The chancellor’s productivity puzzle
Analysis ahead of the 2016 Budget
Improving trust in business
Why we need a more democratic capitalism
Why we need a more democratic capitalism
The growing inequality of trust in business reflects an increasingly pervasive view that large sections of society are no longer benefiting from our current economic system. If this chasm of trust is to be bridged, business and government need to create a far more democratic and inclusive economy. The failure to tackle this problem is likely to result an increase in the politics of fear which could ultimately undermine both our individual liberty and also our long-term prosperity.
Boosting Britain’s housing stock
Stop blaming the planning system for everything
Stop blaming the planning system for everything. Improving the efficiency of the land market will have a far greater effect in driving up the rate of house building than further planning reforms
The government reckons that its housing and planning bill – with the additional measures announced in the autumn statement – will lead to the construction of an extra million homes by the end of this parliament. That means increasing the rate of completions from the 2014 level of 118,000 to well over 200,000 per year. Empirical analysis estimates that there are already over a million plots with planning permission – close to 25 per cent of these in London. And if the current rate of granting permission continues at 250,000 plots per year, this figure will have climbed to over 2 million plots by the end of the parliament. Although there remain some challenges with the planning system, the government must focus on improving the functioning of the land market to drive up construction levels. The way in which volatile and high land values interact with the business model of housebuilding reduces supply. Continue reading “Boosting Britain’s housing stock”
Osborne’s fiscal devolution must go much further to transform local growth
The chancellor’s decision to devolve the full revenues from business rates to local areas is a radical step forward for England’s regions. But for local leaders to increase investment in infrastructure, they need to be able to set rates locally and borrow against these revenues.
The chancellor’s decision to devolve the full revenues from business rates to local areas is a radical step forward for England’s regions. But for local leaders to increase investment in infrastructure, they need to be able to set rates locally and borrow against these revenues. Without this flexibility there will be only minimal increases in investment. Full fiscal devolution to local authority partnerships that reflect local economies, if done after resolving longstanding flaws with the tax itself, could enable areas to generate up to an extra one per cent of revenues above their current trend rates. This would enable councils in London to finance large-scale projects such as Crossrail 2 or those in Manchester to fund a major regional transport hub.
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Britain’s dysfunctional housing market: a European comparison
Compared to European counterparts, Britain’s housing market is a picture of market failure
Across the European Union there is often a perception that Britain takes a more market-oriented approach, and where Britain leads continental Europe eventually follows. However, when it comes to housing, this is not the case. Britain’s housing market is far more dysfunctional than its European counterparts. A comparison of two key metrics of a group of six northern European countries demonstrates that the UK has by far the largest market failure in housing. The UK continues to have the lowest construction rate of all six countries. Moreover its housing benefit bill, due to soaring rents, dwarfs that of other countries and is now almost 10 times that of Germany.
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The Capital Markets Union needs to do more to help risk-takers
The CMU should focus on the fast-growth and innovative firms that truly make a difference and are capital constrained
The CMU should focus on the fast-growth and innovative firms that truly make a difference and are capital constrained
The long awaited Action Plan on Building a Capital Markets Union was published by the European commission on 30 September. Commissioner Jonathan Hill should be applauded for the scope of the plan and also the pragmatic nature of his approach. He has constantly stated that he wishes to focus on whatever is required to drive growth and jobs, taking a bottom-up approach rather than grandiose plans per se.
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Technological change and new work
The application of new technologies that reshape production inevitably makes the skills of some workers obsolete. Managing the transition into new work should therefore be a key priority for policymakers
Long-run economic growth depends on the application of new technologies that reshape production, adding new kinds of work to the economy. As new work is added to the old work, the skills of some workers are inevitably made obsolete. Throughout history, this process of creative destruction has created enormous wealth, but also undesired disruptions. How places adapt and incorporate new technologies into new work can determine the fortunes of entire cities and nations. Managing the transition into new work should therefore be a key priority for policymakers.
Skills formulation must become everybody’s business
Investing in high-quality education is the key for improving the economic and social well-being of people around the world
Investing in high-quality education is the key for improving the economic and social well-being of people around the world
In today’s world economy, education and skills are the driving forces for progress. Wealth and individual well-being, in turn, depend on nothing more than on what people know and what they can do with what they know. There is no shortcut to equipping people with the right skills and to providing people with the right opportunities to use their skills effectively. And if there’s one lesson the global economy has taught policymakers over the last few years, it’s that we cannot simply bail ourselves out of a crisis, that we cannot solely stimulate ourselves out of a crisis and that we cannot just money print our way out of a crisis. Instead, in today’s world economy, education and skills are the driving forces for progress. Investing in high-quality education will thus be the key for improving the economic and social well-being of people around the world.
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Making markets work: how effective regulation reduces reliance on taxation
Social democrats need to shift away from an exclusive reliance on tax and redistribution towards thinking more about making markets work at the micro level
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