Bringing working people back to Europe – the Labour way

In addressing the Fabians European conference “Why Europe? The Left’s Answer” last weekend, I was asked to reflect on what kind of European economic framework would be best for Europe and Britain.

As I, and many others, have argued from many stages the current economic framework is failing spectacularly in Britain and in Europe. 26 million are unemployed in Europe. An effective investment strike sees companies stockpiling their cash in the absence of market confidence. Rapidly falling living standards and rising food and energy prices are squeezing consumption.

It’s time to set out an alternative for Britain and Europe, and I think it’s time to base that alternative on what was also the central theme of Ed Miliband’s speech in Bedford last week (13 February). In Bedford, he stated “I think it starts with a truth that we have forgotten as a country: That economic recovery will be made by the many, not just by a few at the top… putting Labour where it should always have been, on the side of working people. Showing our priority to do everything we can to make a difference to people’s living standards”.

In my view this is the language that we urgently need at European level.

EU membership and the European single market are powerful tools for our economy and offer unique opportunities. Regional and social funds have supported inward investment and job creation. Hundreds of thousands of jobs are already dependent on EU trade in the UK, over 140,000 in my home region of the North East alone.

However, if the EU is only about fiscal austerity, open markets and privatisation, then ordinary people will ever increasingly question its legitimacy. We must use the opportunities of the single market to create and maintain jobs, but the market must be properly regulated and supervised. Deregulation has brought us credit crunches in the financial markets, horsemeat in our food chain, and widespread worker exploitation.

We need a European economic framework which rediscovers that prosperity is created by balancing the interests of business and workers. A new social compact in Europe, as the European TUC has set out.

That demands an economic programme which recognises that fiscal austerity is failing – it is stripping more out of our economies, intensifying the illness rather than healing it, as the IMF has shown. It is intensifying the inequalities, falling wage share of GDP and rates of private debt, which helped create the seedbed for the financial crisis in the first place. Further labour market deregulation and precariousness is incompatible with the agenda on strong manufacturing and quality services which Europe’s economy needs. It’s incompatible with the transition needed to tackle climate change or address skills shortages in key sectors.

To bring Europe back to working people, we need a recovery programme which sees working people as the driver of our economies not a drain on them.

Together through a joint industrial policy agenda, we can create millions of jobs and give a future of millions of others, by using EU public procurement rules effectively, investing in common research and innovation programmes to produce more energy and resource efficient goods and services, and reducing energy poverty locally in the process. The German KfW has shown that a euro invested in energy efficiency programmes creates 5 euros in the local economy.

Increased purchasing power, through living wages, is key to drive us out of recession. These may be determined locally but in coordination across Europe could have a transformative effect. Therefore, European common rules on worker protection play a key role. So key, that these are the main target for the Tories to ‘repatriate’. Already, paid holidays, rights at work, paid maternity and paternity leave, amongst many others, have been delivered through European cooperation. Cameron is keen to see these rights deleted from the law book not just for British workers but for all. However, to the contrary to complete the single market, these rights should be built on through a European minimum income, strengthening democracy at work and collective bargaining rights, and extending rights to quality apprenticeships, training and education, as part of a renewed European social dimension. The EU Council are currently preparing a Roadmap for the social dimension, to be published in June this year, let’s see Labour defend these principles in those debates.

To address rocketing wealth inequalities and a declining tax base, action on tax justice is urgently needed. In a globalised economy, this action can’t be achieved at national level – here EU cooperation offers key tools in tackling the tax avoidance, evasion and abolishing tax havens which costs Britain £70bn per year and the EU as a whole €1 trillion per year. The historic publication on Valentine’s Day of draft legislation for a Financial Transaction Tax covering 11 EU countries, offers an example of the potential of cooperation to promote responsible capitalism not casino markets. Now would be a good time for Labour to actively support a Robin Hood Tax.

We should be pushing for a European and British economic framework in which as Ed Miliband said last week, “We can offer people hope. We can make an economy that works for working people”.