Progress, 2 February 2016
We have a huge job of work to do
Great Britain is a country of enormous potential. ‘GB’ is a symbol of quality and distinction, whether in food, drink, creative industries, textiles or cars. The development of India, China and other emerging economies promises exciting opportunities for British businesses and those who work in them. But as recent market turbulence reminds us, global economic integration also brings risk and uncertainty.
George Osborne is keen to focus our minds on the latest external threats to his much-delayed deficit reduction plan. But he should be attending to issues in our own economy that both leave us more exposed to global shocks and slowdowns, and less able to hold our own in fast-developing world markets.
At least five interrelated imbalances can be identified in the chancellor’s own growth model that need to be attended to if we are going to make the most of our potential and be prepared for whatever events are thrown at us. That means addressing the balance between borrowing and saving, importing and exporting, finance and manufacturing, north and south, and the growing gap between rich and poor.
Underlying all these distortions and divisions is the poor productivity performance we have seen across large sectors of the British economy under Osborne’s stewardship, leaving too many workers and businesses stuck in uncompetitive or low value-added activities. None of it means another crash is on its way, but Osborne’s failure to build the rebalanced, broader-based, better-paying economy Britain needs will become more and more apparent between now and 2020.
That gives us in the Labour party an opportunity to make the case that the Tories are not doing what is needed to secure our long-term economic prosperity – letting down Britain’s businesses, working families, and a generation of young people hoping to make their way over the decades ahead.
But we know in the Labour party we face our own challenges. The fact is that we failed, as the Beckett report shows, to win the last general election because we did not persuade voters that we could be trusted with the British economy and public finances.
Many of our policies to reform the economy – from restructuring the banks to freezing energy prices – were individually popular. But in the absence of a stronger message about how we would help good businesses grow and succeed, they added up to an impression felt by many business-owners and private sector workers that we just were not on their side.
So we have a huge job of work to do to convince Britain’s businesses, and the people who work in them, not just that the Tories are a problem, but that Labour is the solution. But the Conservative approach, that if government gets out of the way, business will flourish, is the wrong one – on infrastructure, trade, skills and productivity, government has a role to play in helping business and hence our whole country succeed. If we understand that and show we have a compelling vision for the British economy with business – big and small – and the people who work for them at its heart, Labour can rebuild trust and help build a stronger and a fairer economy again.
Rachel Reeves MP is a member of the Treasury select committee