Preview: Dear Mr Osborne, Here's your Plan B

World leading economists present the Chancellor with alternatives to austerity.

In this week's magazine, nine of the world's leading economists -- including a Nobel prize winner, one of the Chancellor's own advisers and three former members of the Monetary Policy Committee (MPC) -- write open letters to the Chancellor, George Osborne, urging him to adopt alternative and radical policies to stimulate growth and create jobs.

 

Christopher Pissarides: Cut VAT back to 17.5 per cent

Professor Christopher Pissarides holds the Norman Sosnow Chair in Economics at the LSE and in 2010 was awarded the Nobel Prize in Economics. Writing exclusively for the New Statesman, he tells the Chancellor: "I know you worry about the deficit but I think that you worry about it too much. . . The markets are clearly telling us that you are too worried about the deficit". Pissarides accuses Osborne of being "inflexible" and says the cuts could "slow down the recovery and may even cause a double-dip recession". In his letter to the Chancellor, the Nobel laureate explains the need for a fiscal stimulus to boost employment:

I don't think reducing the top income tax from 50p to 40p in the pound will create many more jobs . . . Cutting VAT back to 17.5 per cent, or reducing National Insurance contributions for those on low incomes, will revive job creation and reduce unemployment. Deficit reduction is best done with spending cuts when the economy is recovering, not with higher taxes in a downturn. There is enough time in the life of this parliament to achieve your deficit-reduction objective with a policy that is friendlier to job creation.

 

Sushil Wadhwani: print money for the public

Economist Sushil Wadhwani, a member of the Bank of England's MPC from 1999 to 2002 and founder/chief executive of Wadhwani Asset Management, outlines his own radical proposal for stimulating consumption and growth, following the latest round of quantitative easing. He tells George Osborne:

We need to ensure the extra money leads to higher demand. One good place to start is with the textbook example of printing money to finance consumption - sending every adult in the country a voucher that can be spent in the next three months. Allocating £300 to each of Britain's 50m adults to spend on goods and services would cost £15bn, or 20 per cent of the £75bn created by the new round of QE. (In 1999, the Japanese government distributed $175 vouchers to the public - 99.6 per cent of them were spent within the six-month limit.) Perhaps you can persuade the MPC that this is preferable to buying gilts?

 

Jeffrey Sachs: agree financial transaction tax

Professor Jeffrey Sachs, a personal adviser to George Osborne on development issues, and director of the Earth Institute at Columbia University, urges the Chancellor to reverse his stance on a Financial Transaction Tax and raise more revenue from the banking sector:

I am strongly supporting the call for a Financial Transactions Tax, or FTT, which I believe would add efficiency to the global financial system by reducing destabilising speculation.

Sachs appeals to the Chancellor to play a leadership role on the FTT, urging:

Please do use your global influence within the G20 and bilaterally to ensure that the US signs up to the FTT . . . Even if the US does not, I would hope that the UK and all of the European Union would agree to such a tax.

 

David Blanchflower: reduce NI contributions

Warning of a future "lost generation" as the number of unemployed young people nears a million, the New Statesman's economics editor, former MPC member and professor of economics at Dartmouth, David Blanchflower, tells the Chancellor:

I suggest you increase the number of university places by 100,000 at once - the universities have a capacity. You could even insist that the extra places be primarily in science and engineering, which would help future growth. Second, give a tax holiday for two years on employer and employee National Insurance contributions for anyone under the age of 25.

 

Robert Skidelsky: Start a national investment bank
Skidesly, emeritus profess of political economy at the University of Warwick and biographer of Keynes, dismisses the paltry funds allocated to the government's new Green Bank, telling the Chancellor:

"We need a proper national investment bank, with more capital and the ability to raise private money . . . You should use part of the proceeds of the sale of government shared in bailed-out banks to increase the capitalisation of the national investment bank."

 

Jonathan Portes: Lift the cap on immigration
Portes, the former chief economist at the Cabinet Office and director of the National Institute of Economic and Social Research, states:

"There is a simple way the government could boost growth not just in the short term but over the medium to long term, too, while reducing the deficit. That is to reverse the damaging restrictions the government has introduced on skilled immigrants and students from outside the European Union."

 

Ann Pettifor: Launch a green new deal
Pettifor, the co-founder and director of the think tank Prime (Policy Research in Macroeconomics), and one of the few economists to have predicted the crash, calls on the Chancellor to ditch austerity, and instead tackle the threat to Britain's economy and environment:

"We need public works programmes that will mobilise a "carbon army" of "green-collar workers" and offer major incentive to environmentally friendly businesses."

 

George Magnus: Lend directly to small businesses
Magnus, the senior economic adviser to UBS Investment Bank, reminds Osborne that "extraordinary times call for comparable economic thinking", proposing that:

"The Bank of England could get involved in direct lending to SMEs and to the government, so that the latter could fund infrastructure and other programmes to boost employment."

 

Chrostopher Allsop: Set up a recovery fund
Allsop, the Oxford professor of economics and a member of the Monetary Policy Committee between 2000 and 2003, tells the Chancellor that "the only lever left is fiscal policy":

"My preference would be public investment for infrastructure, which is sorely needed and could be financed, currently, at negative real interest rates. How about a recovery fund, financed by index-linked gilts?"

 

Alice Gribbin is a Teaching-Writing Fellow at the Iowa Writers' Workshop. She was formerly the editorial assistant at the New Statesman.

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Harriet Harman: “Theresa May is a woman, but she is no sister”

The former deputy leader of the Labour Party urged women to unite across the divided party.

The day-long women's conference is usually the friendliest place at Labour party conference. Not only does it have a creche and a very clear emphasis on accessibility, but everybody who attends starts from a place of fundamental agreement before the sessions have even begun. For that reason, it's often ignored by political hacks in search of a juicy splits story (especially since it takes place on Saturday, before the "real" conference action really gets underway). But with the party divided and the abuse of women on and off social media a big concern, there was a lot to say.

This year, kick off was delayed because of the announcement of Jeremy Corbyn's victory in the leadership election. The cheer for the renewed leader in the packed women's conference hall was far bigger than that in the main hall, although not everybody was clapping. After a sombre tribute to the murdered Labour MP and former chair of the Labour Women's Network Jo Cox, Harriet Harman took to the stage.

As a long-time campaigner for women's rights, veteran MP and former deputy leader of the Labour Party, Harman is always popular with women's conference - even if her position on the current leadership and her status as a former Blairite minister places her out of sync with some of the audience. Rather than merely introducing the first speaker as the agenda suggested, Harman took the opportunity to make a coded dig at Corbyn by doing a little opposition of her own.

"Theresa May is a woman, but she is no sister," she declared, going on to describe the way that May, as shadow spokesperson for women and equalities under William Hague, had been a "drag anchor" on Harman's own efforts to enact pro-women reforms while Labour were in government. The Thatcher comparison for May is ubiquitous already, but Harman made it specific, saying that like Thatcher, Theresa May is a woman prime minister who is no friend to women.

Harman then turned her attention to internal Labour party affairs, reassuring the assembled women that a divided party didn't have to mean that no advances could be made. She gestured towards the turmoil in Labour in the 1980s, saying that "no matter what positions women were taking elsewhere in the party, we worked together for progress". Her intervention chimes with the recent moves by high profile former frontbenchers like Chuka Umunna and Yvette Cooper to seek select committee positions, and Andy Burnham's campaign to become mayor of Greater Manchester.

Harman's message to women's conference was clear: the time for opposition to Corbyn is over now - we have to live with this leadership, but we can't let the equalities legacy of the Blair years be subsumed in the meantime. She ended by saying that "we have many leaders in the Labour party," pointing to Jess Phillips, the chair of the women's PLP, and Angela Rayner, shadow minister for education, women and equalities. Like Burnham, Cooper et al, Harman has clearly decided that Corbyn can't be unseated, so ways must be found to work around him.

Rayner followed Harman onto the stage. As one of Corbyn's shadow ministerial team, Rayner is far from in agreement with Harman on everything, and rather than speak about any specific policy aims, she addressed women's conference on the subject of her personal journey to the front bench. She described how her mother was "born on the largest council estate in Europe and was one of twelve children" and "never felt loved and didn’t know how to love, because hugs, cuddles and any signs of affection just wasn’t the norm". She went on to say "mum won't mind me saying this - to this day she cannot read and write". Her mother was in the audience, attending her first Labour conference.

As a former care worker who became a mother herself when she was just 16, Rayner is a rarity at the top of Labour politics. She told the Guardian in 2012 that she is used to being underestimated because of her youth, her gender and her northern accent: "I'm a pretty young woman, lots of red hair, and everyone expects me to be stupid when I walk into a meeting for the first time. I'm not stupid and most people know that now, but I still like to be underestimated because it gives me an edge. It gives me a bit of stealth."

The mass shadow cabinet resignations in June propelled Rayner to the top sooner than an MP only elected in 2015 might have expected, and she has yet to really prove her mettle on the grind of parliamentary opposition and policy detail. But if Labour is ever to win back the seats in the north where Ukip and Brexit are now strong, it's the likes of Rayner that will do it. As Harriet Harman herself shows, the women and equalities brief is a good place to start - for even in turbulent, divided times for Labour, women's conference is still a place where people can find common ground.

Caroline Crampton is assistant editor of the New Statesman.