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.

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Will the Brexit Cabinet talks end in a “three baskets” approach?

The joy of the three baskets idea is that everyone gets to tell themselves that it will be their basket that ends up the fullest. 

It's decision day in the Brexit talks. Again.

The Brexit inner Cabinet will meet to hammer out not its final position, but the shape of its negotiating position. The expected result: an agreement on an end state in which the United Kingdom agrees it will follow EU regulations as it were still a member, for example on aviation; will agree to follow EU objectives but go about them in its own way, for example on recycling, where the British government wants to do more on plastic and less on glass; and finally, in some areas, it will go its way completely, for instance on financial services. Or as it has come to be known in Whitehall, the "three baskets" approach.

For all the lengthy run-up, this bit isn't expected to be difficult: the joy of the three baskets idea is that everyone gets to tell themselves that it will be their basket that ends up the fullest. There are two difficulties: the first is that the EU27 won't play ball, and the second is that MPs will kick off when it emerges that their preferred basket is essentially empty.

The objections of the EU27 are perhaps somewhat overwritten. The demands of keeping the Irish border open, maintaining Europol and EU-wide defence operations means that in a large number of areas, a very close regulatory and political relationship is in everyone's interests. But everyone knows that in order for the Conservative government to actually sign the thing, there is going to have to be some divergence somewhere.

The bigger problem is what happens here at home when it turns out that the third basket - that is to say, full regulatory autonomy - is confined to fishing and the "industries of the future". The European Research Group may have a few more letters left to send yet.

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