Euro-wonks are having a marvellous time. If your idea of fun is banging on about Europe, then it is bliss to be alive today. But the PM knows we won’t build a country that works for everyone if we only focus on Brexit. She’s clear the economic growth of the last few years hasn’t been felt widely enough. People on average wages or less feel the benefits have passed them by. Housing costs are claiming an ever-greater share of their wages and, while a global elite live gilded lives, it hasn’t made enough difference to everybody else’s standard of living at all.
The Living Wage should make a difference, of course. It will increase take-home pay, raise living standards and make us a high-wage, low-dependency economy. But only if productivity increases at the same time and, for the last several years it’s been flat-lining; stuck in a rut where more jobs are created, but the value each one produces is standing still. If we don’t fix it, the Living Wage will simply price Great Britain PLC out of international markets.
Better skills are part of the answer of course. More apprentices, and more commercially useful academic qualifications too, will make Britain’s workforce more productive. But not terribly quickly. Isn’t there some faster, more fundamental way we can improve our productivity, and the living standards of everybody who’s been passed by at the same time?
Well yes, there is. If we make everything apart from wages cheaper, the cost of living goes down, so everybody – and particularly the less well-off – gets a higher standard of living. Productivity goes up, because we’re producing the same amount of stuff for less. And we can afford to pay ourselves more without becoming a high-cost, uncompetitive commercial backwater. Economists would say we’re cutting the costs of the other factors of production, so the cost of labour (ie pay) can rise.
And this is where the Euro-wonks come in, because Brexit gives us a chance to deliver what’s needed. Food generally costs less outside the EU than in it, for example, so leaving the Common Agricultural Policy should create a once-in-a-generation chance to cut the costs of our weekly grocery bills. Likewise, pruning all the unnecessary EU red tape (and some of the British gold-plating which we’ve added on top, to be fair) and replacing it with more tailor-made UK regulation, would free up money and time for businesses to invest in growth. And we could cut the costs of housing by building up rather than out in towns and cities; allowing urban property to extend up to tree-height, or the tallest building in each block, would create vast amounts of extra building space. Urban centres would be regenerated by a flood of investment in new building to become exciting, successful metropolises where more people want to live and work. Thousands of acres of green fields would be saved because we wouldn’t need to build on them anymore. And, crucially, the costs of buying or renting a house or an office would drop.
Presto; better standards of living, higher productivity, and an economy that works for everyone. What’s not to like?