Tomorrow, Jeremy Hunt will deliver the seventh fiscal statement is less than two years. If the spectacle of this administrative chaos was bad enough, his Government’s record on economic growth is far more troubling.
Their dismal record on growth is so bad that if our economy had just grown as fast as the OECD average, households in the UK would be £5,000 richer every year.
In stark contrast, Keir Starmer and Rachel Reeves have prioritised economic growth- making an ambition for the UK to have the fastest growing economy in the G7 its primary mission for Government. Economic growth might seem abstract, and in some circles it has become unfashionable, but it really does matter. Growth is the only way we can sustainably increase living standards and provide the resources that our public services so desperately need.
To achieve Labour’s ambitious mission, Reeves has outlined a project of ‘securonomics.’ This sees a strategic state leading all parts of the public sector to expand the productive capacity of the economy, as pioneered in the US by Janet Yellen.
For me, the key insight of securonomics is that of inclusive growth, the need for the proceeds of economic growth to be shared equally to all parts of the country. Launching her securonomics project, Reeves criticised the Tories for believing that the “nation can rely on growth in just one corner of the country or a handful of industries.”
As a councillor in Bury we know all too well the inequities of the Tories’ growth model, where living standards have stagnated and inequalities increased.
The typical objection to inclusive growth is that inequality is simply an inevitable product of a modern industrial state, a dogmatic belief that led Boris Johnson to declare that “inequality is essential.” Fortunately for Reeves, the twin dilemmas of low growth and high inequality are not a trade-off but two sides of the same coin. The areas with the lowest economic growth, and productivity, are those where economic inequality is highest, as shown by Alan Krueger in his ‘Great Gatsby Curve.’
One of the reasons that the last Labour Government oversaw such a rise in economic growth was precisely because of its programme of reducing inequalities, as we have seen first hand in Greater Manchester. The National Minimum Wage, Sure Start and Tax Credits- to name just a few- boosted the living standards of the most deprived communities and thereby boosted growth for everyone.
That is why inclusive growth is central to the programme of the next Labour Government. The ‘New Deal for Working People’ is a bold and progressive transfer of power to British workers, ending the scandals of Fire and Rehire, Zero Hours Contract and unfair employment practices. The Take Back Control Bill will reduce power inequalities between communities. The ambition to build 1.5 million homes, including social homes, is a policy that will simultaneously boost growth and cut inequality.
But this message has been clearly lost on Hunt and his Government whose heartlessness and incompetence are also two sides of the same coin. They have overseen fourteen years of brutal cuts to local authorities, in particularly social care, and are now threatening to take away the vital Household Support Fund. They have allowed Non-doms to line their pockets at the expense of our country’s healthcare. Their crises range from people pulling their own teeth out to prisons running out of capacity, is it any surprise that we have entered recession?
Hunt’s Budget should be judged on whether or not it contains a plan for inclusive growth that Britain deserves. If it does not, then it will be as unsuccessful as each of the other Budgets that Tory Chancellors have delivered since 2010.
If you enjoyed this piece, see What will be left of our city? How Tory cuts are destroying councils.
