Lessons learned: Building a new economy

In his first speech as leader of the Labour party, Ed Miliband said “we face a choice: we can return to business as usual or we can challenge old thinking to build a new economy”. Recent polling published by the Fabian Society shows that the British people share Ed’s thirst for change: a clear majority agree that “Britain’s recent problems have exposed fundamental problems with the way our economic system works”.

The poll results are corroborated by my experience talking to people in my constituency and up and down the country. People are fed up with ever spiralling costs. They are working hard and putting in the hours, but their pay is falling. They worry about what the future holds for their children. Most fundamentally, they want to know if the causes of the crisis have been reckoned with, and the lessons learned. The much delayed recovery we are finally seeing after three wasted years of a flat-lining economy seems to be benefiting only a few at the top.

This is an economy that still isn’t working for ordinary families. In the midst of falling or stagnating wages, energy bills are £300 a year higher. It’s costing more to get the train to work, as rail fares are rising by up to 9 per cent. We are seeing more households renting in the increasingly expensive private sector, whilst housebuilding under the coalition is at its lowest levels since the 1920s.

People want action. In the Fabian poll, more than half the public say that increasing competition in the energy sector would make a positive impact on their living standards. A ‘one nation’ Labour government would abolish Ofgem and create a new energy watchdog with the power to force energy suppliers to pass on price cuts when the cost of wholesale energy falls and seek to open the energy market, to ensure competitive pricing. We would apply strict caps on fare rises on every rail route, and introduce a new legal right for passengers to the cheapest ticket for their journey.

On housing, we have said we would create a register of landlords to clampdown on rogue landlords ripping off tenants and have called on the government to act now on the IMF’s recommendation to bring forward £10bn of capital investment, which could support a major affordable housebuilding programme.

This polling emphasised another concern that I hear about across the country: the lack of quality jobs for the future. A disproportionate number of the new jobs created since 2010 have been temporary, part time, or low paid. Youth unemployment is almost at one million, long-term unemployment is at a record high and the number of apprenticeships for young people are falling. Average wages have fallen in real terms in 37 out of 38 months under the coalition government – leaving workers £1,500 a year worse off. And the number of people earning less than a living wage has surged from 3.4 million to 4.8 million over the past three years.

Ed Miliband and Ed Balls have argued that we need a recovery made by and for the many, securing long-term growth that is balanced, sustainable, and with benefits fairly shared. And as I argued in my contribution to last year’s Fabian publication The Shape of Things to Come, this is even more important in the face of the tough fiscal inheritance the next government will face as a result of the Tories’ economic failure.

That’s why one nation Labour is determined to work in partnership with employers, employees and civil society to reform the institutions of our economic life so they are hardwired to deliver social justice even when there is less money around. We see this in Ed Balls’ work with Sir George Cox on overcoming short-termism and raising levels of business investment, and with Larry Summers on the economic reforms needed to more fairly share prosperity; Stephen Twigg’s work with Chris Husbands on revolutionising our skills system; and Chuka Umunna and Andrew Adonis’s work with small enterprises and key growth sectors.

And it’s why I have asked Alan Buckle of KPMG to lead a consultation on what government can do to help businesses create more living wage jobs. The living wage movement has shown how we can tackle in-work poverty and deliver savings to the Treasury at the same time as supporting businesses moving towards a higher-value model. 80 per cent of employers that have signed up to the living wage have reported an increase in the quality of work. Reports show that productivity can improve, as employees develop skills, take on more responsibility, and are better engaged with the aims of the enterprise. It’s a powerful example of what can be done to build a fairer, stronger economy if everyone shares the responsibility.

To get more young people into work, gaining the experience and skills they need to be able to play their full part in our economic future, a one nation Labour government would use a bank bonus tax to create a compulsory jobs guarantee. To boost apprenticeships, we should be using the power of public procurement, requiring firms winning large contracts to offer apprenticeships – something the Fabian polling shows strong support for. To help small businesses around the country access the finance they need to invest, grow and take on new workers, we would be creating a business investment bank. To boost job creation in the green industries of the future we should legislate for a decarbonisation target for 2030 to encourage investment in renewable, nuclear, and clean gas and coal technology.

Another significant finding in the poll is that the public were most concerned by banks and businesses behaving irresponsibly. To crack down on bad practice in the City, and get it working for the wider economy, we should be toughening the rules on ring-fencing retail from investment arms with a threat of full separation, and tightening the regulation of professional standards making reckless misconduct a criminal offence.

It’s clear that the government has failed to deliver the change we need. The Conservatives will never be the party to fix the problems in our economy and build a fairer future. Only one nation Labour has a plan to put things right.