Lab SP: Labour's economic approach

[Ruth Murphy]

Good afternoon,
 
And thank you for joining me. I know after an uneventful week you’ll be hanging onto everything I say.
 
The last week has made clear there’s only one sector that can depend on this Conservative Party, and that’s tabloid journalism. Meanwhile, the rest of the country is crying out for a new economic vision. Just as in 1979 Britain had to confront that its economic model was no longer working, we must once again confront the reality that our approach has once again become stale. Underneath the democratic demand we leave the European Union there was something more profound: a demand for change and taking back control.
 
Under the neoliberal consensus we’ve operated under, that loss of control has been felt by communities for too long. Despite empty free market rhetoric of giving people more control over their lives, the reality is that people feel as if their fate and their destiny has been outsourced to unaccountable corporations, to unaccountable bureaucrats in Whitehall or – as we’ve seen in recent days – to the whims of politicians and governments abroad.
 
There is a reason the slogan of the Leave campaign resonated so profoundly with the British public, even those who voted Remain. But while we’ve left the European Union, we’ve had Conservative governments refuse to return that control to the British people.
 
This hasn’t just worn down the social fabric of our country, with Britons feeling more lonely, more divided and more powerless than before. It has economic consequences too. The Conservative Party has resided over continuous low growth, low productivity and low wages. These are not coincidences.
  
Instead of an economic model which promises wealth creation, the reality is we’ve seen wealth extraction. The Tories’ low growth economy has unhealthily coincided with record profits for the richest few every year and Britain producing more and more billionaires exclusively from its upper middle classes. The privatisation and outsourcing of public resources meant for everyone has done little to benefit British families, but has gone far in establishing a crony capitalism that profited from the pandemic on the back of taxpayers.
 
All this while workers in the North and Midlands struggle on insecure pay and conditions, knowing their children and grandchildren will only have avenues opened for them if they move to the capital. Communities that once powered Britain through industrial revolutions and wars have been left operating call centres or Amazon warehouses, taking dignity and opportunity from these proud towns.
 
Meanwhile professionals in London and the South East wonder if they’ll ever be able to afford a home and securely raise a family despite doing everything society told them to do. While the rest of the country has been neglected, Londoners have been hurt by an overheated economy and housing market. 
 
This is not sustainable.
 
I want to be clear: I do not believe the solutions do not lie in the Old Labour solutions to centralise, nationalise and create a command economy. Those solutions were necessary and worked when it came to guiding our country through a great war and its aftermath. But they ceased to work then, and they won’t get us through this challenge now.
 
Similarly, while New Labour harnessed a neoliberal economic model to share prosperity and opportunity, we must be frank that in the wake of the global financial crisis an uncritical embrace of the current economic model will no longer work and deliver the change the British people demand. 
 
William Croft and Cole Harris are simply not up to the job. They want more and more of the model that has for too long been allowed to let Britain fail. Instead of prioritising investing in the country and in the small businesses that put in the graft, they want to hand £20 billion in a corporation tax cut to big multinational corporations.
 
While the former Chancellor decried inequality, his interventions have simply not stepped up to the challenge. A bailout for energy companies here and the creation of an advisory quango within the Treasury there won’t create good jobs in Hartlepool or help young people afford a home in Hampstead. It is completely devoid from grappling with the economic reality of so many working families.
 
I want to be clear before I outline some of the policies Labour will support both now and the future: when the challenge is this grand, no policy is a single silver bullet. But if we’re going to even need to address the problems so many feel, we need to begin to allow the British people to take back control and to have more agency within their community, their workplaces and their public services. That will be the underpinning of our economic strategy.
 
Firstly, while William Croft tries a divide and conquer strategy on public sector pay – deeming that some public sector workers wages will drive up inflation, some won’t, and letting off the people at the top who continue to have massive bonuses funded by record profits – Labour is clear that we must listen to public sector pay boards to find a reasoned way forward.
 
But we know all too often that while public sector pay boards make recommendations informed by fantastic industry representatives we know their sector, the recommendations are often too separated from the lived reality of workers who have seen their pay squeezed or even cut in real terms time and time again in the past decade and are being told once again to make immense sacrifices during a cost of living crisis.
 
We can find a path forward. But it’s crucial workers’ voices are an integral part of that. That is why Labour would pledge to put workers on public sector pay boards. Their personal experience is vital for us finding a compromise. We know when workers are put into crucial decision making processes, they participate reasonably and effectively: the Low Pay Commission has been a resounding success not in spite of but because of the Trade Union representatives within it.
 
And we need to ensure workers have a bigger stake in their workplace and their voices are heard throughout the economy and throughout different sectors. That is why Labour would legislate that workers are represented on company boards, guaranteeing workers have representation and a stronger voice in their workplaces. We have seen that this model in Germany doesn’t just increase job security, but has a positive effect on investment. When a company has a range of voices from the shop floor to the very top contributing, it’s more likely to make stronger decisions on its day to day management.
 
And we must give sectors that are vital to our economy and society more recognition and prestige. When establishing our sectoral fair pay agreement structures, we’d ensure Royal Colleges are established across those sectors, starting with social care and retail, so workers are given a national voice to improve standards and inform policy.  
 
And we must ensure that we prioritise British industry and ensure we make, sell and buy more in Britain. Prioritising our industry should have always been a given, but recent events have made the case for an industrial strategy. As Chancellor, I would immediately begin work on an industrial strategy and make industrial strategy a cornerstone to our economic strategy. We have a fantastic manufacturing sector, but we know if it was prioritised it could be world leading. We know we can make more in Britain, but we choose not to, letting so much of Britain’s potential and the potential of workers, towns and communities across Britain go to waste and contributing significantly to our low productivity economy.
 
Abandoning industrial strategy was one of the most self-destructive things done by this Conservative government, met with derision from the TUC and the CBI alike as it left businesses and industries without a framework to tackle the challenges facing businesses and the country, removing business certainty and disincentivising investment into Britain in the process.
 
And we know a well-crafted industrial strategy can be a crucial asset in the challenge to level up the country. But it is crucial that towns and communities across Britain are provided not just with more power, but with more wealth in the process.
 
I would prioritise the levelling up agenda. That’s why in the Treasury, a Labour government would immediately set up a local wealth building unit with representatives of each of the UK’s regions and nations so we can come up with a bold and clear strategy to level up with clear targets that must be met, with our first priority to be a root and branch review of Treasury green book rules so that strict orthodoxy can no longer hold back the potential of Britain’s towns.
 
For too long, we’ve been told if money is put in the hands of the largest multinationals and Whitehall we can trust that it is put back in the pocket of workers, towns and communities. And for too long we’ve seen poor decisions be made nationally and locally, because those most empowered to make the best decisions are disempowered.

It’s time we follow some old fashioned common sense and put that money back in the hands of the communities it is meant to serve.
 
Only Labour will put an end to our failed economic model and forge a new way forwards instead of more of the same. A Labour Treasury’s priority will be restoring power to communities, workers, and families across Britain – to you: and we’d ensure we grant the funding to boot.
 
Thank you.