My speech at Labour’s State of the Economy conference

Thank you all for coming today to Labour’s inaugural State of the Economy Conference … Thank you to John and his Shadow Treasury Team for organising

Thanks in particular to Ha-Joon Chang … for his terrific speech on building a balanced and sustainable economy.

And to Sue Himmelweit, Paul Mason, Linda Yueh, Adam Marshall and Len McCluskey for their engaging discussions …

And thank you … most of all … to all of you who took part in the various workshops this afternoon … Debating some of the most important issues facing our economy and our society.

These discussions are invaluable.

It is only through active debate – like we’ve had today – between politicians and businesses … employers and employees … thinkers and educators … that we can build an economy for the future that delivers for all.

I’ve said before that we must change the way our party makes policy.

When politicians and their advisers sit round a table and devise policy … they rarely succeed in getting to grips with the real problems our country faces.

We need to involve more people in decision-making and consult far more widely outside politics.

I believe it’s essential to listen:

To the growing army of the self-employed … often struggling to make ends meet, and falling through the cracks in our social security system;

to entrepreneurs seeking to innovate and create wealth;

to trades unions who stand up for workers’ rights;

to our friends from progressive movements in countries across the world;

to academics; and

to business people shaping a more dynamic, responsive economy.

Only by engaging and debating these crucial issues … as we have done today … can we develop a comprehensive plan … to forge a new economy and the kind of Britain we want to live in.

I think we’ve come a long way already in the eight months since I became leader … John McDonnell, has started to lay out the framework of a new economics.

As John repeated today … an economy that allows people to flourish and prosper in the 21st century will be a very different kind of economy from that of the 1990s … let alone the economy of the 1940s or 1960s.

Building an economy for the future requires bold ambition … A New Economics … And that’s what today has been about.

Looking forward … And tackling – head on – the reforms necessary to build a fairer, more equal, more just society.

Today we’ve discussed the state of the economy. And the sad truth is… the economy is in a bad state.

What’s clear is that this government is not creating the economy of the future we need … Six years ago George Osborne said austerity would wipe out the deficit and cut the debt.

That’s the wonderful thing about George Osborne’s five year plans … they’re always five years away.

What we have instead is an economy that works for the few, not for the many.

Inequality is rising … And food bank queues are growing.

We’ve seen an explosion of zero hour contracts … and a race to the bottom on pay, job security and workplace rights.

A gender pay gap that is still wedged at 19 per cent.

Despite George Osborne’s promises of a ‘March of the Makers’ … we have a government that won’t stand up for key strategic industries … like steel.

Instead, they sought to abdicate their responsibilities when it came to the crisis in the steel industry …

And it was only concerted pressure from the trade unions, from Labour MPs and from the steel communities that forced the government … kicking and screaming … into a change in position.

The security of home ownership is moving further and further away for so many people.

We have a government that … despite the growing economic consensus against austerity …. despite the fact the Prime Minister tells us we now have a ‘strong economy’ … is continuing to pursue spending cuts.

A government that is failing to invest in our public services … leading to a crisis in our NHS.

A government that is failing to invest in critical infrastructure.

A government that is failing to invest in the skills that our young people want … and our businesses need.

And let’s be clear. Austerity is a political choice not an economic necessity.

Even Iain Duncan Smith is now parroting our mantra … saying after the Budget  that Osborne’s cuts were … “distinctly political rather than in the national economic interest”.

The Chancellor has utterly failed against every single one of its economic targets …

·         They have failed to eradicate the deficit

·         Failed to meet their target on the debt

·         Failed to rebalance the economy

·         Failed to address the productivity crisis

This government has consistently made the case for austerity … George Osborne has staked his economic credibility on his austerity economics … and they are failing to deliver.

But worst of all, this government does not seem to understand … that their cuts have consequences

… when you cut adult social care … it means isolation and a loss of dignity for older and disabled people… and it piles pressure onto an NHS that is already being overstretched

… when you saddle young people with more debt … you impede their ability to buy a home or start a family

… when you fail to build housing and tackle sky-high rents … then homelessness increases and the number of families in temporary accommodation increases.

… when you slash the budgets of local authorities … then leisure centres close … libraries close … children’s centres close

… when you close fire stations and cut firefighters … then response times increase and more people die in fires.

These are the very real consequences of the politics of austerity.

Being in opposition can be frustrating … but Labour has proved you can still have influence and make a difference.

We have forced the government to back down in a number of important areas … from tax credits to disability payments … and, most recently, to forced academisation.

Together as a country … we must continue to stand up against the Conservative six year record of mismanagement of the economy …and stand up for the vital services on which we all depend.

But what Labour stands for is far more than stopping the damage being done by this government.

We want to see a break with the failed economic orthodoxy that has gripped policy makers for a generation … And set out a clear vision for a Labour government … that will create an economy that works for all, not just the few.

We must be ambitious and bold to win the next election … and deliver the new economy that Britain needs.

… An economy that tackles the grotesque inequality that is holding people back.

… An economy that ensures every young person has the opportunities to maximise their talents … And that produces the high skilled, high value and secure jobs, they need.

… An economy that delivers new, more democratic forms of ownership.

… A zero-carbon economy that protects our environment.

… A balanced and broad-based economy … supported by investment and a proactive industrial strategy that devolves decision-making to where it needs to be.

We want to see a genuinely mixed economy of public and social enterprise … alongside a private sector with a long-term private business commitment … that will provide the decent pay, jobs, housing, schools, health and social care of the future.

An economy based on a new settlement with the corporate sector that, yes … involves both rights and responsibilities.

Labour will always seek to distribute the rewards of growth more fairly … But, to deliver that growth demands real change in the way the economy is run.

Change that puts the interests of the public, the workforce and the wider economy … ahead of short-term shareholder interest.

Wealth creation is a good thing: we all want greater prosperity.

But let us have a serious debate about how wealth is created … And how that wealth should be shared.

It is a co-operative process between workers, public investment and services, and, yes … often very innovative and creative individuals and businesses.

So if wealth creation is a shared process … then the proceeds must be shared too.

Technology is changing the way we work … Digital technology and robotics are transforming jobs and whole sectors of the economy.

Globalisation means that greater international trade is altering where jobs are based … and where workers are in demand.

Work for many has become insecure … and we want to change that because we believe that a happier, more secure workforce is a more productive workforce.

That’s why I was at Ecotricity in Stroud on Thursday … launching Workplace 2020 alongside our shadow Trade Union minister Ian Lavery … and our shadow Business Secretary Angela Eagle … to kickstart a national conversation about what the world of work should look like in 2020.

Only an economy that is run for all wealth creators … the technicians, entrepreneurs, designers, shopfloor workers, and the self-employed … and that puts them in the driving seat … is going to deliver prosperity for all.

John McDonnell talked this morning about rewriting the rules of the economy … Because the old rules have failed.

The old rules – Tory rules – have led to a lack of investment in our economy, which is failing our communities.

They’ve led to a government that has failed to tackle our unbalanced economy … They are failing to support key strategic industries … like our steel industry.

They have failed to invest in the infrastructure that communities across the country desperately need.

They have failed to invest in housing … The government says it aspires to build a million new homes … The reality however is that housebuilding has sunk to its lowest level since the 1920s.

They have failed to invest in developing the skills our young people deserve and our businesses need.

The old rules mean failing to invest in Britain’s future.

A Labour government will make different choices.

If we want to create the economy of the future … then government has a vital role to play in making the long-term, patient investments … that are the foundations of long-term prosperity.

We want to see the reindustrialisation of Britain for the digital age … That means putting public investment front and centre stage …. driven by a National Investment Bank as a motor of economic modernization … based on investment in infrastructure, transport, housing and the technologies of the future.

John also talked this morning about the need for greater democratisation and decentralisation.

This includes the contribution that co-operatives can make to our economy … to empower people to come together to take control of their own lives

This is the complete opposite of the Conservative devolution plans … passing responsibility without the support and resources to enable people to take control.

John has rightly talked about establishing a “right to own” for workers … to stop jobs and companies being treated like possessions on a Monopoly board … and to give workers the first refusal on taking over a company when it changes hands.

The New Economics is also about economic justice.

People expect companies that trade in this country … and people who live in this country … to pay their tax in this country … It funds our public services.

Aggressive tax avoidance and tax evasion are an attack on the NHS, on schools our care for elderly and disabled people and the social security system that prevents poverty, homelessness and destitution

So I’m very grateful to Professor Prem Sikka who is reviewing HMRC for us to ensure it has the resources it needs to tackle this endemic problem … and to our Labour MEPs who are leading the tax justice fight in Brussels.

I’m equally grateful to Danny Blanchflower for the work he’s doing to review the Monetary Policy Committee … and to Lord Kerslake who is reviewing the Treasury

The machinery of government overseeing the economy must be fit for the reality of today’s economy.

We believe that economic justice and economic credibility must go hand-in-hand … Which is why all our plans are underpinned by Labour’s Fiscal Credibility Rule … agreed following discussions with the world-leading economists on our Economic Advisory Council.

Our rule makes clear that we will ensure solid public finances … while rejecting the politically motivated austerity that is strangling investment … and choking prosperity.

We need a Labour government that will put investment, productivity and sustainable growth first … alongside a 21st century industrial policy.

That is how we will provide the economic security that the Tories are failing to deliver.

… Security and investment in jobs and skills.

… Security and investment in housing.

… Security and investment in our NHS and our schools.

… And, yes, security and investment in our public finances too.

We have the opportunity to build a fairer, more equal, more prosperous economy.

But we must be bold and ambitious in our approach.

It was the radical Labour government of 1945 that delivered so many of the social achievements of which we Labour members are so proud …  the National Health Service, the welfare state, council housing, comprehensive education … institutions that were about the collective improvement of all.

And we must harness that radical spirit to build an economy for the 21st century.

This morning John laid out the framework developed over the last eight months … by which Labour can win the next election.

It is a bold and ambitious programme.

I don’t underestimate the scale of the task in front of us.

There is no point being in politics if you are not ambitious not for yourself but to make your community your country and our world a better and more just place.

And it’s a programme that we will continue to refine … With your help.

As I said at the start … we need to involve more people in decision-making … and consult far more widely outside politics.

It is essential that we continue a rich and diverse debate on these fundamental issues … To continue to build the New Economics from the ground up.

So I hope you will all continue to engage in these important discussions and to contribute to this debate … to continue building a platform for economic and social justice.

Thank you for your contributions today … and in the future.