Theresa May and Jeremy Corbyn might propose radically different solutions, but their speeches at this year’s party conferences showed a common understanding of the fundamental challenges facing the UK’s economy.
The Prime Minister acknowledged that we’ve experienced nearly a decade of low growth, stagnating wages and pay restraint. She warned that the boom in the housing market has enriched homeowners while for others, getting on the housing ladder is a distant prospect.
For his part, Corbyn attacked the government for overseeing the longest fall in people’s pay since records began, and a situation where houses have become “speculative investments for the few”.
At Positive Money, we’re trying to show MPs of both parties that if they’re concerned about an economy where housing costs are rising much faster than wages, the solution lies in the money and banking system. Monetary policy – particularly quantitative easing – since the financial crisis has seen hundreds of billions pumped into financial markets, which has pushed up the price of assets, including property.
Instead, we need to use QE for People as a way of injecting money into the real economy, to boost wages and investment.
Thanks to donations from over 400 Positive Money supporters, we were able to organise events at both the Labour and Conservative conferences. With the theme 10 years after the crash, these events were a chance to make our case to MPs and activists that our economy remains dysfunctional.
At our Labour conference event, Fran Boait explained how institutions such as the Bank of England are still stuck in a pre-crisis way of thinking. She spoke alongside Labour’s shadow treasury minister, Anneliese Dodds, who praised Positive Money’s “tireless campaigning” on the lack of accountability of the money system. Anneliese Dodds recommitted Labour to its review into the Bank of England’s mandate, which was started in 2015. (Watch the video below.)
At our event in Manchester, our economist Ed Smythe argued that the UK economy is over-reliant on ultra low interest rates, and that this has pushed up inequality and led to record consumer debt. He warned the Conservative delegates that another crash could happen on their watch, and that the best solution is for the Bank of England to deploy QE for People.
Ed’s remarks received a warm response from Director of leading Conservative think tank Respublica, Phillip Blond. He said he found Ed’s arguments persuasive, and agreed that a targeted form of QE seems like a better option than what we’re doing at the moment. He said that the young have lost out from rising asset prices, and that he’s interested in exploring how QE for People could be used to distribute assets more widely.
And the director of the Institute for Fiscal Studies, Paul Johnson, said that our proposal for QE for People is “worth listening to” in a vacuum of new thinking about the economy. But he warned that the policy would depend on a strong institutional framework to avoid monetary policy becoming too politicised.
Watch the video from our Labour Party conference event: