But sadly won’t ….
We meet at a time of unprecedented economic crisis. Six years after the financial crash living standards are in freefall. Real wages continue to fall while the price of essentials soars. Housing has become unaffordable in many parts of our country, especially for the young. The ghost of a recovery entirely down to a cynical chancellor returning to boom and bust: ten times as many people are resorting to food banks as when we left office; and ordinary people in deep crisis are being lectured by the most privileged cabinet in a century on the need for sacrifice. We have become a rentier economy, in which speculation trumps sustainable growth. There must be no doubt about the depth of the crisis; this depression is longer and deeper than the 1930’s and one has to go back 130 years to find anything comparable. And at our conference today we need to demonstrate that we are ready to take the big decisions. And if this means rethinking our commitments, and challenging deeply-held myths – in media and political class – then a serious party with values challenging for Government must be prepared to do that.
It means that we must challenge our own preconceptions too – moral, political and economic. We must understand why – despite the aftermath of the 2007-8 crash and the role Gordon Brown played in leading the world’s economic system back from the brink of catastrophe – our own timidity is one reason why the Tories and their Lib Dem hangers-on have got away with labelling us as the party that took down the economy. We must be confident – and recognise that the whole tide of evidenced economics is moving away from austerity and towards more intervention, more fiscal expansion, and the need for Governments to play a creative and enabling role in reviving economies.
We must remember above all that our values are founded on aspiration – not on the aspirations of the minority to avoid tax and to spend on luxury, but the aspiration that ordinary people have economic security, decent housing, the expectation of improving health and education. We must rediscover the moral compass that tells us that these are things that are achieved collectively. And we must understand that economics is about providing a sustainable,secure decency for all our citizens, not indulging the speculative whim of a minority at the expense of society as a whole. That is what One Nation economics must mean.
And to achieve that I propose a six point plan:
- a sustained increase in public expenditure, in particular to support massive house-building programme and training and education. This means that we must acknowledge that my previous commitment to stick to SR 2013 expenditure targets must be abandoned, and acknowledge that we were wrong to make that commitment; in the situation we face it is not only economically illiterate but, morally and intellectually, deeply frivolous. We must have the honesty to say that we made a mistake, and we now intend to put it right. Doubtless our opponents will portray us as fiscally irresponsible; but the real fiscal irresponsibility, in the face of the economic disaster of austerity, would be not to take this action. We must show that we are a party that can learn from the growing consensus among economists – from sources as diverse as Nobel Laureate Paul Krugman and the IMF – that austerity economics has completely failed for all but the tiny minority that it has enriched; that its intellectual underpinnings are weak and in some cases discredited; and its effect on the people for whom we speak are catastrophic. Recovery will not come from private consumption while real wages are falling, or from exports while the Eurozone economies still languish, or from investment when banks continue to sit on the cash piles accumulated from quantitative easing; only a bold, courageous state prepared to spend and borrow can generate the stimulus we need to get the economy working. We need to understand the irony that Coalition austerity will have increased our national debt while failing to get the economy working; we must use the power of the state to invest, in housing above all. And we need to understand that, with interest rates near zero and with little risk of demand-led inflation, the conditions for public borrowing are uniquely benign.
- ending workfare – The argument that you can revive an economy and give people real long-term job prospects by forcing them to work for their benefits for free in big businesses – effectively undercutting the small and medium enterprises which will drive any sustainable economic recovery – is morally and economically unjustifiable. Our approach will be entirely different. It will be to provide work for people through our jobs guarantee – but decent work, paid a living wage, with education and training as part of the package. You cannot sanction people into non-existent jobs. We want to build a high-wage, high-value economy – not provide subsidy for a corporate race to the bottom, while undercutting the competitors of businesses receiving the ultimate handout of free labour. And we will apologise, unreservedly and unequivocally, to those who have been caught in the workfare trap.
- a significant increase in minimum wage and move towards a citizen’s income – once again the economic consensus is becoming clearer by the day; raising the minimum wage will help stimulate the economy and will help end the scandal of state subsidy for low pay. And in the long term we will examine the case for a minimum citizen’s income, which is gaining increasing support among economists as the best and most efficient way of ensuring both decency for all and the economic stability that has eluded us in the austerity years; cheap to administer, affordable, and above all empowering and liberating, reminding us that our party was built on the idea that a decent sufficiency is what citizens can expect by right.
- tax evasion clampdown and tax reform – we will end the sordid spectacle of corporate tax evasion. Our principle will be simple: if you operate in the UK, you can expect to pay your taxes here. More locally, speculation in property is blighting our times; it is lunacy to believe that a general rise in the price of the most fundamental need of life is somehow a sign of prosperity.
- We must act to stabilise the housing market – by building more, and by using all the fiscal instruments at our disposal – including taxation if necessary – to ensure that speculation in housing, especially in the buy-to-let market is curbed. We must end the delusion that rising house prices are somehow a sign of prosperity; in reality they redistribute wealth from the young and poor to the older and better-off, unnacceptable in our One Nation Economy. We must reinvent the rented sector, by building good-quality social housing and bringing stability and fairness to the private rented sector through regulation.
- international regulation – I have mentioned how Gordon Brown led the action that saved the world economy from meltdown in 2008. We will lead the world once again in creating an international financial system that will regulate banking and international finance, and create institutions that support growth, not abet speculation. We should remember that it was the system of financial regulation created after the Second World War to prevent a repeat of the depression of the 1930s, that underpinned the uniquely benign economic conditions of post-war era. We will continue to argue for a Tobin Tax and will make international financial reform the theme of our EU Presidency in 2017.
This, then, is a six-point plan for a one nation economy. We’re sometimes asked – What is One Nation Labour? If it is to be anything more than the meaningless piece of triangulation our opponents claim, we need to articulate a One Nation vision. As our critics point out, the phrase comes from 1950’s Tory tradition – the acceptance of a strong, enabling welfare state; a courageous state, providing big investment and continual improvement of essentials of life like housing, health and education – an agenda that Labour, in office after 1945, had set. It is about building consensus, not about the right of the rich to enrich themselves further, but to show that we are on the side of the decency of collective provision. Ed Miliband has powerfully pointed out how we have gone from a nation that expected things to get better to one that has become profoundly pessimistic; if One Nation means anything, it is about rediscovering our optimism. And, in particular, in a one nation economy, we do not demonise the poor and vulnerable; we have the moral authority to be generous, because, as a party with a proud socialist and ethical tradition, decency and generosity are what we do.
In conclusion, conference, these six points are not just a policy: they are a challenge. A challenge to understand that the existing economic narratives have failed; and that includes the narratives that we ourselves pursued in office before 2010. It means a more generous, more grounded, more intellectually credible economics and politics that matches the economic concerns of our people rather than explaining them away in the interests of an elite. It means understanding – as the people for whom the coalition speaks do not – the effects of austerity on the living standards of millions of people who cannot afford the £1300 per year that the Coalition has cost them. It means challenging the language, not just of the Tories in Government, but of a commentariat that is bound together with Government and the financial establishment; it means reaching out to those whose living standards have been destroyed and earning their trust once again. Not easy, when we have in office been complicit in some of those decisions; but, morally and intellectually, the only credible path for a Labour Party that is serious about effecting real change.
One thing is certain: fear – of the media, of Murdoch, of the easy assumptions of the Westminster bubble – will achieve nothing. We can only truly be One Nation Labour when we learn to speak truth to power, calmly, rigorously and passionately.
In 2015 we will mark the seventieth anniversary of Labour’s greatest election victory – the victory that enabled us to lay the foundations of One Nation by using the power of the state – of collective provision of health and housing above all – to liberate the aspirations of millions. And there were no excuses, no waiting for the economic conditions to be right, no sticking to Tory spending plans; amidst the deepest of crises we had the courage and the confidence to remember what we were for and who we represented.
I pledge to you that as Chancellor in 2015 I will do the same.
One can but dream …