, millions of families around
the country are facing a hard winter ahead. The government should
prioritise protecting them, over tax cuts that disproportionately
benefit the rich.
Around one in three
families don’t have enough money to even meet the basic
standard of living. Getting more cash in their pockets would lead to
higher growth today – and better health and education outcomes in
future.
Even better, if we were to also invest in a program of
mass home insulation
and decarbonisation, this government would be keeping our bills low,
while protecting the UK from energy shocks and climate catastrophe in
the future. It’s a win-win.
People are also in dire need of more investment. The
amount we spend on adult skills has
fallen by half since 2010 and spending per pupil is lower
due to rising inflation. Add on the lost learning during the pandemic
and the government’s refusal to properly invest in
catch-up education, and you have a nation in urgent need
of a skills upgrade.
The places we live in need investment too. While that
does include physical infrastructure, especially outside
London, we also need more social infrastructure. We should
give communities the money they
need and let them decide how best to improve the places
they live in.
We face a choice in this country. We can ensure
everyone has a warm home, the knowledge that they can afford life’s
essentials, a clean and healthy environment, and the opportunity to
thrive for generations to come.
Or we can continue transferring wealth from the
majority to the rich, making our jobs, homes and futures less secure
as well as accelerating environmental breakdown.
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