Why "predistribution" could be a winning agenda for Miliband

How the state can act to prevent inequalities arising in the first place.

"Predistribution", a concept that Ed Miliband discusses in his interview in this week's New Statesman, is one that is easily mocked. But it represents an idea that is central to the challenge of building a fairer economy - that the state, rather than merely ameliorating inequalities through the tax and benefits system, should act to ensure that they do not arise in the first place. (See this recent piece by Yale professor Jacob Hacker, the man who coined the term). To this end, it should legislate for policies such as a living wage and introduce curbs on predatory energy and rail companies, pursuing what Miliband's consigliere, Stewart Wood, has called a "supply-side revolution from the left". As he wrote in a piece earlier this year:

We will need different kinds of banks and stronger competition in the banking industry; corporate governance reforms to incentivise good ownership models and longer-term business strategies; ensuring that companies see the continuing upskilling of their workers as an obligation and not simply a luxury; and the courage to challenge vested interests in the economy that charge excessive prices for energy or train fares and squeeze families' living standards.

In his speech to today's Policy Network conference, Miliband will elaborate on this theme, stating that while redistribution will remain a "key aim of the next Labour government", a greater focus on predistribution is needed. He will advance two main arguments for this claim. Firstly, that the failure of the last Labour government to reduce inequality proves that while redistribution is "necessary" it is "not sufficient", and secondly, that the fiscal constraints a Labour administration will face (based on current forecasts, it would inherit a deficit of £96.1bn or 5.8% of GDP) mean that it will be not able to increase tax credits (the last Labour government's primary redistributive instrument) in the manner that Tony Blair and Gordon Brown did.

The great strength of predistribution is that it does not cost the state a penny to pursue. Rather than relying on taxation to narrow the gap between the rich and the poor, Miliband will harness the instruments of legislation and regulation. Rail companies, for instance, would be barred from raising fares by more than 1% above inflation. As he will say in his speech:

As with much of Miliband's "responsible capitalism" agenda, more detail is required (which, given that we're still not even halfway through this parliament, is hardly surprising) but the ambition is admirable. Under the rubric of predistribution, Labour can finally adopt the kind of policies that will have a transformative effect on the living standards of working people.

In his speech at the Policy Network conference, Miliband will say that redistribution is "necessary" but "not sufficient". Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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Can Philip Hammond save the Conservatives from public anger at their DUP deal?

The Chancellor has the wriggle room to get close to the DUP's spending increase – but emotion matters more than facts in politics.

The magic money tree exists, and it is growing in Northern Ireland. That’s the attack line that Labour will throw at Theresa May in the wake of her £1bn deal with the DUP to keep her party in office.

It’s worth noting that while £1bn is a big deal in terms of Northern Ireland’s budget – just a touch under £10bn in 2016/17 – as far as the total expenditure of the British government goes, it’s peanuts.

The British government spent £778bn last year – we’re talking about spending an amount of money in Northern Ireland over the course of two years that the NHS loses in pen theft over the course of one in England. To match the increase in relative terms, you’d be looking at a £35bn increase in spending.

But, of course, political arguments are about gut instinct rather than actual numbers. The perception that the streets of Antrim are being paved by gold while the public realm in England, Scotland and Wales falls into disrepair is a real danger to the Conservatives.

But the good news for them is that last year Philip Hammond tweaked his targets to give himself greater headroom in case of a Brexit shock. Now the Tories have experienced a shock of a different kind – a Corbyn shock. That shock was partly due to the Labour leader’s good campaign and May’s bad campaign, but it was also powered by anger at cuts to schools and anger among NHS workers at Jeremy Hunt’s stewardship of the NHS. Conservative MPs have already made it clear to May that the party must not go to the country again while defending cuts to school spending.

Hammond can get to slightly under that £35bn and still stick to his targets. That will mean that the DUP still get to rave about their higher-than-average increase, while avoiding another election in which cuts to schools are front-and-centre. But whether that deprives Labour of their “cuts for you, but not for them” attack line is another question entirely. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.

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