What does ‘predistribution’ mean?
‘Predistribution’ is the word buzzing around Westminster today, following Ed Miliband’s interview with the New Statesman this week. It may be an ugly word, but it’s a decent idea. Put simply, it means focusing more on decent wages and relying less on tax credits to reduce inequality.
As Miliband points out, it’s an idea whose time has come (again) for several reasons. First, rising national debt and a large fiscal deficit reduce the scope for tax and spend to do all the work of poverty alleviation. Second, public attitudes continue to turn against the redistribution through the tax system in any case, as Bobby Duffy from Ipsos MORI and I explore here. ‘Predistribution’ may therefore prove both more practical and more popular, for reasons Daniel Sage sets out here.
The million dollar question, of course, is what this means in practice and Miliband will inevitably come under pressure to announce policy immediately. He should ignore the chorus. Miliband is showing leadership in starting the debate and should be comfortable with letting it play out before he announces detailed proposals.
There are plenty of options to look at and explore. London Citizens has a living wage campaign, for example, which is a civil society response. Norway has much more transparency on what people are paid (via information on people’s tax contributions), which is a ‘nudge’-type answer. Germany has ‘co-determination’, giving employees more power to bargain in their own workplaces. France has profit-sharing, which is a more direct form of intervention.
The big point is that there are democratic choices available to us which are not just about what kind of welfare state we have, but also what kind of economy we want. And our obligations to one another do not have to start and end with how much tax we pay. David Cameron once said ‘there is such a thing as society – it’s just not the same as the state’. What Ed Miliband is saying might be summed up as ‘there is such a thing as society – and that applies to the economy too’.