Lean Government: how to balance the book without wounding low earners

Tuesday 29 September 2009 Public Finances and the Economy

The fringe event, held on 29 September, addressed how to tackle the deficit without wounding low earners. The event was chaired by Kate Green, Child Poverty Action Group and the speakers were David Blunkett MP, Helen Goodman MP, Clive Cowdery, Resolution Foundation, Sonia Sodha, Demos and Jonathan Cox, London Citizens.

Clive set the scene for the discussion by outlining the history and purpose of the Foundation. He explained the positive impact on low earners of government initiatives during the recession, whilst warning of the vulnerability of this group in the recovery period. Jonathan followed Clive, giving details of London Citizen’s Living Wage campaign and emphasising that despite recent progress the living wage must operate alongside tax credits. Helen Goodman MP, argued the Government couldn’t afford not to consider low earners as this group saves £700m for every 100,000 people in work and stressed the importance of tax credits in helping low earners to stay in work. David Blunkett MP, addressed the deficit directly, arguing that we need to have a plausible story of how we pay off the deficit in order to still be financially independent. On the basis that a reduction in spending was inevitable David outlined three areas where cuts could be made without wounding low earners.

In the discussion that followed the speakers recommended an approach which would protect low earners from the brunt of the cuts. Suggestions included rolling out a living wage, up-skilling in the public sector, financial advice to help low earners better understand the practice of loan sharks and so make sounder financial choices and utilising capitalism to self-generate contributions naturally in the economic cycle to make redistribution take place.