Will a National Infrastructure Commission Increase or Decrease Inequality?

If we are to have a stronger, less-unequal economy (as opposed to hosting a few astronomically-paid financiers and having the rest of us in low-paid low-value jobs in an attempt to compete with the Chinese) we need a thoroughgoing infrastructure strategy, to create and support decently-paid, high value jobs, that rely on 21st-century standards of energy, transport, communication and so on.

So George Osborne’s announcement yesterday, of new measures to push forward infrastructure-creation is welcome. A number of respected economists – such as Professors Larry Summers (Clinton’s Treasury Secretary) and Joseph Stiglitz (Nobel Laureate) have said that infrastructure policy has to play a key part if economic inequality is to be reduced from the extreme levels now found in the UK and US.

But it isn’t guaranteed that all approaches to infrastructure will deliver this goal: it is possible to build infrastructure that will disproportionately benefit richer people and richer regions, and be paid for by the rest of us though our (regressive) tax system.

So it is good to see that the man whom Osborne has appointed to chair the new National Infrastructure Commission (former Labour Transport Secretary, Lord Adonis) has a record of recognising the social and economic challenges arising when “inequality is vast, both between people and between regions”.

The infrastructure plan has the potential to be a big lever, shifting the direction of the UK economy, and that lever could shift it in either direction: fairness and economic strength or rising inequality.

So we are today writing to both Lord Adonis and George Osborne (who has himself spoken of inequality-reduction and a “higher-wage” economy) to say that the National Infrastructure Commission should assess and report the effects on economic inequality (both between people and between regions, both of economic benefits and economic costs) of the committee’s recommendations, and make these a factor in decision-making.

The Infrastructure Commission will be making decisions that determine what sort of economy we have – hopefully the policy-makers will recognise that making the economy less unequal will make the nation and the economy stronger, and win the support of the vast majority of the electorate.

Duncan Exley, Director, the Equality Trust