Compass: What is Plan B?

Compass’s new report, Plan B; a good economy for a good society has been launched with the support of 100 economists. Plan B is their vision of an alternative political economy that includes short term emergency measures like reversing cuts to get the economy moving again, directing quantitative easing to a Green New Deal and creating a British Investment Bank to leverage investment in low carbon sectors such as housing, transport and renewable energy.

Plan B is also about laying the long term economic foundations for the good society. The report has an emphasis on the ‘core economy’ of families and outlines policies for a rebalancing of time spent working and ‘living’. It also argues that we should be moving beyond viewing ‘GDP’ as the sole measure of economic success.

Here is the Compass Summary.

What is Plan B?

An alternative economic model to the Government’s strategy of drastically cutting public spending in order to try and eliminate the budget deficit within five years.

What’s Wrong With Plan A?

Plan A is failing to provide economic growth or jobs and could in fact increase the deficit.

The cuts are also having a devastating effect on the public services that most of us rely on.

The impact of the government’s decision to reduce spending by £130 billion over 5 years is now beginning to tell, the cuts are reducing GDP by up to 2% per year.

What Would Plan B entail in the short term?

• The cuts would be reversed until the economy is growing strongly.
• A new round of Quantitative Easing (money created by the central bank) would be directed to a Green New Deal, to insulate and prepare large numbers of buildings to generate renewable energy.
• Increasing some benefits for the poorest who are then likely to spend any extra income, this would help get the economy moving again.

How Would Plan B Pay down the deficit?

• „It would cancel Private Finance Initiative debts, saving the nation £200bn in debt repayments.
• By Introducing a Financial Transaction (Robin Hood) tax on the banks.
• „The £70 billion in yearly uncollected tax would be closed.

Plan B would mean that the Government pays down the deficit through growth and spending adjustments only when the economy is in good enough shape to.

How would Plan B create jobs?

Stopping the cuts and investing in a Green New Deal would help create new jobs and save hundreds of thousands of existing ones.

Plan B would also create a new British Investment Bank that focuses strategy on low carbon sectors such as housing, transport and renewables. This would help create the conditions for start-up businesses to develop.

How does this differ from ‘Business as usual?’

In the context of climate change and the globalising economy there is no short term fix for Britain, we cannot go back to ‘business as usual’. Instead short-term measures have to create the conditions for a good economy that is in tune with the needs of people and the planet.

That’s why plan B would:

• „Reform the banking sector to reduce the likelihood of another crash and focus investment on the productive economy.
• Focus on the ‘core economy’ of families and move beyond ‘GDP’ as the sole measure of economic success and rebalance of time spent working and ‘living’.
• Reduce wage inequality and make companies more efficient through worker participation.

What other measures are there?

It is not just the economy that needs thorough going reform but the state. Via Plan B, the state will spend more effectively and efficiently.

Investment will be focused on preventing illness and social disruption rather than wasting money on symptoms. For example a small investment to stop obesity could more than halve the £4.8bn cost to the NHS.

Public services will also be transformed through the widespread use of co-production techniques, emulating successful examples like Newcastle where savings have been reallocated to deep rooted social problems such as long-term care.

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For more information on Compass and for access to the full report, go to http://www.compassonline.org.uk/news/item.asp?n=13946