Thank you for this invitation to address you. It is timely to be discussing our alternative to austerity. On October 20th there is the major TUC demonstration which we need to make a big success.
The Coalition government will only be pushed off course by a massive opposition movement.
Cameron has said there will be no change in the government’s course. Making a virtue out of consistency is presumably easier than admitting failure.
Yet by the government’s own measures, it is not difficult to demonstrate their failure.
If you recall, austerity was going to be good for us because it would:
- return the economy to growth
- lead to a “march of the manufacturers”
- increase private investment to cover public sector cuts
- reduce the public sector spending deficit.
But in all these measures the government has failed:
- far from growing the economy, it has gone back into recession – down 0.6% since the Spending Review
- manufacturers aren’t marching – they are stagnating along with the rest of the economy
- far from a boost to private investment, we see a strike by private investors
- far from a shrinking public deficit, it is growing – £9 billion higher, so far this financial year compared to last year.
The major disaster is the economy, but the failure of the government to change course is disastrous too.
There are some things which we can immediately take heart from. The collapse of the deal between the Coalition partners on the issues of constituency reform and House of Lords reform is encouraging. It now seems very likely that the Government will not last until 2015.
It is also most likely – at least the bookies agree – that the next government will be a Labour government.
One of the things that Ed Balls said at the TUC two weeks ago I very much agree with.
He said: “The fact is you and your members cannot just sit back and wait for a Labour government.”
I’m pleased to say that Congress took this to heart. In an important composite motion moved by UNISON, Congress adopted an eight point action plan.
The headline point is probably one that directs the General Council to: “co-ordinate unions which take strike action to challenge austerity policies that are loading the costs of the crisis onto workers in both the public and private sectors, while government cuts taxes for the rich.”
What is interesting is the intention to co-ordinate action between workers in the private and public sectors. This is very necessary, although it will be very difficult given the precise negotiating arrangements across sectors.
I think the most certain development is that you see co-ordinated action on public sector pay. There is an appetite of this, and no obvious obstacles to achieving it.
This can be a tremendous encouragement to all workers, and we should try and ensure public sector workers are supported in this move.
One new policy that was floated at the TUC was as the proposal from Len McCluskey for an immediate one pound an hour increase in the minimum wage. I think this is an excellent idea.
It is very evident that tax cuts to the rich simply result in the rich accumulating more. If however you give money to workers and poor people they spend it. So lifting the minimum wage is a direct stimulus to the general economy.
This process is also understood by the Labour leadership. Ed Balls’s proposal to reduce VAT assumes that this reduction in tax from consumers will be spent by them on other commodities.
VAT is a tax which bears disproportionately upon lower income families.
A real stimulus to the economy must be based on a mix of major investments to the infrastructure and services – alongside immediate improvements in wages and benefits to raise consumer spending.
Simply waiting for private investors to invest is a recipe for further stagnation. At the moment private firms are holding around £750 billion in bank accounts.
They are waiting for wages and benefits to plummet further. The bosses believe that this is the only way to get a risk free and healthy profit. It is a strike by investors.
If we reject such an approach, then we must have then we have to demand government action on investment. The TUC made a good start on this too.
Congress agreed that the banks already in government ownership – particularly RBS -should be directed by government towards supporting growth, by increasing lending to promote investment.
Congress also went so far as to call for the nationalisation of the entire financial sector.
Certainly a publicly owned banking service would allow real investment in the future of our country – offering an end to the scourges of unemployment, housing shortage and the decline in public services.
Now, it is clear that the Labour Party is some way yet from drawing the same conclusions as the TUC on economic policy.
The five points of the party for immediate action are good enough. But the economy has taken a further turn for the worse since these were formulated.
Our supporters, and potential supporters, need something much more extensive now.
Ed Balls made a breakthrough with his Bloomberg speech in 2010, which correctly predicted the disastrous outcome of austerity during a recession.
What we need now from Ed Balls’ “Bloomberg 2” where he outlines, in broad terms, how Labour will return the economy to sustained growth.
Labour’s position in the polls is very encouraging. But this must be consolidated by outlining a narrative which restores a sense of hope to the electorate.
Ed Miliband has positioned the issue nicely when he referred to how this government has broken the national promise to young people that their living standards would be higher than their parents. What follows then is how will Labour restore that promise.
I think that Labour has to show that by investing in the economy it is able to educate, employ and house the next generation.
Such an approach will reach across the different age groups of voters. Not just the young, but also their parents and grandparents want to see opportunities again for the young.
This is the desire of 99% of the electorate who earn less than £150,000 a year.
If Labour makes such a commitment then the electorate will give it the majority it needs to implement such an approach.
The 1945 Labour government rescued the country from a disastrous economic position. The next Labour government must commit itself to do the same.
Thanks for listening.