Gregory Barker – 2013 Energy Efficiency Mission Launch Speech

gregorybarker

Below is the text of the speech made by the Energy Minister, Gregory Barker, on 4th February 2013.

It was a real pleasure to welcome the Prime Minister, the Rt. Hon. David Cameron here and to hear his ringing endorsement of the UK Energy Efficiency Mission and I share his passion and commitment.

We want the UK to be the most energy efficient economy in Europe, not because it is nice to have but because it is an essential part of how the UK is going to compete in the global race, how we are going to have competitive onshore manufacturing and rebuild our industrial base.

This is all about competition. This is all about growing efficiency, not just in the energy sector but as part of a holistic approach to the efficiency of the wider economy.

But there is a problem that the Prime Minister put his finger on, and that we hope to deal with this afternoon. The fact of the matter is that we have a host of policies; arguably we even have too many policies dealing with energy efficiency. Yet despite that, historically, energy efficiency has been ignored, relegated to second tier status by successive governments for decades. And that has to change.

I am very proud that this Coalition Government has actually recognised that fact and one of the first things that I did coming into government was to ensure that energy efficiency was actually properly recognised in the architecture of the Department of Energy & Climate Change.

It was extraordinary to me to get there and find that we had an Office for the Deployment of Renewables; that there was an Office for New Nuclear; that there is obviously a big oil and gas office there. But energy efficiency was dispersed piecemeal throughout the Department and there was nobody actually at the top table speaking up for energy efficiency alongside the other key elements of energy policy and the energy future.

Now under David Purdy we have the Energy Efficiency Deployment Office, at last recognised within DECC as a vital part of our future policy framework. Within that I have also got to pay tribute to Tracy Vegro who has been responsible for deploying the Green Deal, the most transformational, consumer-facing energy efficiency policy we have ever tried and which will, unlike other markets in the past, be bringing in not a monopoly provider or a monopoly contract but a whole host of new market entrants; opening up choice not just to people with big wallets but to people in the lowest docile of the economy; bringing choice to the fuel poor; bringing much needed competition to the sector to drive down cost.

But there is more to energy efficiency than just the Green Deal, whether that is the Green Deal for consumers or businesses. If you look at the shopping list of our policies, as you will know, we also have the CRC, we have enhanced capital allowances, there are climate change agreements, and there is – although we still need to see a much stronger price signal – an emissions trading scheme at the EU level.

I have mentioned the Green Deal, I have also mentioned the £1.3 billion of subsidy which comes from the Energy Company Obligation – ECO – a vital partner to the Green Deal. There is the Smart Meters Programme which is going to transform the customer relationship with electricity. There is Electricity Market Reform (EMR) and I am currently serving on the Committee which is taking this through Parliament.

We are absolutely determined that future energy markets will actually see energy efficiency recognised within EMR, we see energy efficiency always being the first policy call of choice when it is the cheapest option and we are proactively exploring the way which we can reflect that in the new architecture of the UK electricity market. That means not just electricity demand reduction, it also means demand response which will completely change the way that consumers will interact with their electricity provider.

We have issued strengthen guidance for local authorities under the Home Energy Conservation Act and we have of course our own commitments as a Government that is proud to be walking the walk. We met our 10% target on reducing the energy consumption of the central Government’s real estate – in fact we smashed through it and now we are on track to deliver a 25% cut by 2015 – a really big, meaningful reduction.

But exactly as the Prime Minister said, there is a recognition that the sum of the parts adds up to considerably more than the whole. And the idea for a National Energy Efficiency Mission, to pull all these strands together, to pull in all the key participants in the energy efficiency economy, was actually something that really came to me when I was having a discussion with Andrew Liveris, the global CEO of the Dow Chemical Company, at the Olympics business event.

I had been an admirer of Andrew’s for some time after reading his book, ‘Make it in America’. Where he says is that it is no coincidence that those countries which are resurgent in terms of manufacturing and are increasing their global share of manufactured goods worldwide, are also those countries with an increasing focus on energy efficiency and renewable energy. Actually, the two represent two sides of the same coin and that actually here is a pro business, pro-entrepreneurial, pro-innovation, pro-manufacturing, low carbon agenda which is a huge opportunity we simply cannot afford to miss.

I was discussing this with Andrew and in the course of our conversation, I went through that shopping list of efficiency policies which I previously mentioned and he had no idea. Not only did he not know about the Green Deal, he did not know about the Green Investment Bank, he did not know about the measures that we are putting in place to drive the ESCO market, he did not know about the priority that efficiency has in our ring-fenced science research and development programme, or the fantastic work that the TSB is doing.

There is so much to this ambitious, exciting agenda – but if we are honest, we are just not telling the story effectively. But in order to get it out there, in order to pull it together, we need that backing from the very top of Government and that is why it was absolutely essential that the Prime Minister was here, to launch that mission and articulate this ambition to make the UK the most energy efficiency economy in Europe and to make clear the absolute connection between reducing our carbon emissions and winning that global race that he so frequently refers to.

So we are unapologetic in saying that energy efficiency is a win-win agenda. There is a lot more we need to do to achieve our goals and over the course of the afternoon I hope we can explore in the working groups some new solutions of how we can pull this all together. I want to get maximum bang for British industry buck, maximum bang for the consumer, make sure that those benefits that come with energy efficiency actually cascade down, right the way through to peoples bills.

This is a bold, pro growth agenda and working together we can make it happen.

Brendan Barber – 2012 TUC Conference Speech

Below is the text of a speech made by the leader of the TUC, Brendan Barber, at their annual conference in Brighton on Monday 10th September 2012.

Congress, well it’s been quite a summer.

For just a few short weeks we put our economic problems to one side and adopted the gold standard, not the failed economic orthodoxy of the early twentieth century, but the standard of Olympic gold.

Today our Olympian and Paralympian stars are being saluted in London, but here in Brighton we can join in the celebrations. Everyone wants to claim their share of Olympic glory but we have good reason to be proud of our contribution to the Games.

It was eight years ago that Seb Coe came to this hall and told us of the importance he attached to our backing for London’s then uncertain bid to host the 2012 Games. He told us of his aim to inspire a generation. And we told him of our ambition that a world class sporting event should bring with it world class employment standards.

Since then trade unions and the Olympic bodies have been working together to realise our shared ambitions. Let us applaud the construction unions for paving the way, both literally and metaphorically, with their memorandum of agreement with the Olympic Delivery Authority (ODA), ensuring that the Olympic Park was delivered on time, on budget and with a safety record far superior to the industry average.

Let us also praise Barry Camfield, the former Assistant General Secretary of Unite, whose work on the ODA board ensured that union values were there at the heart of the Games. In 2008 you endorsed the principles of co-operation agreed between the TUC and the Olympic bodies. They played a big part too in putting the London Living Wage on the agenda and helping us ensure that training, equality, diversity and trade union rights were all embedded in the 2012 project.

We must not forget the practical work done by the staff of the community and trade union learning centre in Stratford. Nor the immense contribution of the Games volunteers, among them many trade unionists.

Many of them were teachers. And how often did you hear medal winners praise the teachers who had recognised early potential and encouraged them to go on and do great things?

We don’t say it often enough in this country, but day in, day out, it’s the teaching profession who inspire each generation and it’s high time we celebrated the success of our teachers, schools and young people.

Naturally, the Olympics and Paralympics weren’t all plain sailing. Despite the protocol we agreed with the Games organisers, the distinction between volunteers and workers was not always policed as well as it might have been – as the Musicians’ Union motion you will debate later makes clear.

And like many others, we had serious objections to some of the 2012 sponsors. But we can say with confidence nevertheless that the Games were better because of our involvement.

Of course there is still much to be done as we enter the legacy phase. We have already made contact with unions in Brazil to see that London’s gains are not just a one off, but become embedded in the Olympic movement.

And we are continuing to fight for decent working standards for the workers around the world supplying sportswear and Olympics merchandise. The agreement that was made with LOCOG on supply chain standards prompted by our Playfair campaign – allowing our inspectors into factories in China and elsewhere to root out labour abuses – may only have come late in the day, but it provides a vital template for future Olympics and I hope the organisers of Rio 2016 respond positively.

I think what London 2012 showed was what we can achieve when we have the courage to do things differently.

Rejecting those who say we have to do things on the cheap, and instead doing things right. Engaging trade unions as partners; giving workers as well as business a voice.

Let’s not forget how it all started, with that wonderful opening ceremony. Politicians have struggled for years to define what they mean by Britishness.

Danny Boyle got it at his first attempt. It’s about our shared history. Our struggles. The suffragettes. Trade unions. The Jarrow marchers. The Windrush voyagers. The visionaries who, in the aftermath of war and amidst austerity, built our NHS.

It’s about our inventiveness. The industrial revolution. Street culture. Music. Our brilliant creative industries. Tim Berners-Lee giving the world – not the patent office – the web.

And it’s about our diversity, something that has always been part of our national heritage and character. It’s a Britishness that isn’t against others in a crude jingoism, but one that recognises how many people and traditions have fused to give us the identity we were proud to support during the rest of the Games.

It’s no wonder that some commentators on the right looked so isolated. To Tory MP Aidan Burley, who criticised the ceremony as ‘leftie, multicultural crap’ and who also happens to chair the sinister Trade Union Reform Group, let us say: you are wrong about modern Britain, just as you are wrong about the trade union movement.

But our opponents on the right had more setbacks to come. Let’s just go through these tablets of stone so many ministers hold dear.

You can’t pick winners. Tell that to Bradley, Jessica or Mo, all supported by targeted funding.

Markets always trump planning, they say. Well look at the Olympic Park, the result of years of careful planning and public investment.

Private is always better than public, they argue. Not true, as we saw all too clearly when it came to Olympic security.

Those summer weeks were a time when we really were all in it together. Not because we were told to be. But because we wanted to be. Athletes, workers, volunteers, spectators, residents, communities – all pulling together.

The same spirit we have just seen during the Paralympics. And as we reflect on the wonderful achievements of our disabled athletes, let us not squander the potential of disabled workers.

Today let us again say to the government that its decision to close 54 Remploy factories is utterly disgraceful, and it’s not too late for ministers to rethink their plans.

Congress, it’s right to celebrate the Olympics, but it’s even more important to learn from them. For the central lessons of this summer – that private isn’t always best and the market doesn’t always deliver – surely need to shape future policy.

We can’t muddle through greening our economy – we need investment, planning and an Olympic-style national crusade. We won’t build up industrial strength unless we work out what we do best as a country, whether it’s cars, pharmaceuticals, aerospace, or the creative industries, and help them do even better.

And just as the Olympics needed new infrastructure, so does the rest of the country. Not just new transport schemes or energy kit.

But new schools and colleges to nurture world class skills. And new housing to provide affordable homes and get people back to work.

So let’s build the council housing Britain is desperately crying out for. And while we’re at it, let’s build a new banking infrastructure as well, with a state investment bank, regional banks and a financial transactions tax to fund our national regeneration.

And let’s have proper regulation of our financial system too, because what the masters of the universe in the City need isn’t a light-touch but strong clear rules and powerful penalties for those who break them.

Congress, nowhere is the case for change more urgent than when it comes to economic policy. It’s clear that austerity simply isn’t working.

There has been no growth since the government came to power over two years ago. In effect the economy has become a gigantic laboratory.

Ministers are forcing through cuts the Institute for Fiscal Studies says are ‘without historical or international precedent’. Economic beliefs that failed in the 1930s and the 1980s are being applied once again.

Any scientist will tell you that an experiment that produces clear negative results is as useful as one that succeeds. But then scientists are rational – if an experiment fails they will try another approach.

After all it was Einstein who said that insanity is doing the same thing over again and over again and expecting different results. Sadly that not’s something this government comprehends.

The Chancellor says fiscal contraction will boost the private sector. Instead it has brought about a double-dip recession.

He says cutting public spending in the middle of a recession will reduce the deficit. Instead borrowing is set to go up by £150 billion.

The target for closing the deficit has already had to be extended two years. Most expect that target to go even further into the future. His response to these failures? Even more of the same.

Congress, since this government came to power its economic assumptions have been proved wrong time and again. It forecast growth of 2.8 per cent this year, yet if we get zero per cent we’ll be lucky.

It boasted of a march of the makers, yet manufacturers are suffering their worst conditions in years. It promised an export-led recovery, yet our trade deficit is at its widest level since 2005.

When it comes to economic policy, the lesson is clear: don’t believe a word this Chancellor says. And what about David Cameron?

He tells us that scrapping employment rights will boost jobs, but with no evidence to back his claim up. At least he has not got all his own way on this.

It’s right to acknowledge Vince Cable and his Liberal Democrat colleagues for resisting the full Beecroft bundle, including no-fault dismissals.

But we have still seen reduced protection against unfair dismissal and fees for employment tribunals. Many threats remain. Yet I see no investment boom. I still see big companies on an investment strike and workers afraid to spend.

Frankly, if the Prime Minister really believed in sacking underperforming workers, then why is George Osborne still in a job?

Congress, it’s time for change. The government’s strategy is failing Britain.

The economy is on its knees. Services are being devastated.

And our society is becoming more fractured as benefits are cut for the poor and taxes slashed for the rich. But austerity isn’t just some temporary sacrifice.

It could be with us for the duration. A self-perpetuating economic nightmare.

And it’s already beginning to happen.

Beyond the boutiques of Notting Hill and the mansions of Kensington, there is another country. A Britain of boarded up high streets, pawnbrokers and food banks.

A Britain of stratospheric inequality where the rich float free and the poor sink further into penury. A Britain of hopes denied for millions of our young people.

With more than one in five under-25s without work, it’s time to stop talking about the risk of a lost generation; they’re with us now.

Congress, our level of youth unemployment is a national scandal and the government’s response has been pathetically, shamefully and woefully inadequate.

When I addressed you in Liverpool in 2009, I warned that the economic crisis could fuel social disorder. Two summers later, we experienced the worst rioting in a generation.

I do worry desperately about the country we are becoming.

What we are staring in the face is many years of stagnation. Our own lost decades.

And it won’t be the West London rich who suffer. No, it will be the rest of us.

The victims of a government that thinks it can buck the central lesson of economic history. That austerity simply begets more austerity.

Of the 173 austerity packages carried out around the world since 1973, the IMF concluded that all led to recession not growth.

But when you’re driven by ideology, like so many in power today, the facts don’t matter. To anybody who has lived in the economic real world, the pitfalls are obvious.

When wages don’t rise and jobs are made insecure, workers won’t spend. When workers won’t spend, confidence goes.

And when confidence goes, growth dies. That’s where we are now.

Congress, Britain deserves better than this.

That’s the message we’ll be taking to the British people on the 20 October as we hold our Future that Works demonstration. I hope it will be a momentous day. A worthy successor to our magnificent March for the Alternative last year.

An occasion when we not only change the terms of the debate, but when we reach out to the millions of people who share our concerns.

When I address the rally in Hyde Park, it will be one of my last engagements as General Secretary. I’ve worked for the TUC for 37 years and it’s been a privilege to spend my working life in the service of working people. But no task we’ve faced in that time is more important than the one we face now.

Britain is at a historically important crossroads. The choice we face is clear.

In one direction is decline, depression and despair. In the other is recovery, regeneration and renewal.

So, at this defining moment, let it be our movement that shows the way. Let it be us who give working people a sense of hope about their prospects.

Let it be us who show a better future can be within our grasp. And together let’s build a new Britain we can all be proud of.

Thank you.

Brendan Barber – 2012 Speech to TUC Women’s Conference

Below is the text of the speech made by Brendan Barber to the TUC Women’s Conference on 14th March 2012.

Thanks Max [Hyde]

Thanks for your hard work on the Women’s Committee and with the NUT.

And thanks everyone for inviting me to address your conference.

Let me begin by congratulating Evelyn Martin from the GMB for winning the women’s gold badge and being awarded the MBE last year.

Let me congratulate Michelle Stanistreet for being elected as NUJ general secretary last April – the first ever women to hold this post.

And conference, let me also say a few words about two outstanding women trade unionists who we sadly lost over the last year – Marge Carey from USDAW, and Terry Marsland who made her mark with the Tobacco Workers’ Union, Tass and MSF.

Both were working-class women who grew up in Liverpool.

Both devoted their lives to improving the lot of ordinary women.

And both were an inspiration to us all.

We will never forget them.

Conference, you are meeting once again at a time of tremendous difficulty for ordinary women and their families.

The facts speak for themselves.

Women are twice as likely to be affected by government cuts as men.

Women are being disproportionately hit by the pay freezes, pension reforms and massive jobs cull in the public sector.

And women are continuing to bear the brunt of an economic crisis largely caused by the testosterone-fuelled antics of male bankers in the City.

Earlier today, it was announced that women’s unemployment has reached its highest level in a quarter of a century.

Over 1.1 million women are now without work. The number of unemployed women aged between 50 and 64 has risen by 20,000 over the past quarter. And female unemployment has risen by nearly 25 per cent in the North East in the last year.

But the headline statistics – however bad – tell us nothing about the countless personal tragedies unfolding right across Britain.

The female graduate told to start her own business because there are no jobs.

The young mother unable to find work because of a lack of childcare.

And the woman in her fifties made redundant now fearing she will never work again.

Like 52-year-old Helen from London.

A community care worker for 10 years who lost her job back in 2009.

She hasn’t worked since.

As Helen says: ‘I’ve been for interviews, I send my CV off all the time, but there is nothing. It’s so depressing, so frustrating, I don’t know what to do’.

Conference, let’s be clear: the jobs crisis facing women is a national scandal – and we will not stand by while this government destroys the lives, livelihoods and aspirations of millions of women in this country.

Think too about all the other things the coalition is doing.

Funding for the EHRC slashed.

Changes to the state pension age that disadvantage half a million women.

Plans to cut maternity leave to 18 weeks – or zero if Steve Hilton gets his way.

Hard won abortion rights at risk.

Basic employment rights deemed to be red tape.

Legal aid cut mercilessly.

Refuges for victims of domestic violence closed.

Colleagues, the evidence is clear: this is the most female-unfriendly government in living memory.

With women bearing the brunt of the coalition’s policies, with so few women supporting the government, what has Number 10’s response been?

To appoint a new tsar for women. To say a few warm words about getting more women onto company boards. To talk about tax breaks for people who employ cleaners and servants.

Conference, let’s be clear: this is a government that knows absolutely nothing of the lives led by ordinary women in Britain today.

If there’s one statistic that shows just grotesquely unequal our country has become, then it’s surely this.

The richest 1 per cent of the population – the people the government desperately wants to cut tax for – already claim more in tax reliefs each year than the typical woman working in the private sector earns in a year.

That’s not just deeply shocking; it’s a moral abomination that shames our society.

So how, in the midst of austerity, do we win fairness, equality and justice for women?

How do we respond to the government’s attacks on women’s rights, jobs, and services?

And what can we in the trade union movement do to make a difference to the lives of the most vulnerable, disadvantaged women in our society?

Let me describe what I think must be our three key priorities in the year ahead.

First priority: we’ve got to set out our alternative to austerity.

With the cuts hitting women hard, it’s our job to show there is a better way to get our economy back on track.

Ministers want us to believe that austerity will be worth it in the long run; that the sacrifices we are making now will pay dividends at some indeterminate point in the future.

But we need to get the message across that it won’t like this – that austerity means high unemployment, stagnant wages and falling living standards for the duration.

Instead we need to give ordinary working people – ordinary women – a sense of hope about their prospects.

That’s why, over the past year, the TUC has made the case for a different strategy based on growth, jobs and tax justice.

Keeping our economy moving, keeping people in work, and keeping tax revenues flowing – with those at the top making a proper contribution at long last.

In a sense we’ve got to shift the terms of the debate from deficit reduction to economic renewal.

Because it’s only through building a fairer, stronger economy ­­­- providing decent work for all – that we’ll be able to deal with our debts in the long term.

As Keynes once said: ‘look after unemployment and the budget will look after itself’.

And this takes me onto our second priority: we’ve got to keep fighting the cuts in our workplaces and our communities.

What we’ve got to do is build on the huge success of our massive mobilisations of March 26th and November 30th last year – in which women of course played such a prominent role.

Not just working alongside all those organisations – from charities to women’s groups – who share our concerns about the scale and speed of the cuts.

But also reaching out to those millions of people from every walk of life – men and women; black and white; young and old – who believe in a better, more hopeful vision for Britain’s future.

A big part of the task we face is showing just how devastating the cuts are to the everyday lives of people of all backgrounds.

And the good news is you’re already leading the way of that front.

Thanks to the excellent ‘Women and the Cuts’ toolkit which was launched last autumn, you’re already building up a detailed picture of how austerity is affecting women in communities the length and breadth of Britain – complemented by the mapping exercise you are now undertaking.

Our task is simple: to make this kind of work the norm not the exception right across our movement – giving us the evidence, the testimonies, and the arguments we need to take apart the government’s case for cuts.

So to our third priority: we’ve got to get organised.

As vital as our campaigning work is, there can be no substitute for effective trade union organisation in the fight against austerity.

Recruiting workers into trade unions, encouraging them to get active, rebuilding our collective strength: that’s what we’ve got to do now.

And with union density higher among women than among men, once again you are showing how it is done.

Proof of the old adage that women need unions; and unions need women.

At a time when women are being hit hard by the cuts; when it is women who account for the majority of the 710,000 jobs being slashed across our public services; and when women are often being shoehorned into lower-paid work in the private sector -assuming they’re lucky enough to find it – the case for stronger organisation is surely unanswerable.

And as you know better than me, the way to bring women into the fold is to focus on the issues that matter most to them.

So let’s speak up for equal pay, better childcare and decent jobs.

Let’s support a woman’s right to choose.

And let’s show our commitment to ending violence against women.

And where better to start than by encouraging trade union members to support the petition calling on the UK government to sign to the Council of Europe’s Convention on Violence Against Women?

Conference, do not underestimate what you can achieve through collective action.

Your theme this year could not sum it up any better: ‘Every woman in every workplace: stronger together’.

And in the year ahead, as we face our toughest test in a generation, that’s exactly what we’ve got to be: stronger together.

Stronger together as we fight the cuts.

Stronger together as we set out our alternative.

And stronger together as we win fairness for ordinary women and their families.

Thanks for listening and have a great conference.

Brendan Barber – 2008 Conference Speech

Below is the text of the speech made by Brendan Barber, the General Secretary of the Trades Union Congress, on 8th September 2008.

While the past year has had its problems for sure, by working together and campaigning together, we’ve made real progress on the issues that matter most to the people we represent.

We’ve won a historic agreement on agency workers – removing one of the worst injustices from our labour market, so never again can Britain’s army of temporary workers be treated as second-class citizens in the workplace.

And we should thank John Monks and his ETUC colleagues for the hugely important role they played in winning that deal.

We’ve put the issue of vulnerable workers firmly in the public spotlight – highlighting the overwhelming case for action in a way government, business and the public simply cannot ignore.

We’ve won major pensions’ reform so that in the future every employer will have to contribute to their workers’ pensions – and what better way for us to mark the one hundredth anniversary of the Old Age Pensions Act won through the campaigning of previous generations of trade unionists?

Think too about those achievements that have rarely made the headlines.

The record number of workers accessing learning opportunities through their union.

The tougher penalties for scrooge employers who refuse to pay the national minimum wage.

The new law on corporate killing that came into effect earlier this year – there’s more still to do to hold reckless employers to account but this is a vital step forward.

In the past year we’ve also become stronger as a movement.

We’ve recorded a welcome 65,000 increase in our membership.

Reached out to migrant workers in every corner of the UK.

And signed a new Protocol with our American sisters and brothers to combat the disgraceful activities of union busters on both sides of the Atlantic.

Helping deliver for workers that most fundamental collective right: the right to organise.

We want no pitbulls here – with or without lipstick

So there is much for us to be proud of – and Congress, I’ve never been prouder to be part of this movement.

Proud that once again we led the fight against the Far Right in communities across Britain, ensuring that the vast majority of our towns and cities remain free from the poisonous embrace of the BNP.

Proud that we stood shoulder to shoulder with our comrades in Zimbabwe, and let us salute those South African trade unionists – ordinary dockworkers in Durban – who refused to unload arms destined for the Mugabe regime.

Proud that we played our part in shaping a breakthrough agreement between the trade union movements of Israel and Palestine so that the PGFTU can secure the income that is justly theirs in respect of Palestinian workers working in Israel.

Where trade unionists, despite all the difficulties, have been able to reach agreement across the divides of that bitter conflict let us hope they’ve carved a path that political leaders can now follow.

It would be right Congress too to put on record a tribute to Guy Ryder, General Secretary of the ITUC, who worked tirelessly to deliver that agreement.

And proud that we have spoken with one voice to demand fair pay for public servants and – in a year when we celebrated the 60th anniversary of the NHS – an end to the reckless privatisation of our public domain.

Together we have spoken up for public services in a way the government cannot ignore.

We have shown that you cannot create world-class services with a workforce battered and bruised by change, sapped of morale by a thousand reorganisations, and crippled by pay awards that do not begin the reflect the true cost of living.

And don’t let anyone tell us that the government can’t afford fair pay for public servants.

If it can spend billions on consultants, billions on tax breaks for UK plc, then surely it can find the money to give Britain’s teachers, prison officers, civil servants and local government workers the fair pay they deserve.

But let us be clear about this: working people are not the cause of inflation; they are the victims of it.

Congress, this campaign – and so many of our other battles for justice throughout the world – lost a great champion with the terrible loss of Steve Sinnott. His death in April shocked everyone in our movement and beyond.

Steve was not just a great trade unionist and a wonderful friend – he was an outstanding advocates for teachers, young people and state education, a true internationalist, and an inspiration to us all.

None of us will ever forget the huge contribution he made.

Congress, what unites all of our campaigns – from public services through to Zimbabwe and agency workers – is one simple principle: fairness.

Over the past year, we have led the debate on fairness, exposing the huge inequalities that now disfigure our country.

And the argument I want to make today is this: our country more than ever desperately needs to become fairer.

Gone are the comfortable realities of the past decade: that the economy can be taken for granted; that prices will remain stable; that the Tories are a spent political force.

With the credit crunch biting, with incomes being squeezed by rising food, fuel and energy costs, with the gap between the super-rich and the rest of us now a yawning chasm, the British people are crying out for fairness – and I believe the case for action is compelling.

Fairness is not some nebulous concept: it is the glue that holds our society together, the foundation on which any economic progress is built.

Too much of contemporary Britain simply isn’t fair.

It’s not fair that employees are facing a fall in their living standards while top bosses see their pay packets go up by 20 or even 30 per cent.

It’s not fair that workers pay proportionately more tax on their earnings than people who earn a hundred or even a thousand times more.

It’s not fair that pensioners and low-income families are living in fear of a cold winter while energy companies post huge profits and speculators rake it in.

You know economists debate whether and when the UK economy will be in recession – two quarters of what they quaintly call negative growth.

Let me tell them today. Millions of households in Britain are already in recession as wages fail to keep up with energy and food costs. I don’t call that negative growth – but a cut in living standards.

So it’s when times are tough that fairness really counts.

Of course we know this economic downturn was not made in Britain.

Greedy bankers, particularly in the US, and higher world demand for oil must take the lion’s share of the blame.

And in this globalised world we cannot avoid the downturn.

We can’t say ‘stop the world, we want to get off’.

But let’s also be clear.

The credit crunch is no random act of god – but inevitable.

inevitable because governments listened to those preaching the cult of deregulation;

inevitable because bankers worked out they could make money by irresponsible lending and selling on the debts; and

inevitable because property price bubbles always burst.

But in some ways you know the credit crunch has done us all a favour.

Because it has stripped bare some of the workings of the modern finance industry; and shown just how wrong it has been to put it on a pedestal as the engine of economic growth.

As the Economic Statement we published yesterday makes clear, we need a fundamental change of direction.

Policies that stimulate growth, as well as control inflation.

Policies that promote real engineering, as well as regulate financial engineering.

And policies that curtail excess, as well as encourage enterprise.

In short: a decisive break from the neoliberal orthodoxy of the past quarter of a century.

Because what we have seen in the past year, from the credit crunch through to spiralling energy prices and the loss of confidence in the banking system, is market failure on a colossal scale.

And it is ordinary people, ordinary taxpayers, who are now footing the bill.

Delegates, I encourage you all to read the Touchtone pamphlet we have just published this weekend showing the scale of inequality in today’s Britain. Recent years have indeed been a golden age for the rich.

Billions are paid out in City bonuses.

In 2000 a typical FTSE 100 Chief Executive was paid 39 times the national average. Now it is over 100 times.

And according to accountants Grant Thornton in 2006 the 54 billionaires living in Britain paid £14.7m in tax on their £126bn combined fortunes.

In other words they are paying tax at an average rate of a little over 0.1 per cent.

Congress, the grotesque inequality we see now is a scar on our country, and I have to say, that when I hear Ministers talking about celebrating more millionaires it makes me cringe.

Congress, you know the world has gone made when an Abu Dhabi corporation pays £200m to buy the City – and its Manchester not even London.

With three-quarters of us saying the gap between rich and poor is too wide, now is the time for decisive action.

Not just to curb greed at the top, and we desperately need reform of our tax system, but also to address desperate conditions at the bottom.

Because at the other end of the spectrum, away from the champagne bars of the Square Mile, life is very different.

Two million workers in Britain today face exploitation, maltreatment and pitiful working conditions, often quite legally.

People like 54-year-old Julie.

Had to give up her job to care for a child who had learning difficulties, and for the last 20 years has worked at home making Christmas crackers.

Paid £35 to £40 for every batch she produces, even though each one takes 40 hours to make – translating into an effective pay rate of less than £1 an hour.

Not entitled to sick pay, holiday pay or pension, and has never been given a payslip.

Or think about 52-year-old Paula, an agency worker cleaning cabins on the ferries.

Starts work at 5.30 in the morning, and after a five hour rest in the middle of the day, finishes at 11.30 at night.

And she has to do that for 14 days in a row, again without holiday pay, sick pay or pension rights.

When she complained that her permanent colleagues received better treatment, she was suspended by her agency for six weeks.

And think finally about Robert.

A coal miner for 18 years until the Tories closed his pit.

Since the early 1990s, he has worked – supposedly self-employed – as a car valet.

With his company recommending a 6am start, he clocks up 60 hours a week.

Paid a piece rate for each car washed, he also has to fork out for his own cleaning materials and damage insurance.

And at the end of an average month, after expenses, Robert takes home around £250.

Congress, this is happening here and now – in Britain, in 2008 – under a Labour government.

And it is a scandal that shames our country.

So what are the answers?

How do we make Britain a fairer place for all?

What can government do to turn fairness from a political slogan into a practical reality?

Well, let me offer ministers just three simple suggestions.

First – remove once and for all the worst injustices from our labour market.

Follow up the agreement on agency workers by ending bogus self-employment and delivering equal rights for homeworkers.

Make enforcement of the current law much more effective, especially in those sectors and businesses where the risks are greatest.

And introduce a new Fair Employment Commission to lead the fight against vulnerable working and raise awareness where it matters most.

Second – meet the public’s desire for tax justice.

Make our tax system more progressive, with low earners taken out of tax altogether and a new minimum rate introduced for those on £100,000 or more.

Pursue the tax avoiders in the City and among the super-rich with the same determination as you pursue so-called benefits cheats.

And close the loopholes that cost the public purse £25 billion a year, because three-quarters of the public think it’s too easy for the rich to get away with not paying their share.

Third – perhaps most crucially – inspire again the imagination of ordinary people showing what a Labour government is for.

Meet the massive demand for council housing and give our construction industry the boost it so desperately needs.

From healthcare to transport, criminal justice to education – show just a little less faith in market mechanisms and a little more belief in public provision.

And yes introduce a windfall tax on the excessive profits of energy companies and divert the proceeds to the poorest and most disadvantaged sections of our society.

Congress, I believe the case for fairness is as relevant now as it ever has been.

And I’m convinced that argument – for fair employment, fair tax and a fair distribution of wealth and opportunity – is not just morally compelling, it is also the way to electoral success.

So this week we will keep pressing for change; asserting what for us is a core value.

And make no mistake: throughout our history, fairness has been the lifeblood of the labour movement.

Fairness is what inspired trade unionists, socialists and progressive reformers to campaign for a universal old age pension a century ago.

Fairness is what drove Aneurin Bevan to create our NHS 60 years ago, delivering free healthcare for all despite bitter opposition from the conservative establishment.

And fairness is what motivated ordinary people the world over to march together, campaign together and stand together to help defeat the obscenity of apartheid.

Now, in the first decade of the twenty-first century, it is our duty to write the next chapter in that story.

Only by being fairer can Britain be stronger; and only by being stronger can Britain make the world fairer.

And if we can win that argument – if we can win the hearts and minds of politicians and public alike – then I believe we can win a better future for all our people.

Thanks for listening.

Ed Balls – 2014 Speech on the New Third Way

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Below is the text of the speech made by Ed Balls, the Shadow Chancellor, on 30th June 2014.

Thank you Andrew, and to the London Business School for hosting this speech this morning.

And thank you to all of you for coming. Not least because the advertised title for my speech today, ‘the UK economy’, didn’t really give you much to go on.

This morning I do not intend to talk about the short-term challenges that economic policymakers face here in Britain – the new normal for interest rates, how to boost housing supply, the right pace for deficit reduction – vitally important though they all are.

Instead, I want to stand back and ask what the economic trends we have seen over the last twenty years can teach us about how we should shape our economic policy for the next twenty.

And I want to make my contribution to a debate which economic policymakers have been grappling with, and on which Ed Miliband has been leading the way…

…in the face of seismic global and technological changes, rising inequality and a decade of stagnating median incomes so pay packets are buying less and less, how can we earn our way out of this cost of living crisis and deliver a rising prosperity that can be shared by all citizens and not just a few?

THE THIRD WAY OF THE 1990s

I have chosen this twenty year comparison deliberately.

Not because these trends and pressures started precisely twenty years ago.

But because it is twenty years ago this year that I left my job as a young economist and leader writer at the Financial Times to work for Labour in opposition.

It seems like yesterday – but also a very long time ago…

…and while we now face some very different challenges, there are some striking similarities too.

Back then, our country was recovering from a deep recession, following the ERM crisis. The fiscal deficit was very large, and household incomes were being squeezed by tax rises and cuts to public spending.

And the political debate was focussed on the big global economic changes taking place – the rapid growth of international trade; new competition in manufacturing from emerging economies in Eastern Europe and Asia; and technology replacing jobs and undermining wages amongst low skilled, manual workers.

Of course, this debate took place not just in Britain, but across the developed world.

In America, as debate raged about the North American Free Trade Area and newspaper columnists agonised over what they called ”the downsizing of corporate America”, the first term President Bill Clinton called a G7 jobs summit in Detroit.

That was the summit at which his Labour Secretary, Robert Reich, famously said: “when I hear the word flexibility, I say watch out for your wallet.”

Here in Britain, as we debated the case for Bank of England independence and new fiscal rules to prevent another ERM-style crisis, Tony Blair and Gordon Brown led the public debate about how Britain should respond to these economic changes by calling for a ‘skills revolution’.

Meanwhile, Europe’s response was a single currency to deliver stability, a single market to deliver rising prosperity and a social chapter to deliver fairness. All much to the anguish of Tory Eurosceptics.

And on the world stage, Tony Blair and Bill Clinton led the progressive governance movement in calling for a ‘third way’ in response to the challenge of globalisation.

Not passive, free-market laissez-faire on the one hand; or a rejection of open, global markets and a lurch to protectionism on the other; but an attempt to show that a dynamic market economy and a fair society can go hand in hand.

TWENTY YEARS ON

If a new insecurity was taking hold in the 1990s, today those concerns are deep, entrenched and undermining public trust that politics can offer a solution.

As Ed Miliband said after the local and European elections provided all political parties with a serious warning shot across the bow, there is:

“a depth and a scale of disenchantment which we ignore at our peril… that goes beyond one party, beyond one government.”

All politicians have heard time and again on the doorstep the worries and fears of people up and down our country: economic recovery is not working for them and their family, and their living standards are continuing to fall.

And we in Britain are not alone. Far right or populist parties are flourishing across Europe.

Indeed, the pattern we have seen here in the UK – growth returning, but feelings of insecurity and discontent being expressed at the ballot box – was repeated in countries like Denmark and Austria which have also seen growth return and unemployment fall in recent months.

So, twenty years on, the best we can say is that the struggle to prove that a dynamic market economy and a fair society can go hand in hand remains to be won.

Some would say that the Blair-Clinton attempt to forge a third way did not succeed.

That steps were taken to improve the prospects of lower paid workers, including higher national minimum wages and more generous tax credits to make work pay.

But not enough was done to improve the prospects of the non-university educated workforce. While the failure of financial regulation led to a global financial crisis and the global recession which followed hit middle and lower incomes families particularly hard.

I have some sympathy with this argument.

We did not do enough on skills.

And the failure of all parties, in the UK and all countries in the developed world, to see the coming crisis was a huge error.

But I do not believe that the progressives were wrong in their central belief that a path could be taken between free-market economics and protectionism and isolationism.

My argument is that the ‘third way’ did not deliver because the world was changing in a more profound way than any of us anticipated.

And new times now demand a new approach.

Not only do we face new challenges from technological change and globalisation, we must also deliver at a time when there is less money around.

So charting a new way forward for the even more challenging century we now live in is now the challenge for this generation – politicians, businesses, trade unions – all of us.

It is the task of the Inclusive Prosperity Commission, which I am chairing with former US Treasury Secretary Larry Summers and which will report in the autumn.

And it is the subject of the conference that my fellow commissioner, Lord David Sainsbury, and I are organising this Thursday at which Ed Miliband will give the keynote address.

THE 21st CENTURY ECONOMIC CHALLENGE 

To understand how to respond to this change, we first have to understand the nature of the change itself.

And this is my starting point: over the last twenty years, the global economy has fundamentally changed – and changed for the better.

As communism collapsed and countries have liberalised their economies, there have been significant reductions in poverty and increases in living standards across Asia, South America, Eastern Europe and now Africa.

Meanwhile, developments in information and communications technology have transformed the way we live our lives and brought the world ever closer together.

And as these trends have accelerated, the global economic map has been redrawn as new opportunities have opened up not just for us, but for emerging markets like China and Brazil.

Back in the 1990s, we recognised that globalisation was creating new challenges.

Trade and technology were combining to place a premium on higher level skills and qualifications, and to reduce low-skilled jobs which could be done more cheaply by robots or workers in poorer countries.

Changes to the structure of labour markets – often caused by the strain of global competition and including the fall in trade union membership – also had a knock-on effect on wages.

And having more working mums has helped to increase living standards – but also made providing affordable childcare and family-friendly employment rights more important too.

While we attempted to address all of these challenges, we failed to foresee three other changes which were going to fundamentally reshape our world.

First, global economic integration led to much greater instability in our financial and tax systems than any of us anticipated.

As we now know, the global financial sector was taking risks that both bankers and regulators did not fully comprehend.

As leverage increased and balance sheets grew, bulging corporate tax receipts gave the impression that everything was rosy.

And here in Britain, the Labour government ended self-regulation by introducing the Financial Service and Markets Act.

But while voices in the City and across the right, including George Osborne, argued that we were being too tough on the financial sector, we should have been much tougher still.

Because when the global crash came, the result was the near-collapse of the financial system and unprecedented state intervention in our banking sector.

Alongside this, globalisation also created much greater complexity in our tax system.

We have all read about large multinational companies that have chosen to avoid paying their fair share of taxes.

Offshore tax havens, transfer pricing arrangements and well-paid accountants have all helped some international firms stay one step ahead of the taxman.

And technology companies, which don’t need a shop front which physically anchors them in a particular country and are free to go where corporation taxes are lowest, have benefited in particular.

Second, labour mobility has also been much greater than anyone expected.

Just as hundreds of thousands of Eastern Europeans have come to live and work in the UK and other developed countries across Europe, so too have millions of Mexicans and Latin Americans moved to the United States, and Indians and Chinese to the relative riches of the Middle East – a new global and mobile middle class.

Additional competition for low-skilled jobs, and increasingly intermediate-skilled jobs, has put great pressure on communities.

And as the countries they left have continued to develop themselves, their use of natural resources like energy, water, precious metals and other commodities has risen, which has pushed up prices and contributed to our cost-of-living crisis.

But third, we have seen profound technological change which is not just substituting for unskilled labour, but replacing traditional middle-income jobs too.

Two decades ago, we were right to worry that low-skilled jobs in sectors like manufacturing would go overseas.

Now the advances in robotics and artificial intelligence means that intermediate skilled jobs will be lost too, in what economists call a ‘hollowing out’ of the labour market.

Sophisticated machine tools and software are already reducing the need for routine jobs on production lines and in offices. And with 3D printers, not to mention Google’s driverless cars or Amazon’s drones, this trend is set to continue.

Meanwhile at the top, the returns from ideas, capital and top-class qualifications are getting greater and greater.

And the result has been, for most developed countries, rising income inequality on a scale not seen since before the First World War,.

THE UK ECONOMIC CHALLENGE

No developed country has escaped the impact of these global trends, but the UK has been particularly hit hard:

–       while all developed counties were hit by the global financial crisis, our financial sector – larger and more exposed to international shocks than our competitors – has experienced bigger hits to growth and to our fiscal position;

–       the UK’s openness and ‘safe haven’ reputation, alongside the  decision – wrong in my view – not to put in place transitional controls on EU accession states in 2004, has meant that immigration – particularly low skilled immigration – has put additional pressure on our labour market;

–   and while many countries have tried to increase labour market flexibility in the face of ‘hollowing out’, the UK has seen a particular shift to low-wage, part-time and often insecure employment.

So, we now face the twin challenge of dealing with the aftermath of the financial crisis, while also trying to adapt to the relentless forces of globalisation, immigration, and technological change.

Like many economists, I argued strongly four years ago that, with our economy still vulnerable, George Osborne’s decision to accelerate tax rises and spending cuts would: hit confidence; choke off our economic recovery; and make it harder to get the balanced investment and export-led recovery we need and to get the deficit down.

And so it has proved.

We have had the slowest recovery for 100 years, and, even as growth has resumed, GDP per head is not expected to return to its pre-crisis peak until 2017 – a lost decade of no real income growth.

As a result, government borrowing is now forecast to be £75 billion next year.

This is why I have made a binding fiscal commitment that a Labour government will balance the books and deliver a surplus on the current budget and falling national debt as soon as possible in the next Parliament.

It will require tough decisions to cut public spending and social security spending, as well as a fairer tax system.

And we need immediate action to boost housing supply to stop the recovery becoming more unbalanced and get long-term unemployed young people back to work.

But alongside the immediate short-term challenges that economic policymakers face here in Britain, we have deep structural issues to resolve.

Because as the IMF annual report revealed, this UK recovery has been characterised by particularly low productivity growth.

I mentioned earlier that the UK has seen a marked increase in low-paid work.

Over the last few years, the number of people working part-time who want to work full-time has gone up 300,000 to 1.4 million, with growing numbers also employed on contracts with no holiday pay, sickness pay or even a guarantee of hours.

At the same time, too many university graduates are struggling to find work to match their endeavours. Britain now has more overqualified workers than any country other than Japan.

And inequalities are becoming more deeply entrenched.

Today, only one in eight children from a low-income home goes on to achieve a high income as an adult.

As Alan Milburn’s Commission on social mobility reported recently:

“Without action, there is a real danger that social mobility – having risen in the middle of the last century then flat-lined towards the end – could go into reverse in the first part of this century.”

This is not the only cause for concern.

Business investment is slowly starting to recover…

… but it is still £6.1 billion a year below its pre-crisis peak and is the fourth lowest in the EU as a share of national income– only above Cyprus, Greece and Ireland.

…  our export growth since 2010 is 6th in the G7, 16th in the G20, and 22nd in the EU.

… business expenditure on R&D is the lowest in the G7 as a percentage of GDP.

… while infrastructure investment is down 12.2% compared to 2010 and public investment is set to contract again next year.

… and still just 8% of all employers – including less than a third of the biggest firms – offer apprenticeships to give young people a route into work.

A NEW INCLUSIVE PROSPERITY FOR THE 21st CENTURY

So how do we respond?

Some say that if rapid globalisation and technological change have undermined the pay and prospects of working people, then the simplest thing to do is to turn our back on those economic forces.

By putting up trade barriers.

Stopping migration into Britain.

And leaving the European Union.

In my view, Britain has always succeeded, and can only succeed in the future, as an open and internationalist and outward-facing trading nation, with enterprise, risk and innovation valued and rewarded.

Backing entrepreneurs and wealth creation, generating the profits to finance investment and winning the confidence of investors from around the world.

Turning our face as a nation against the rest of the world and the opportunities of globalisation is the road to national impoverishment.

But at a time when, in the face of these powerful global changes, many people in our country are seeing their living standards falling year on year, we cannot take public support for this open, global vision of a dynamic market economy for granted.

I know, as an MP with, until recently, the largest BNP membership of any constituency in the country, how some on the extremes of left and right see the solution to be isolationism, turning inwards.

But they are wrong.

Open markets and business investment are part of the solution, not the problem – as is Britain properly engaged in a reformed Europe.

But as we were told loudly and clearly at the local and European elections, we cannot just bury our heads in the sand and ignore the legitimate and mainstream concerns of people across our country that our economy is not currently working for them and their families.

That is why when I hear people denying there is a cost of living crisis, or suggesting that that the return to growth in the economy will solve the problem, I fear they just don’t get it.

A return to business as usual won’t work.

It won’t work economically. There is no future for the UK in trying to compete on cost with emerging countries round the world.

It won’t work politically either. Cutting workers’ rights, undermining public services and reducing taxes only at the top in the hope that wealth will trickle down will not persuade a sceptical and hard-pressed electorate.

New times demand a new approach.

And I want to set out three ways that I believe that a new inclusive prosperity for the 21st century must be different from the approach taken in the 1990s:

–   first, we need tougher global co-operation;

–   second, we need good jobs and skills, especially for those being left behind;

–   and third, we need a new industrial policy.

Let me take them in turn.

HARD-HEADED INTERNATIONALISM 

First, to deliver an inclusive prosperity, we need a much tougher international response to these global trends.

We have to show that we understand and can respond to people’s concerns about financial instability, immigration and tax avoidance.

But we must do this while staying open to the world and continuing our commitment to a dynamic market economy.

I call this a hard-headed internationalism.

And it must start with Europe.

We know that we need reform of the EU to deliver value for money for taxpayers and to make Europe work in our national interest.

But it is not in our national interest to walk away from the huge single market on our doorstep. To do so would be anti-investment, anti-jobs and anti-business.

And nor is it in our national interest to have a Prime Minister who, playing to a domestic and Eurosceptic gallery, flounces out of vital summits and thinks that splendid isolation is a sign of strength, when everyone else can see it is really just a sign of weakness.

Instead of marginalising ourselves with fringe parties, isolating ourselves from key allies and failing to deliver the right Commission President for Britain, we should be at the centre of the debates that provide the modern rationale for our cooperation with Europe.

And we need that cooperation to make progress in vital areas, including on security, trade and climate change.

On financial regulation, we need new impetus to global efforts to reform our financial system which are grinding to a halt.

This means making progress on the agreements reached at the G20 summit in 2009, which included tough new principles on pay and compensation where very little progress has been made.

On immigration, too, we need greater international cooperation so that we can keep the benefits of skilled migration, while controlling and managing it fairly.

This means new laws to stop agencies and employers exploiting cheap migrant labour; while also making sure people who come to this country learn English and contribute to Britain.

While in Europe, we need longer transitional controls, stronger employment protection and restrictions on benefits.

Because when we face such an acute challenge to make work pay for unskilled people, we should not be subsidising unskilled migration from the rest of the EU.

And on business taxation, we also need greater international cooperation to strike a fairer deal for the future.

Today, after extensive consultation, Shadow Exchequer Secretary Shabana Mahmood and I are publishing Labour’s approach to business taxation.

We believe our business tax system must be competitive, promote long-term investment and innovation, and be simpler, predictable and fair.

The last Labour Government left Britain with the most competitive rate of corporation tax in the G7 and we are committed to maintaining that position.

But unlike George Osborne, we also recognise that companies are just as concerned about other elements of the business tax regime, such as capital allowances and business rates.

That is why, having started and supported successive cuts in corporation tax over the last 15 years, we do not think the right priority is a further cut next year.

We will, instead, cut and then freeze business rates for more than 1.5 million business properties.

When resources are tight this is a tough choice to allow us to support more businesses and keep our overall business tax regime competitive.

The purpose of a competitive tax system must be that companies view Britain as a great place to do business, not simply a cheap place to shift their profits.

So Labour’s approach will be to develop a business tax system that promotes long-term investment, supports enterprise and innovation, provides a stable and predictable policy framework for business and which is founded on fairness. With this approach Britain can compete in a race to the top, with a highly skilled, productive workforce directly benefiting from sustainable economic growth.

Our tax system must tackle the short-termism that has become an entrenched feature of the UK business environment and instead promote the long-term investment we need to create more good jobs for the future.

So we are examining the case for introducing an Allowance for Corporate Equity, along the lines suggested in the Mirrlees Review, to redress the systemic bias in favour of debt finance.

Such a scheme would offer a strong incentive for long-term investment, building more robust businesses that would be better able to plan for the future. We will consult with business and other stakeholders on the case for introducing this reform, and how it might be implemented.

We will also examine the possibility of structural changes to the tax system to incentivise long-term investment.

In his report on short-termism in British business, Sir George Cox recommended a series of reforms including a lower rate of capital gains tax for long-term investors.

This could complement an Allowance for Corporate Equity, by making long-term investment attractive to the investor as well as to the recipient of funding.

Labour is consulting with industry on the potential impact of these and other recommendations of the Cox Review and how they could be delivered in a revenue-neutral way.

At a time when working people are facing a cost-of-living crisis and the deficit is high, it’s vital that everyone pays their fair share and we restore public trust in the tax system.

High profile cases of tax avoidance have undermined both public trust in company taxation and also hit businesses who play by the rules and pay their fair share.

George Osborne is failing to tackle tax avoidance. The most recent figures from HMRC show that the amount of uncollected tax in our economy – the ‘tax gap’ – went up last year.

This isn’t good enough, so Labour will make reversing this trend and narrowing the tax gap a priority for HMRC.

So the next Labour government will act to tackle tax avoidance including through international leadership in the G20 and the OECD and by closing loopholes, increasing transparency and ensuring we have tougher independent scrutiny of the tax system.

WORK AND SKILLS

The second task for our inclusive prosperity agenda is to provide good jobs and skills for everyone and especially for those who feel they have been left behind.

To equip people without skills for the world of work and to meet the challenge of ever faster technological change, we have to raise skills and productivity in every sector and ensure that work pays.

Demand for high skilled jobs in advanced manufacturing, financial and business services, and across the creative industries will continue to increase.

So we must maintain our global excellence in Higher Education.

But so too must we ensure that the highest skills can be achieved through our vocational system. We cannot just meet the shortage in trained technicians that businesses repeatedly highlight by importing labour.

Those with intermediate skills are most at risk of the ‘hollowing out’ phenomenon. We must help equip them to take up new opportunities as baby boomers retire and ensure the skills they have developed are recognised by prospective employers.

In lower skilled sectors, we must ensure that the minimum wage continues to increase, is properly enforced and that employers have clear incentives to pay a living wage – with tax credits an added reward for hard work rather than a subsidy for low pay, and training available to all to support career progression.

And we must ensure that young people entering the world of work have the ambition, skills, knowledge and qualifications they will need to succeed.

We must improve careers advice in every school.

We need a major expansion of university technical colleges to ensure Britain is producing enough trained technicians in STEM subjects and other subjects where there is clear demand.

We need to get young people into training rather than unemployment, as Rachel Reeves has championed, and improve the quality of apprenticeships, so that they are focused primarily on taking young people to level three and beyond.

We need a greater role for employers in designing vocational qualifications.

And employers must also have a key role in commissioning and planning skills provision in their area.

A NEW INDUSTRIAL POLICY

And third, to deliver inclusive prosperity, we need to match policies for open markets and skills with a new industrial policy which puts innovation, long-termism and growth centre stage.

After the debacle of British Leyland in the 1970s, ‘industrial policy’ have been dirty words in Britain.

Some remain cautious about the politics of ‘picking winners’ – but that misses the lesson of the 1970s. Back then, it was the industrial losers who did the picking and good money was poured after bad.

Although she kept quiet about it, Mrs Thatcher had an industrial policy in the 1980s as she unveiled the Big Bang for financial services, brought Japanese car manufacturers to Britain and invested heavily in Airbus and its supply chain, including Rolls-Royce.

Twenty years ago, as we responded to globalisation, Labour also steered clear of talking openly about industrial policy.

Instead, with our economy returning to full employment, we focussed on providing macroeconomic stability and reforms to increase competition, encourage enterprise, support science and improve skills.

But since the global financial crisis and following the pioneering work of Peter Mandelson as Business Secretary, a consensus has now emerged that focusing on specific sectors is not only essential; it is inevitable.

Chuka Umunna and I commissioned the Executive Director of Jaguar Land-Rover, Mike Wright, to build on this by telling us what we need.

His report last week on manufacturing and the supply chain made clear there is a clear role for government to give strategic direction, bring sectors together to foster long-term planning and tackle issues like the cost base and skills.

Vince Cable might have belatedly bought into his predecessor’s approach to industrial policy, but there are still glaring gaps.

Although the government is focused quite rightly on aerospace, automotive and some low carbon technologies as part of their eleven industrial strategies, there are glaring gaps.

Why is there no place for the creative industries? No sector aside from real estate has grown faster in recent years. From Americans watching Downton Abbey, to Asians listening to Adele, to Africans tuning into the Premier League, British content is global content.

It’s for this reason that Harriet Harman and Chuka Umunna commissioned John Woodward, former Director of the UK Film Council, to carry out a creative industries and digital review, which will report in the next few months, with a strategic review of industrial policy every five years.

And while the government focuses on life sciences – which are a major British asset – why is there so little focus on health and social care?

Both sectors employ many more people, mostly in low paid jobs, and the ageing population is creating significant additional demand.

And then what is the government doing to support regional growth?

From Silicon Valley to the City of London, the world’s best industries tend to be clustered. In the UK, our automotive sector is concentrated in the Midlands and North East; the offshore wind sector brings jobs to many coastal regions; aerospace is predominantly based in the North West; and our creative industries are centred major cities like London, Manchester, Bristol and Leeds.

The government cannot create clusters – but it can do a lot to support those that already exist, especially at the local level.

Tomorrow Lord Adonis will join Ed Miliband to set out the results of his work.

He will set out how we should nurture help small business thrive, ensure innovation flourishes and empower independent and properly funded Local Enterprise Partnerships alongside Combined Authorities.

We will examine all of his proposals but will transfer £30bn of funding to city and county regions over the course of a parliament to achieve his vision.

And Andrew and I are working closely on how taxation can be used as a tool to drive growth and investment in city and county regions.

At a national level, we also need clear long-term direction.

We need action, as Sir George Cox’s report said last year, on boardroom pay, and corporate governance.

We need more competition in banking and a British Investment Bank to support small and growing companies.

We need an independent infrastructure commission, as Sir John Armitt has proposed, to put aside the dither and squabbling that has dogged our approach to infrastructure for decades.

And we need a new long-term framework for science and innovation.

Mike Wright and Lord Andrew Adonis’s reports have both looked carefully at Government support for innovation and science. They both come to similar conclusions, in particular that the ten year framework for science funding, set up by Lord Sainsbury as science minister , and which ends this year, has provided the stability and long-termism that our research base and companies need.

Liam Byrne launched a consultation on how we can build on this last week.

I believe that a similar long-term funding framework for innovation policy, covering initiatives like the Technology Strategy Board and catapult centres, will be equally important to delivering an inclusive prosperity.

And I am determined to ensure that long-term funding frameworks for science and innovation will emerge as key conclusions from Labour’s Zero-Based Review of spending priorities.

CONCLUSION

I started by saying  that, in the face of seismic global and technological changes, stagnating median incomes and rising inequality, our challenge is to earn our way out of this deep-seated cost of living crisis.

We must deliver rising prosperity for all, not just a few.

That means creating more good jobs, boosting skills and encouraging long-term investment as we restore the broken link between the wealth of the nation and family finances.

As Ed Miliband has said, Labour’s approach is about big reforms, not big spending.

A new plan for Britain and business to succeed together.

Pro-business, but not business as usual.

Not laissez faire complacency…

… or protectionism and anti-Europeanism.

But together building a long-term consensus to embrace open markets…

…and to work together to secure the skills, long-term investment and market reforms we need to deliver rising prosperity for all.

Because if we are to maintain public support for an open market economy, we need to address public concerns, promote competition and long-term investment and make sure markets like energy and banking work better for consumers and businesses alike.

That is the One Nation approach that Ed Miliband, my Shadow Cabinet colleagues and I will set out in the days, weeks and months to come.

…hard-headed internationalism…

…more good jobs and skills for everyone…

…and a new industrial policy….

A new inclusive prosperity for the 21st century.

I do believe the future of our country depends upon it.

 

Balls, Ed – 2014 Speech on Taxation

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Below is the text of the speech made by Ed Balls, the Shadow Chancellor of the Exchequer, at the Fabian Society Annual Conference on 25th January 2014.

Can Labour Change Britain?

Thanks Jessica.

And thanks to all of you for giving up your Saturday to be here today.

The title of today’s conference is ‘Can Labour Change Britain?’

And with the next General Election in sight, I want to set out today how this Labour generation can rise to the challenge.

Jessica, I first started attending these Fabian New Year conferences over 25 years ago.

I remember hearing the then Shadow Foreign Secretary Gerald Kaufman debating the pros and cons of unilateral nuclear disarmament and a young rising star called Tony Blair, who had just written an article for a fashionable magazine of the day, called Marxism Today.

How times changed!

When I first started coming to these conferences, the fight to rid Labour of Militant was won, and Labour was finally putting the corrosive internal party division of past decades behind us.

But even as Neil Kinnock fought valiantly for sanity, and even as the Tory government of the day cut taxes for the wealthy, while child poverty rose and long-term unemployment became entrenched we had still not yet re-established ourselves as a credible voice for the hopes and aspirations of working people.

Already out of power for a decade, a return to government was still a long way off.

So I am proud that today, under Ed Miliband’s leadership, this Labour generation has learned from that long and bleak period in opposition.

Just over three and a half years after a General Election defeat, this Labour movement is more united, more in touch and more determined than ever.

Yes, we once again we have a Tory government cutting taxes for the rich, while over 900,000 young people are struggling to find work and child poverty is forecast to rise.

But this time Ed Miliband and Labour are leading the debate, setting the agenda and speaking up for working people – middle and lower income Britain – facing a cost of living crisis.

As Ed Miliband said in his speech last week:

“This cost-of-living crisis is about the pound in people’s pocket today. But it is not just about that. It reaches deeply into people’s lives. Deeply into the way our country is run. Deeply into who our country is run for. And because the problems are deep, the solutions need to be too. ”

Ed is right.

This is no time for steady as she goes.

No time for propping up the status quo.

Our country is crying out for real and lasting change.

And it is this new Labour generation – from the leadership out across our party – that is now preparing a credible and radical programme for government that I believe can win public trust.

WHY UNCHANGED TORIES CAN’T CHANGE BRITAIN

So Labour has changed over the past twenty five years.

But as for the Tories – divided on Europe, stigmatising the vulnerable, dismantling the NHS – they haven’t changed at all.

And there is a reason why we are all expecting a nasty, vicious, negative and backward-looking election campaign.

Because if this election is about credible change and a positive vision for the future, then the Tories will lose.

David Cameron had his chance to stand for change in 2010.

After the global financial crisis and with the MPs’ expenses scandal fresh in everyone’s minds, people wanted change then too.

But David Cameron failed to win public support or articulate a vision.

He failed to win a majority.

He failed to convince the country that the Conservative Party had changed and had earned the right to change Britain.

And as the last three years have shown, the country was right not to trust the Conservatives.

But to fully understand this Tory failure, and the challenge ahead for Labour, we need to be clear about what’s gone wrong and what needs to change.

Living standards

Ed Miliband has been right to argue that the cost of living crisis is undermining support for a Tory-led government that promised to make people better off.

This government promised strong and balanced growth, rising living standards and the budget deficit gone by 2015.

The Tories and their supporters are now working hard to persuade the public that any growth in our economy is a vindication of their economic policies and disproves our critique that the Budget and Spending Reviews of 2010 choked off the recovery and flat-lined the economy.

But the Tories have delivered the slowest recovery for over 100 years, real wages down by an average of £1600 a year for working people, and painful public spending cuts extended well into the next parliament because three years of flatlining means that government borrowing has been £200bn higher than planned.

Simply to catch up all the lost ground since 2010 we need 1.5 per cent growth each quarter between now and the general election.

And Tory claims their plan is working are not going to wash with working people who are seeing their living standards falling and for whom this is no recovery at all.

Because the current cost-of-living crisis is not just about people on tax credits, zero-hours contracts and the minimum wage. It’s also about millions of middle-class families who never thought that life would be such a struggle.

And in the last 24 hours David Cameron has gone from not wanting to talk about the cost-of-living crisis to effectively telling people they’ve never had it so good.

A desperate attempt to use highly misleading and selective statistics to tell people they are better off when they feel worse off. It makes the Tories look even more out of touch than before.

As the IFS has made clear, household incomes will be substantially lower in 2015 than in 2010. No amount of smoke-and-mirrors can allow David Cameron to wriggle out of this basic fact: hard working people are worse off under the Tories.

David Cameron’s and George Osborne’s plan may have worked for a privileged few at the top.

But for the million young people trapped out of work…

For millions of ordinary families, worried about how to make ends meet when wages are falling, and prices are going up…

For the young couples struggling to get on the housing ladder while the chronic shortage of homes forces up prices…

For the aspirational majority who work hard, pay their taxes, who want to get on and not just get by, but who are working harder for less as the cost of living keeps on rising this Tory plan isn’t working.

And people feel betrayed.

Fairness

But we know there is a deeper reason why the Tories are failing.

The deeper public concern is one of fairness.

A view that David Cameron’s Britain does not reward the majority who work hard and save but instead serves the ‘wrong people’ – the rich and the powerful.

That view was already around in 2010 – and directed at all political parties.

But the view that this Tory-led government is standing up for the wrong people has become deeply entrenched.

As the latest Ashcroft polls have shown – just 21 per cent of people think the Conservative party stands for fairness.

Because on energy bills, zero-hours contracts and excessive bank bonuses, the Tories aren’t representing the views of the majority, the hard-working people of Britain.

How often have you heard these words on the doorstep:

– I’m worse off;

– The Government is doing nothing about it;

– They stand up for the rich and powerful, but they don’t seem to care about people like me.

And by cutting the top rate of income tax for people earning over £150,000 and choosing to introduce the unfair and perverse bedroom tax, David Cameron and George Osborne have shown us just how out of touch they really are.

NO TIME FOR COMPLACENCY

On the cost of living and the condition of Britain, under Ed Miliband’s leadership, Labour is winning the argument.

Today, twice as many people think that Labour wants to help ordinary people get on in life as the Tories.

More than half of voters think that Labour is the party which will best tackle the cost of living crisis and improve living standards for people like them

But this is no time for complacency.

Because David Cameron’s failure to win public trust also reflects a deeper mistrust of politics more widely.

When the question is “Can politicians make things better?” the danger is, for too many people, the answer is ‘no’.

And Lord Ashcroft’s recent polling report on the state of Tory support in marginal Tory seats makes clear that the rise of the UK Independence Party is a direct reaction to the failure of the Tory party to deliver change, combined with a general anti-politics mood. Anti-politics, anti-business, anti-European too.

LABOUR – THE ECONOMIC CHALLENGE OF CHANGE

So we cannot assume that Tory failure will simply translate into Labour success.

Our task is to show to a sceptical electorate that Labour has learnt from its mistakes and that we have the values, the ideas and the credibility to deliver the change Britain needs.

And to do so, in my view, we have to stand back and reappraise what has been happening in our economy over the last forty years.

Over the course of my lifetime, the global economy has fundamentally changed – and changed for the better.

As communism collapsed and countries gradually liberalised their economies, rapid reductions in poverty and increases in living standards have taken place in China, across Asia, in South America and Eastern Europe with growth now increasingly taking off in Africa.

Meanwhile, rapid changes in information and communications technology have transformed the way we live our lives and brought the world closer together. It is staggering to think that there is more computing power in my Blackberry than in the Apollo rocket that landed on the moon in 1969.

And as this pace has accelerated, global trade has increased as never before with new market opportunities opening up not just for us but also for rapidly growing middle income countries from Brazil to Indonesia.

But these changes have created big challenges too.

Trade and technology have combined to place a premium on higher levels of skills and qualifications, and reduced routine jobs which can be more easily done by robots or workers in poorer countries.

Changes in the structure of labour markets – often caused by the strains of global competition and including the fall in trade union membership – have also had a knock on effect on wages.

And as a result, labour markets are polarising with jobs growth happening primarily at the bottom and top of the income distribution.

Good jobs in the middle of the distribution have been far harder to come by. And in recent years, except at the very top, wages have stagnated. While, as resources like food, fuel and water have become scarcer, rising prices have put pressure on the cost of living.

These powerful trends were under way well before the global financial crisis. And while that crisis, and the failure of bank regulation which drove it, was not inevitable, there is a remorseless logic which connects the structural revolution of globalisation with the financial crisis that followed.

Global imbalances built up as cash-rich countries benefiting from export-led growth, like China, supported rising trade deficits and consumer debt in many developed countries. The financial services sector aided and abetted this process by misallocating capital and underestimating risks.

And when the global financial crisis caused huge collapses in economic output, those with bigger banking sectors, like Britain, were hardest hit.

So our generation now faces a twin task.

Dealing with the aftermath of the financial crisis.

And resolving the underlying tensions of globalisation and technological change which have not gone away.

For Britain, with the Eurozone in crisis, businesses very cautious and our banks still fragile, this was always going to be a long and hard adjustment.

Like many economists, I argued strongly that George Osborne’s decision to accelerate premature tax rises and spending cuts would hit confidence, choke off our economic recovery and make it harder to get the balanced and investment-led recovery we need and to get the deficit down. So it has proved.

And with the global financial system still very vulnerable, the Eurozone moving from crisis to stagnation, and the Chinese economy slowing down, the world economy is certainly not yet out of the woods.

Here in Britain we have had the slowest recovery for 100 years but recently we have seen a long overdue return to growth

After three damaging years of flatlining, any growth is welcome.

But as we debate how to secure a stronger investment-led recovery, our task is also to look beyond the immediate challenge of economic and fiscal adjustment.

We have to ask a bigger question –– how do we create a stronger and fairer economic model for the future where the many benefit from rising prosperity and not just the few?

Some on the right argue for a return to free-market, trickle-down economics – cutting taxes at the top, stripping out regulation and making deep cuts to public services.

Others say if the problem is that rapid globalisation and technological change have undermined the pay and prospects of working people, then the simplest thing to do is to turn our back on those economic forces.

To put up trade barriers.

Or to leave the European Union.

I know, as an MP who had, until recently, the largest BNP membership of any constituency in the country, how some on the extremes of left and right see the solution to be isolationism, turning inwards, setting their face against the rest of the world and the global economy.

And it would be a mistake to believe that the frustration with the status quo in Brussels is confined to UKIP voters, any more than is scepticism about our open trading relationships with the rest of the world.

But I say that both these arguments are the road to economic ruin.

In my view, Britain has always succeeded – and can only succeed in the future – as an open and internationalist and outward-facing trading nation, with enterprise, risk and innovation valued and rewarded.

Backing entrepreneurs and wealth creation, generating the profits to finance investment and winning the confidence of investors from round the world.

But we cannot succeed the Tory way through a race to the bottom – with British companies simply trying to compete on cost as people see their job security eroded and living standards decline.

We can only succeed through a race to the top – investing in the skills of all as we make our economy more dynamic and competitive, and earn our way to higher living standards for everyone.

That is why Labour is today the party of radical economic change

I know some in the business community believe that Labour’s focus on living standards, fairness, transparency and competition is anti-business.

But we will only win support for an open and dynamic market economy if we show that it can work for all, and not just some.

Without an active industrial policy to manage these powerful forces of globalisation and technological change, inequalities will continue to widen and, for many, precarious low skilled work will increasingly become the norm.

At a time when politicians and business leaders often seem to compete with each other for bad headlines, none of us can afford to bury our heads in the sand and ignore the concerns of the majority of people across our country that our economy is not currently working for them and their families.

That is why it is so vital that Labour shows we can succeed where the Tories have failed, working with business to shape the economic policies that can change Britain and earn our way to rising living standards for all.

And that is the agenda that Ed Milliband, my Shadow Cabinet colleagues and I have been setting out in recent weeks – not anti-business, but anti-business as usual.

To support good jobs and higher skills for all, we will:

– Expand free childcare for working parents to 25 hours a week to help make work pay.

– Introduce a compulsory job for the long-term unemployed and every young person under the age of 25 out of work for more than a year – paid for by repeating the successful tax on bank bonuses and restricting pensions tax relief for the very highest earners – a job they would have to take up or lose benefits.

– Introduce a new ‘gold standard’ vocational qualification and, as Rachel Reeves set out this week, require compulsory basic skills tests for anyone claiming Jobseekers Allowance.

– Increase support for high-end apprenticeships, including in companies seeking to bring in more skilled migrants.

– And combine tougher immigration controls and fair labour market rules which can get the benefits of migration while commanding public trust.

To ensure markets work in the public interest and for the long-term, we will:

– Legislate for more competition and tougher regulation in energy and banking to make sure these markets serve the public interest.

– Support new rules on takeovers and executive pay, following the Kay and Cox Reviews, so that corporations focus on long-term value rather than short-term returns.

– And Chuka Umunna, Lord Adonis and I will also explore reforms to ensure workers benefit from increased productivity through greater profit-sharing and employee share ownership, not the Tory plan to trade away rights for shares, but looking at the case for a new national, tax-advantaged profit-sharing scheme.

To deliver an investment-led recovery, we will:

– Set up a British Investment Bank to support small business, as we cut and then freeze their business rates.

– Back a new 2030 low carbon target to stimulate long-term investment in renewable, nuclear and clean gas and coal.

– Invest in science and R&D, with strengthened collaboration between universities and businesses, to support innovation and nurture new ideas and new companies.

– And commit to building 200,000 new homes a year by 2020, with reforms to our planning system and a new long-term Infrastructure Commission as proposed bygf Sir John Armitt.

And to ensure this long-term prosperity is shared around Britain, we will devolve economic power to innovative cities and regions and investment in our high technology and manufacturing supply chains.

These are the clear and detailed and deliverable policies we need to change Britain and persuade a sceptical public.

Radical – but not utopian.

Visionary – but evidence-based.

Egalitarian – but honest and realistic.

You could even call it a Fabian approach to managing economic change.

LABOUR – THE FISCAL CHALLENGE OF CHANGE

But there is a further challenge we face in winning public trust to deliver change.

After three years of economic stagnation and with the sustainability of the recovery still uncertain, we stand to inherit a very difficult fiscal situation in 2015.

As Ed Miliband said last week, deficit reduction alone does not make for a successful economic policy.

But both of us know it is a necessary and important part of it.

With the deficit we inherit currently set to be nearly £80 billion and the national debt still rising, it will be up to the next Labour government to finish the job.

This means that delivering change – on living standards, on skills and innovation and on jobs for young people, while safeguarding our NHS and vital public services – will be more difficult than at any time in living memory.

Certainly more difficult than at any time since the post-war Labour government of 1945.

So let me be clear.

We are determined to deliver the change we need to make our economy work over the long-term and to build a fairer society that rewards hard work and protects the vulnerable.

But we must make sure the sums add up.

We cannot and will not duck the hard choices ahead.

Without fiscal discipline and a credible commitment to eliminate the deficit, we cannot achieve the stability we need.

But without action to deliver investment-led growth and fairer choices about how to get the national debt down while protecting vital public services, then fiscal discipline cannot be delivered by a Labour government – or, in my view, by any government

It is these three objectives – fiscal discipline, growth and fairness – which will guide our approach.

Let me take them in turn.

Fiscal Discipline

First, fiscal discipline.

Last year, I set out how we will deal with the very difficult fiscal situation we will inherit in 2015.

We won’t be able to reverse all the spending cuts and tax rises that the Tories have pushed through.

We will have to govern with less money, which means the next Labour government will have to make cuts too.

No responsible Opposition can make detailed commitments and difficult judgments about what will happen in two or three years time without knowing the state of the economy and public finances that we will inherit.

But we know we will face difficult choices.

The government’s day-to-day spending totals for 2015/16 will be our starting point.

There will be no more borrowing for day-to-day spending.

Any changes to the current spending plans for that year will be fully-funded and set out in advance in our manifesto.

And we will insist that all the proceeds from the sale of our stakes in Lloyds and RBS are used to repay the national debt.

Alongside these commitments, Chris Leslie, the Shadow Chief Secretary to the Treasury, has already begun our zero-based review of public spending.

By examining every pound spent by government from the bottom up, we will root out waste and inefficiency.

And we will look at new ways of delivering public services suited to tougher times – while ensuring that they continue to make a huge contribution to the strength of our economy and the fairness and stability of our society.

Even those departments or areas of government spending which we chose to ring-fence will still be subject to this review because it is vital that we get maximum value for money for every pound spent.

So we have already gone further than any Opposition has at this stage in setting out a clear and disciplined approach.

But I want to go further still.

So I am today announcing a binding fiscal commitment.

The next Labour government will balance the books and deliver a surplus on the current budget and falling national debt in the next Parliament.

So my message to my party and the country is this:

Where this government has failed, we will finish the job.

We will abolish the discredited idea of rolling five year targets and legislate for our tough fiscal rules within 12 months of the general election.

Tough fiscal rules which will be independently audited by the Office for Budget Responsibility.

We will get the current budget into surplus as soon as possible in the next Parliament.

How fast we can go will depend on the state of the economy and the public finances we inherit.

And because we will need an iron commitment to fiscal discipline, I have also asked the Office for Budget Responsibility to independently audit the costing of every individual spending and tax measure in Labour’s manifesto.

I urge the Chancellor to work with us to make this happen ahead of the next general election.

This would be the first time this kind of independent audit has ever happened – and I believe it is essential to restore public trust in politics and improve the nature of the political debate.

Growth

Second, alongside fiscal discipline, the reforms I set out earlier to get people back young people back to work and earn our way to long-term economic growth and prosperity are also vital to deficit reduction.

We can only reduce the fiscal deficit if our recovery is balanced, long-term and doesn’t sow the seeds of problems ahead.

The challenge is to deliver stronger, investment-led growth which helps reduce the deficit in a sustainable way.

And with business investment still weak, housing demand once again outstripping housing supply and the IMF forecasting that UK growth will slow down again next year, it’s clear that this is not yet a recovery that is built to last.

On housing, we support Help to Buy.

But we have called on the government to allow the Bank of England to urgently review how the scheme is working and to target its impact.

As we have said before, it cannot make sense for taxpayers to guarantee mortgages on homes worth as much £600,000.

And we have consistently warned, as have the CBI and the IMF, that action to support housing demand must be matched by action to increase housing supply.

But none of these things have happened.

So I say George Osborne must listen to the CBI and the IMF and act in the Budget to bring forward housing investment.

We need Help to Build, not just Help to Buy.

This would help people aspiring to own their own home, create thousands of jobs and apprenticeships and ensure we have a recovery that is built to last.

And it is why housing investment will be a central priority for the next Labour government.

Of course, there is a careful fiscal judgement to be made.

I have said that there will be no more borrowing for day to day spending in 2015-16.

But consistent with our tough fiscal rules, we will assess the case for extra capital spending to boost growth and jobs and make our economy stronger for the long-term.

Because the longer it takes to deliver the long-term policies that will transform our economy and earn our way to higher living standards, the harder it will be and the longer it will take to get the deficit down.

Fairness

Third, Labour will combine iron discipline on spending control and action on growth with a fairer approach to deficit reduction.

That means facing up to the tough choices that are necessary if we are to take a fairer approach to deficit reduction.

As I said at this Conference two years ago, fair pay restraint in the public sector in this parliament would have been necessary whoever was in government.

And at a time when the public services that pensioners rely on are under such pressure, the next Labour government will not continue paying the winter fuel allowance to the richest five per cent of pensioners.

We won’t be able to reverse the Government’s cuts to child benefit for the highest earners.

We will keep the benefits cap, but make sure it properly reflects local housing costs.

We will cap structural social security spending.

And yes, over the long-term, as our population ages, there will need to be increases in the retirement age too.

And we will make changes to create a fairer tax system.

So we will crack down on tax avoidance, scrap the shares for rights scheme and reverse the tax cut for hedge funds.

We want a lower 10p starting rate of tax, which would help make work pay and cut taxes for 24 million people on middle and lower incomes.

And today I want to go further, to ensure that those with the broadest shoulders bear a fairer share of the burden.

The latest figures show that those earning over £150,000 paid almost £10 billion more in tax in the three years when the 50p top rate of tax was in place than when the government conducted its assessment of the tax back in 2012.

And when the deficit is still high, when tough times are now set to last well into the next parliament, when for ordinary families their real incomes are falling and taxes have risen it cannot be right for David Cameron and George Osborne to have chosen to give the richest people in the country a huge tax cut.

That’s why, for the next parliament, the next Labour government will reverse this government’s top rate tax cut so we can finish the job of getting the deficit down and do it fairly.

For the next Parliament, we will restore the 50p top rate of tax for those earning over £150,000.

Reversing this unfair tax cut for the richest one per cent of people in the country.

And cutting the deficit in a fairer way.

CONCLUSION – CHANGED LABOUR CHANGING BRITAIN

So, can Labour change Britain?

My answer is a resounding Yes.

By setting tough and credible fiscal rules.

By supporting the long-term growth that will earn our way to higher living standards and help reduce the deficit.

By rooting out waste in public spending.

By making fairer choices on tax and benefit reform.

By pursuing radical reforms to tackle the cost of living crisis and build an economy that works for working people.

Yes, under Ed Miliband’s leadership, Labour can change Britain.

And less than four years after our general election defeat, we are also showing that Labour has changed

Working with business to make our economy more dynamic – but challenging business to support difficult reforms which promote competition and long-term value.

Recognising the role that trade unions play in our economy – but challenging them to change as we reform our party for a new century.

Supporting the most vulnerable and abolishing the bedroom tax – but proposing tough reforms to put work first.

Pro-European – but not ducking the big reforms we need.

Open to the outside world – but refusing to accept a race to the bottom where low-skilled, low-paid work becomes the norm.

Celebrating wealth creation and entrepreneurs – but clear that the richest must bear their fair share of the burden.

Yes, Labour has changed.

So let us now win the trust of the British people.

And together let us deliver the change Britain needs.

Thank you.

Ed Balls – 2013 Speech to Labour Party Conference

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Below is the text of the speech made by Ed Balls, the Shadow Chancellor, to the 2013 Labour Party conference in Brighton.

 

Conference, we meet here in Brighton.

With the General Election now just nineteen months away

Determined to defeat this out of touch Tory-led Government.

Knowing that we have more work to do to win back the trust of the British people.

And fully aware that no party since the 1920s has gone from losing office to a working majority at the next general election.

So Conference, this is our task.

To show we are ready for the great challenges we will face on spending control and the deficit.

To set out Labour’s alternative plan to create jobs, make work pay and tackle the rising cost of living.

And to secure a mandate to build a One Nation Britain:

A strong recovery that is built to last.

An economy that works for the many and not just a few at the top.

Conference, not just for the few, but for all working families in every part of Britain.

And Conference, three and a half years after the General Election defeat, we have learned from that experience and our time in government. And where we got things wrong – on immigration control, bank regulation and the 10p tax rate – the next Labour government will be different from the last.

And where change is needed in our party, we will reconnect with our members and working people across the country.

But Conference, let us also be proud of what the last Labour government achieved.

The national minimum wage.

Our schools and hospitals rebuilt.

NHS waiting times down from 18 months to 18 weeks.

More apprenticeships.

Bank of England independence.

Not joining the Euro.

1 million more small businesses.

Crime down.

Child poverty down.

And 3,500 Sure Start children’s centres – one of the most important reforms any Labour government has ever delivered.

And Conference, replacing the Tory abomination that was Section 28 with civil partnerships.

Paving the way for a landmark reform, something which would not have happened without Labour votes in Parliament, the progressive triumph of gay marriage.

And Conference, as we look forward to the General Election to come, determined to win a Labour majority, I want you all to know:

As the Labour and Co-operative MP for Morley & Outwood – majority just one thousand, one hundred and one – the seat David Cameron needed to win to get a Tory majority in 2010 and, because of our hard work and determination, the seat he failed to win… Conference, I am up for the battle to come.

And as Chair of our Economic Policy Commission, I know this whole party is up for the battle to come. And Conference, please join me in thanking my co-Chair, Margaret Beckett, for her continuing hard work and service to this party not just over the past year but over four decades in Parliament.

And Conference, as a proud member of the Unite and Unison trade unions, I know this whole movement is up for the battle to come.

So in the coming months let us lay the foundations for the General Election.

Selecting the best Parliamentary Candidates we have ever had, with more women candidates in key seats than ever before.

Winning council seats and by-elections up and down the country with the toughest and best generation of local government leaders we have ever had.

Winning more seats in the European elections. And let us end the stain on our country’s reputation by kicking the BNP out of the European Parliament.

And Conference, in next September’s Scottish referendum.

With Alistair Darling, Johann Lamont and Margaret Curran now showing so powerfully that the arguments for separation are falling apart.

With Alex Salmond in a state of total confusion on the single most important economic decision a country can take – which currency to have: first he wanted the Euro – saying sterling was a “millstone around our neck” and now he wants independence but to keep the pound all the same.

Let us win the argument that we are Better Together in next year’s Scottish referendum.

Demonstrating, as Carwyn Jones and Welsh Labour have done so brilliantly, that it is our Labour values of co-operation, solidarity and social justice that best secure our union.

And Conference, it is Labour whose leader is facing up to the need for reform in our party and in our country.

Leading from the front – on phone-hacking, banking reform, putting the crisis of the ‘squeezed middle’ on the political agenda before anyone else.

And who on Syria had the courage to stand up and say that if the case was sound and the United Nations was properly engaged, Labour would support military action, but that Labour would not support a gung-ho Prime Minister, putting decision before evidence in a reckless dash to conflict.

Conference, Ed was right – and he prevailed. My friend, our leader, Britain’s next Prime Minister, Ed Miliband.

And Conference, when David Cameron and William Hague now have the nerve to go round saying that Parliament’s refusal to be bounced into military action in Syria has ‘diminished’ Britain, let us reply: no Labour government will ever stand aside when terrible atrocities are committed and international law is broken.

But Conference, we know what has diminished Britain.

Flouncing out of a European summit, leaving Britain isolated and without influence. That’s what has diminished Britain.

Absurdly comparing Britain to Greece and choking off business confidence and our recovery as a result. That’s what has diminished Britain.

Stigmatising the unemployed and the low paid and calling them shirkers, driving vans round out streets telling immigrants to ‘go home’, attacking our police and teachers and social workers, peddling the lie that ‘Britain is broken’. That’s what has diminished Britain.

Conference, we know who diminishes Britain.

David Cameron has diminished Britain.

Conference, we all remember what David Cameron and George Osborne said three years ago on the economy.

They claimed in 2010 that faster tax rises and deeper spending cuts would secure the economic recovery and make it stronger…

They said their plan would make people better off and get the deficit down.

And on every test they set themselves, this Prime Minister and Chancellor have failed.

They didn’t secure the recovery, they choked it off – as we warned – and flatlined our economy for three wasted and damaging years.

They claimed living standards would rise – but they’ve fallen year on year.

They made the number one test of their economic credibility keeping the triple A credit rating – but on their watch Britain has been downgraded, not once but twice.

They promised to balance the books in 2015 – but the deficit is now set to be over £90 billion.

And now after three wasted years, David Cameron and George Osborne now try to claim their plan has worked after all.

Worked? It may have worked for a privileged few at the top, but for the million young people trapped out of work, this Tory plan isn’t working.

For millions of ordinary families, worried about how to make ends meet when wages are falling, and prices are going up

For the young couples struggling to get on the housing ladder because the chronic shortage of homes is forcing up prices

For ordinary working families – the aspirational majority – who work hard, pay their taxes, who want to get on and not just get by, but who are working harder for less as the cost of living keeps on rising

This Tory plan isn’t working.

And for the 400,000 disabled adults forced to pay the Government’s perverse and deeply unfair bedroom tax, this Tory plan has failed them absolutely. And that is why in our first Budget the next Labour government will repeal the bedroom tax.

So when David Cameron and George Osborne say that everything that is happening in the economy is down to them.

Let us remind them:

– Prices rising faster than wages for 38 out of the 39 months since David Cameron entered Downing Street

– 3 years of flatlining

– The slowest recovery for over 100 years

– A million young people out of work

– Welfare spending soaring

– More borrowing to pay for their economic failure

That is their economic record. And we will not let them forget it.

I say to David Cameron and George Osborne: you can’t just air-brush away three wasted years, you can’t just air-brush away your economic failure.

And as for their claim that “we’re all in this together’, we don’t hear that line much anymore.

Conference, with the deficit still high and ordinary families struggling with a cost of living crisis, how can it be right or fair for David Cameron and George Osborne to have chosen this year to give the richest people in the country, earning over £150,000 a year, a £3 billion tax cut?

And isn’t it now clear whose side David Cameron and George Osborne are really on?

Cutting taxes for hedge funds.

Trying to bribe working people to give up their rights.

Country suppers at Chequers for Tory party fund-raising.

Protecting the privileges of the few, while the many work hard and don’t see the benefit.

For all their claims to be modernisers, with Cameron and Osborne, it’s not been “Who Wants to Be a Millionaire?” it’s “Who Wants to Help a Millionaire?”

Not “phone a friend”, but “cut taxes for your friends.”

Not “50-50” but “winner takes all”.

Conference, isn’t it about time they “asked the audience”?

Because we know the truth. The country knows the truth.

David Cameron and George Osborne.

For the few, not the many.

More of the same, from the same old Tories.

Conference, after three years of stagnation, it’s good news that our economy has finally started to grow again.

It was growing three years ago before they choked it off.

So don’t listen to the Tory propaganda that says Labour doesn’t want the economy to grow.

What nonsense. Because when the economy is in recession we know which communities lose out. When unemployment becomes entrenched, we know which constituencies suffer most. When the cost of living is rising, we know which families are hardest hit.

We know that three years of flat lining – far longer than any of us expected – have caused long-term damage: businesses bankrupt, investment and capacity lost, long-term unemployment entrenched.

And now even as growth finally returns, with prices still rising faster than wages, with business investment still weak, with unemployment still rising in half the country, with bank lending to business still falling, we can’t be satisfied.

For millions of families this is no recovery at all.

And when around the world emerging markets are jittery, China is slowing, oil prices are rising and the Eurozone is still stuck with chronic low growth, I say this is no time for complacency, to sit back with fingers crossed.

And that is why we have urged George Osborne to act to secure a strong recovery.

Because what Britain needs is strong enough growth so that we can catch up the ground we have lost and so that everyone can feel the benefit.

Not a recovery that only works for some, not early hikes in interest and mortgage rates as a weak British economy hits the inflationary buffers, but a recovery that works for all and is built to last.

That is why, along with voices from the Bank of England and the IMF, we are right to be concerned that the Government is boosting housing demand – with a taxpayer mortgage guarantee on houses of up to £600,000 – while doing nothing about the supply of housing which has fallen to its lowest level since the 1920s.

George, it’s basic economics. If you push up housing demand, but don’t act to boost housing supply, all that happens is that you push house prices up and up. And the end result is that the very people your policy should be helping – young first time buyers – will find it even harder to get on the housing ladder.

And Conference, I have to ask, when we need to secure stronger growth and invest for the future, how can it make sense for George Osborne to be planning to cut infrastructure investment in 2015?

That is why we have consistently said, it is why the IMF have said, bring forward £10 billion of infrastructure investment right now, build 400,000 affordable houses over the next two years, create half a million jobs and thousands of apprenticeships. That is the way to secure an economy that works for all and is built to last.

But Conference, we can’t rely on George Osborne to do the right thing.

And we stand to inherit a very difficult situation.

After three wasted years of lost growth, far from balancing the books, in 2015 there is now set to be a deficit of over £90 billion.

David Cameron and George Osborne’s failure on the economy has led to their failure to get the deficit down, and it will be up to the next Labour government to finish the job.

And I need to be straight with this Conference and the country about what that means.

The government’s day to day spending totals for 2015/16 will have to be our starting point. Any changes to the current spending plans for that year will be fully funded and set out in advance in our manifesto. There will be no more borrowing for day to day spending. And we will set out tough fiscal rules – to balance the current budget and get the national debt on a downward path.

Of course Labour will always make different choices.

We will combine iron discipline on spending control with a fairer approach to deficit reduction.

And with our zero-based review – a review of every pound spent by government from the bottom up – Rachel Reeves and my Shadow Cabinet colleagues have begun the work of identifying savings so that we can switch resources to Labour’s priorities.

But we won’t be able to reverse all the spending cuts and tax rises the Tories have pushed through.

And we will have to govern with less money around. The next Labour government will have to make cuts too. Because while jobs and growth are vital to getting the deficit down – something this government has never understood – they cannot magic the whole deficit away at a stroke.

So delivering our Labour goals will be harder than at any time in living memory.

But it can be done – if we get people back to work and strengthen our economy, cut out waste and focus relentlessly on our priorities, and make sure difficult choices are not ducked, but are rooted in our values, in fairness and in common sense.

So Conference, at a time when the public services that pensioners rely on are under such pressure, we cannot continue paying the winter fuel allowance to the richest five per cent of pensioners.

We won’t be able to reverse the Government’s cuts to child benefit for the highest earners.

We will keep the benefits cap, but make sure it properly reflects local housing costs.

We will have a cap on structural social security spending.

And yes, over the long-term, as our population ages, there will need to be increases in the retirement age.

But a fairer approach to deficit reduction means we will also crack down on tax avoidance, scrap the shares for rights scheme and reverse the tax cut for hedge funds.

And we will insist that all the proceeds from the sale of our stakes in Lloyds and RBS are used not for a one-off pre-election tax giveaway – but instead every penny of profit used to repay the national debt.

Conference, fiscal responsibility in the national interest.

And with our zero-based review, we will make different choices.

So we will ask: can we improve care and save money, as Andy Burnham has proposed, by pooling health and social care as a single service, with a single budget and joint management?

And Conference, we will repeal the damaging and costly Tory privatisation of the NHS.

And we will ask: does it really make sense to have separate costly management and bureaucracy for so many separate government departments, agencies, fire services and police forces?

And Conference, we won’t pay for new free schools in areas where there are excess school places, while parents in other areas are struggling to get their children into a local school,

And on infrastructure, we need more long-term investment – and we will assess the case for capital investment as we prepare our Manifesto – but we must also set the right priorities and get value for money.

Conference, we support investment in better transport links for the future. And we continue to back the idea of a new North-South rail link.

But under this government the High Speed 2 project has been totally mismanaged and the costs have shot up to £50 billion.

David Cameron and George Osborne have made clear they will go full steam ahead with this project – no matter how much the costs spiral up and up. They seem willing to put their own pride and vanity above best value for money for the taxpayer.

Labour will not take this irresponsible approach. So let me be clear, in tough times – when there is less money around and a big deficit to get down – there will be no blank cheque from me as a Labour Chancellor for this project or for any project.

Because the question is – not just whether a new High Speed line is a good idea or a bad idea, but whether it is the best way to spend £50 billion for the future of our country.

And Conference, in tough times it’s even more important that all our policies and commitments are properly costed and funded.

The British people rightly want to know that the sums add up.

So we will go one step further and ask the independent Office for Budget Responsibility – the watchdog set up by this government – to independently audit the costings of every individual spending and tax measure in Labour’s manifesto at the next election.

This is the first time a Shadow Chancellor – the first time any political party in Britain – has ever said it wants this kind of independent audit.

It’s a radical change from what’s gone before, but the right thing to do to help restore trust in politics.

Conference, you know we need economic responsibility and fiscal rigour.

And we can’t write all the details of our first Budget today – when we don’t know the state of the economy and public finances that we will inherit.

But after three wasted years of Tory failure, people are rightly now asking what will Labour do differently.

So now, with nineteen months to go to the election, this week is the right time to begin setting out Labour ‘s alternative.

Conference, as Liam Byrne has said, Labour won’t stand aside when there are almost one million young people out of work, and when long-term unemployment is so high.

And we know we can’t make our economy grow more strongly, get the costs of welfare down and deal with the deficit if we are squandering the talents of so many.

So building on the success of Labour’s Future Jobs Fund – so short-sightedly scrapped by this government – we will introduce a Compulsory Jobs Guarantee for young people and the long-term unemployed.

We will fund this by a repeat of the tax on bank bonuses and by restricting pension tax relief for the very highest earners to the same rate as the average taxpayer.

And we will work with employers to make sure there will be a paid job for all young people out of work for more than 12 months and adults out of work for two years or more, which people will have to take up or lose benefits.

That is welfare reform that works.

Matching rights with responsibilities.

Getting young people into work and ending the scourge of long-term unemployment once and for all.

Conference, when people get into work they should always be better off – it should always pay more to be in work than on benefits.

So we must do more to make work pay.

The national minimum wage is one of Labour’s proudest achievements.

It was opposed by the Tories every step of the way.

Even now some Conservatives say the minimum wage should be suspended.

And its value has fallen by 5 per cent in real terms since 2010.

So Labour must now fight to protect and strengthen the national minimum wage.

Increasing the fines for those who exploit workers.

Strengthening the national minimum wage, restoring its value and catching up the ground lost over the last three years.

And encouraging employers to go further and pay the Living Wage.

And Conference, to move Labour on from the past and put Labour where it should always be – on the side of working people – we will introduce a lower 10p starting rate of tax.

Conference, a tax cut for 25 million hard-working people on middle and lower incomes.

And we will pay for it by introducing a mansion tax on properties worth over £2m, introduced in a fair way, so that foreign investors who buy up property in London to make a profit will finally pay a proper tax contribution to our country.

But for many families high child care costs are a real problem and can mean that it doesn’t even add up to go to work.

Childcare is a vital part of our economic infrastructure that, alongside family support and flexible working, should give parents the choice to stay at home with their children when they are very small and to balance work and family as they grow older.

So to make work pay for families, we must act.

Stephen Twigg set out yesterday how we will guarantee childcare available for all primary school children from 8am to 6pm.

But we need to do more for families with nursery age children too.

Conference, after the financial crisis, it is right that the banks make a greater contribution.

And here is how we can.

In the last financial year, the banks paid a staggering £2.7bn less in overall tax than they did in 2010.

Over the last two years the government’s bank levy has raised £1.6 billion less than even they said it would.

At a time when resources are tight and families are under pressure that cannot be right.

So I can announce today, the next Labour government will increase the bank levy rate to raise an extra £800m a year.

And we will use the money, for families where all parents are in work, to increase free childcare places for 3 and 4 years olds from 15 hours to 25 hours a week.

For the first time, parents will be able to work part-time without having to worry about the cost of childcare.

Making work pay.

Tackling the cost of living crisis.

A radical transformation in the provision of childcare in our country.

And we need a radical transformation in our economy too.

Because in the twenty-first century, the companies and countries that will succeed will be those who can exploit the huge opportunities the new digital age and the era of big data are bringing – in high-value manufacturing, digital media, education and medical technology.

And the question is whether we will seize this opportunity or squander it?

Because we and British business know we have no future trying to undercut emerging market economies like India, China and Brazil on cost and wages.

And that is why so many companies look at this Government’s record on industrial policy with increasing dismay:

The RDAs abolished.

The Heseltine growth review neutered.

The Business Bank a damp squib.

Apprenticeships for young people falling.

Energy policy in chaos.

Borrowing powers for the Green Investment Bank postponed.

And on infrastructure, dither, delay and inaction.

Conference, we cannot succeed as a country with this ‘race to the bottom’, deregulation, laissez-faire and old-style ‘trickle-down economics’.

It’s a narrow and defeatist vision.

Doomed to fail.

And we have seen it fail before.

Just look at the British car industry in the 1970s and 1980s. Trying to compete on cost. Cutting back on innovation, quality and skills. Plagued by terrible industrial relations.

And now look at the renaissance of Jaguar Land Rover – creating thousands more jobs and exporting round the world.

Not by cutting corners, but based on world-class, long-term investment in innovation, skills and supply-chains.

Chuka Umunna and I are determined to learn from this success. And I can announce that Mike Wright, Executive Director at Jaguar Land Rover, will now lead a review for us on how we can help strengthen our manufacturing supply-chains and deliver the skills and innovation Britain needs to succeed.

Following Sir George Cox’s review on short-termism, we will change takeover rules, and corporate incentives and reform our tax system to stop short-term asset-stripping and support long-term investment.

And why not use any revenues from the planned increase in the licence fees for the mobile phone spectrum, expected to be over £1billion in the next parliament, to capitalise the British Investment Bank so that, region by region, we can get small and growing businesses the finance they need to grow and create jobs?

And Conference, we will set up an the independent Infrastructure Commission, as recommended to us by the Chair of the Olympic Delivery Authority, Sir John Armitt, to end dither and delay in infrastructure planning.

We will legislate for a statutory banking code of conduct and demand real reform and cultural change from the banks.

We will legislate for a decarbonisation target for 2030 and unlock billions of pounds in new investment in renewables, nuclear and clean gas and coal technology.

And we will give the Green Investment Bank the borrowing powers it needs to do its job.

Conference, that is what the next Labour government will do.

So Conference, even in difficult times, even as we face a huge deficit, we will rise to the challenge and build an economy that works for the many and not just a few at the top.

And we know it can be done.

Because we have done it before.

Conference, we are not the first Labour generation to face a huge deficit and the need for spending restraint and a country crying out for change.

We are not the first generation to be awed by the scale of what needs to be done to transform our country.

And as we prepare for the 2015 General Election, to be held in the seventieth anniversary year of the end of the second world war, let us take our inspiration from the great reforming Labour government of 1945.

That past Labour generation faced huge economic and fiscal challenges. But they did not flinch. And they built lasting change: new homes for returning heroes, a universal welfare state, and a National Health Service which, sixty-five years on, is still a beacon of British values, Labour values – for all and not just a privileged few.

So Conference let us not be the Labour generation that flinched in the face of hardship.

Let us show we will not duck the great challenges we will face on spending and the deficit.

And let us build an economy that works for all working families in every part of Britain.

So in the coming weeks and months, when people ask what would a Labour government do, let’s go out and tell them:

Jobs for young people guaranteed.

Expanding free childcare.

A British Investment Bank.

Infrastructure delivered.

Green investment unlocked.

The deficit down fairly.

Tax cuts for millions – not millionaires.

Reforming our banks.

The minimum wage raised.

Our NHS saved.

Tackling tax avoidance.

Rail fares capped.

The bedroom tax scrapped.

Building the homes we need.

This what a Labour government could do.

Let us together make it happen.

Thank you.

Ed Balls – 2013 Speech to National House-Building Council

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Below is the text of the speech made by Ed Balls to the National House-Building Council lunch in 2013.

 

Thank you Isabel and to the National House-Building Council for inviting me to speak to your prestigious and superbly attended annual lunch, now in its 77th year.

Over that time, this Council’s mission to ensure quality and high standards in house-building has been copied around the world.

Founded to ensure that high standards were sustained during the house building surge of the 1930s, you repeated that task as government and the house building industry came together to build homes for returning heroes after the second world war.

And my message today is that the work of this Council and a strong partnership between government and this industry will be essential over the next decade as we move into what I believe must a new era of house-building.

It will be difficult, but I believe we can forge a consensus across parties and across our country that Britain simply won’t be able to tackle the cost-of-living crisis that we currently face – or build the strong economy that we need to take us to a more prosperous future – unless we build more homes.

So as Shadow Chancellor, and with our new Shadow Housing Minister, Emma Reynolds, I am delighted to be here today to discuss with you why we believe housing must be at the centre of Britain’s economic policy.

Recovery

We meet here today with economic recovery finally getting going again after a long and damaging period of stagnation, and that return to growth is something to celebrate and nurture.

But with business investment still on hold, bank lending to SMEs still contracting, youth unemployment still very high, house completions still historically very low and living standards still falling for millions – meaning that for most people there is so far no recovery at all – this is no time for complacency.

Because there is no quick fix. We have to earn our way to rising prosperity. But we will not succeed unless we use the talents of all and ensure that everyone can benefit from economic recovery and not just a few.

That is why we believe it is so vital that government works closely with all businesses – large and small: to promote open markets, competition and long-term wealth creation; and to reform our economy so that, by using and investing in the talents of all, we can deliver rising living standards not just for a few but for everyone in every part of the country.

And building more homes will be central to that vision.

Of course, you might say that Labour did not move early enough to put house building at the centre of our economic policy when we were in power.

You’d be right to say so.

When we came into office in 1997, our priority was to tackle the huge backlog in housing repairs.

Improving the housing stock we had was important, but the housing studies that you contributed to, which were hugely influential when we made the decision rightly not to join the euro, also highlighted the vital importance of boosting housing supply.

Kate Barker’s subsequent review of housing supply, which we commissioned when I was at the Treasury in 2003, is rightly seen as a landmark document for the industry.

And when we did put in place the investment, planning reforms and leadership, we together accelerated the rate of house-building to its highest level since 1989.

Successive governments could – and should – have done more to build homes. The last Labour Government didn’t do enough at the beginning, but we did champion house-building – not just before the financial crisis but once it had begun too – because we recognised the importance of the long-term investment and jobs that it brings.

And as a result of the work we did together to launch the ‘zero carbon homes’ strategy, this industry has shown a commitment to innovation and design to cut carbon emissions that has surpassed many other sectors – despite the current Government’s less than enthusiastic commitment.

In recent years, your sector has been one of those worst hit by the recession, with 18,000 jobs lost in construction since the General Election. But after a long and protracted period of stagnation, in which in this industry capacity and skills have gone to waste and permanent damage has been done, the economic recovery does appear to be getting going.

And there are early signs that house-building is starting to see a modest recovery.

Today’s increase in home starts is welcome but the number of homes built over the past year is down eight per cent compared with the year before and the supply of affordable homes is at a near 10-year low.

And at a time when rising life expectancy means increasingly families now have four generations and not three, new homes are currently being built at less than half the level that our country needs and it is the youngest generation that is set to lose out.

Under this Government house building is at its lowest peacetime level since the 1920s. And by 2020, we are on course to have a shortfall of over 2 million homes.

In my community, the weakening of the ‘brownfield first’ presumption is undermining sustainable development in an area where viable brownfield sites are widely available.

And across the country, the combination of lower government financial support and planning changes have contributed to a falling share for affordable homes within overall housing starts, with affordable housing starts down over a quarter in the last year.

So there is also still a huge amount of ground to be made up, and damage to be undone, before we get close to returning to pre-downturn levels.

I believe that there are two central challenges for economic policy in the Autumn Statement and the coming months: how do we secure a strong balanced recovery which can deliver rising living standards for all and not just a few; and how do we ensure it is built to last and supports long-term investment.

Both of these challenges require us to put house-building centre stage.

That is what the Government must do.

It is what we will do.

Let me take each one in turn.

Who is benefiting from this recovery?

First, falling living standards mean that, on average, working people are now over £1,600 a year worse off than they were at the last General Election.

And there is a very important housing market dimension to the cost of living crisis.

Many people today can’t access mortgages because of the difficulty of saving up for a deposit.

In 1997, it took an average family just three years to save for a deposit on a home. Today, it takes an average of 22 years.

But the cost-of-living challenge is about much more than mortgage availability – it’s about mortgage affordability too.

Soaring house prices mean it’s simply too expensive for many people to get onto the housing ladder.

You just have to look at house prices relative to earnings. Today, the average house costs ten times the average wage, compared to 5 times the average wage twenty years ago. And the fact is that this house price-earnings gap is continuing to widen.

Much of the debate recently has been around Help to Buy. I will return to this in a moment.

But Shelter estimate that high house prices mean first-time buyers on average earnings can afford to use the scheme in just 16 per cent of the country.

Unless we build more affordable homes, house prices relative to earnings will remain high, houses will remain unaffordable, and many people will never realize their dream of owning their own home.

And high house prices and the shortage of affordable housing directly impacts on rent affordability too.

With more people now renting in the private sector than the social sector for the first time in decades, the cost of renting in the private rented sector has increased by twice as much as the rate of wages since the General Election.

And the high cost of the private rented sector is not only bad news for families; it also hits the public finances hard too.

As our previous Shadow Housing Minister, Jack Dromey, reminded me regularly, thirty years ago, around 80 per cent of public spending on housing was spent on building houses for people. Today, 95 per cent of total housing spending goes on housing benefit to subsidise high and unaffordable rents.

Any sensible and sustainable attempt to cap structural social security spending and get the housing benefit bill down simply has to involve expanding the supply of more housing.

Is this recovery built to last?

Building more homes is essential to tackling the cost-of-living crisis. But house-building must also be at the centre of an economic plan to build a strong and sustained and balanced recovery.

So far this year, the recovery has not been based on creating a significantly greater supply of new homes; instead, it has been built on generating greater demand when we already face a critical shortage.

We have and continue to support ‘Help to Buy’ as one element in a balanced housing plan to secure economic recovery. It is vital that we give those with some savings who want to buy a home access to the housing market.

The first phase, targeted at first time buyers in new build properties, was slow to get going but, alongside Funding for Lending, it has helped to unlock finance from a dysfunctional lending market.

But the Government’s second phase of Help to Buy, with taxpayer-guaranteed 95% mortgages available to purchased existing properties, has been widely criticized, including by the former Governor of the Bank of England, the Institute of Directors and the IMF who warned:

“in the absence of an adequate supply response, the result would ultimately be mostly house price increases that would work against the aim of boosting access to housing”.

Commentators are right to question why the Chancellor has decided that a policy, which should be about helping first time buyers, is available for homes worth all the way up £600,000 and why this policy will allow existing mortgage holders to re-mortgage their current property with a taxpayer-backed mortgages.

The Chancellor has said he will ask the Bank of England to review the details of the scheme in a year’s time.

We believe a year is too long to wait.

So I propose the details of the scheme should be reviewed now and then every six months thereafter, to make sure that is contributing to a balanced recovery that is built to last.

But the fundamental flaw in the Chancellor’s current plan is to rely on securing lasting recovery by boosting housing demand, while failing to take any action to boost housing supply.

If Help to Buy merely boosts demand for housing without being matched by action to increase housing supply, then house prices will rise and rise.

The danger with this kind of unbalanced approach is that home ownership will be pushed even further out of reach for the aspiring first time buyers that Help to Buy should be helping.

And at the same time, boosting demand without building more homes risks delivering an unbalanced recovery that will only make the economy more vulnerable in the future.

When what this industry and our country needs is long-term certainty about rising housing supply so that you can plan ahead with confidence.

Building more homes

That is why I believe the challenge for the Autumn Statement, and the next Labour Government, is to match support for first time buyers with action now to boost housing supply.

We have to be more ambitious.

That is why, a year ago, Shadow Communities Secretary Hilary Benn, Jack Dromey and I urged the Chancellor to use the revenues from the sale of the 4G mobile spectrum to build 100,000 new affordable homes over the next two years.

It is why we continue to support the IMF in urging the Government to bring forward £10 billion of infrastructure investment this year and next year.

And it is why at our conference in September, Ed Miliband set out our commitment to build at least 200,000 new homes a year by 2020 – through a roadmap to support the private sector in building more homes, including more affordable homes, and a planning system that helps, not hinders, house-building.

In setting out our ambition, we have asked Sir Michael Lyons to lead a new housing commission to advise us on what needs to be done to achieve our goal.

The Independent Lyons commission will look at:

– How we can get much more residential land to market;

– What flexibilities could be granted to local authorities to they can build more affordable homes;

– How we can ensure that communities that want to expand but do not have the land on which to grant planning permission can do so;

– Whether the current planning gain system is fit for purpose;

– And whether land made available for development is being land-banked in a damaging way and how this can be prevented.

We will certainly want to hear your views on all of these issues.

Because history shows us that developers, communities, local councils and national government all need to work together effectively to create homes people want to live in and towns that can become economically independent, are well connected to the regional economy, and generate local jobs.

What we need to achieve requires a scale of ambition not seen for many decades.

And I am not blind to the scale of the challenge and the difficulties that lie ahead.

Nor do I expect you to overlook the fact that I am not the first politician to come to an event like this and promise change.

But I have a very clear message.

A Labour Treasury will make house-building a priority and play its full part in delivering the scale of change we need.

And because of the scale of the deficit we can now expect to inherit in 2015, we will need to find innovative ways of supporting private sector investment to deliver that priority.

If we are to meet that target of at least 200,000 new homes a year by the end of the next parliament, while protecting communities, preserving valuable green belt land, avoiding haphazard urban sprawl and encouraging quality housing in sustainable communities , then every community will need to play its part and plan for the next generation.

But we are also clear that we cannot deliver this ambition unless we build new towns.

Our priority will be to create ways in which a local authority or groups of authorities are incentivised to come forward to identify locations capable of sustaining large scale sites for New Towns and Garden Cities.

With the Lyons Commission we will examine whether and how to give new town development corporations the right to:

– keep increased revenue from business rates as a revenue stream to finance investment – and to use the increased value of land to generate further capital for investment;

– acquire and assemble land;

– and plan and develop the infrastructure needed, bringing together the agencies and utilities who will need to participate in that process to deliver it.

We should draw on the lessons from the past of how the New Towns were developed after the Second World War by Development Corporations, which had the powers to acquire, own, manage and dispose of land and property; undertake building operation; provide public utilities; and do anything else necessary to develop the New Town.

But as we concluded when considering this issue in Government, these powers alone are not enough.

These Corporations generated revenue by selling land and housing, receiving rental income and receiving commercial income.

However, they needed up front funding to build the infrastructure and housing which could later be sold at a profit.

George Osborne has shown himself willing to use the Government’s balance sheet to guarantee some house building – but in particular demand through guaranteeing household mortgages.

And yet we read that the New Towns which you heard about a year ago have stalled.

The Government is providing guarantees of up to £12 billion for Help to Buy. He should now step up to the plate to back the supply of new houses in New Towns.

Providing guarantees to Development Corporations could be essential to provide backing for a large-scale growth programme to provide confidence, reduce risk and give credibility to the development.

We cannot afford to dither any longer – and I cannot see a stronger case for the full throated backing of the Chancellor than a step change in housing supply.

To do that we will need the full backing of the Labour Government, including the Treasury, for new towns – willing to devolve the powers, determined to provide the resources, and showing the leadership and vision that is sadly lacking in Government at the moment.

Infrastructure

And to make this work, working with communities, we also need to make sure we deliver the infrastructure that allows towns to become thriving communities.

For decades, successive governments have too often ducked and delayed the vital decisions we need to make on Britain’s long-term infrastructure.

We are determined to change that. And that was why we asked Sir John Armitt, Chair of the Olympic Delivery Authority, to look at how we can better identify, plan and deliver infrastructure for future generations.

We cannot simply wait until the next general election to implement his proposals in statute.

So I have today written to Sir John asking him to:

– Produce a draft white paper based on his report, which sets out in detail the policy, administrative and legislative steps necessary to establish and operate a National Infrastructure Commission;

– Explore the advisory input needed in order to deliver a successful Infrastructure Commission;

– And prepare draft legislation to establish the National Infrastructure Commission.

This landmark reform is vital. And we are determined to work with you – on infrastructure, as well as on skills, planning and housing finance – to build a recovery that is built to last and ensure that more people can own their home and share in rising prosperity.

Conclusion

Let me end by saying this.

We know that house-building can transform our country’s future prospects.

Because we have seen it before.

The next General Election will mark the seventieth anniversary of the end of the Second World War.

Back then, our country faced huge economic and fiscal challenges.

But the Government of the day, in partnership with this industry, succeed in achieving lasting change.

And at the heart of it was a bold and radical plan to build more homes.

As a result, London was reborn as the vibrant, thriving capital city that we know today.

And a series of successful, economically independent new towns emerged around it.

We need the same kind of ambition today to solve our housing crisis.

The only way to achieve the lasting change we need is by working with you to create greater supply of new houses.

So the next Labour government is committed to:

– building at least 200,000 new homes a year by 2020;

– maintaining high standards across the sector;

– reforming the planning system;

– and investing in the infrastructure and skills we will need.

This is the best way to help secure a strong, balanced recovery that everyone can benefit from and that is built to last.

And I look forward to continuing to work with you in the months and years to come.

Ed Balls – 2013 Speech at Thomson Reuters

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Below is the text of the speech made by Ed Balls, the Shadow Chancellor, to Thomson Reuters on 3rd June 2013.

 

INTRODUCTION

Three years into this coalition government, and three weeks before the Chancellor completes his much-trailed Spending Review for 2015/16, it makes sense now to set out Labour’s approach.

In my speech today, I want to make three central arguments.

First, that this Spending Review is a sign not of strength but of weakness. It is happening because the Chancellor’s economic policies have failed catastrophically – on living standards, economic growth and on deficit reduction too. It is this economic failure that is the background to this month’s Spending Review.

Second, the Prime Minister and the Chancellor are making a terrible mistake in ploughing on with their failing plan: increasing the price the British people will pay now and in the future for this failure. Action for growth this year, next year and the years after should instead be the purpose of any spending review this summer.

And third, the next Labour government must start planning now for what will be a very difficult inheritance. We can now expect to inherit an economy with families under real financial pressure, businesses that have lost vital opportunities to invest, and public finances in poor shape, despite deep cuts to vital public services. This bleak inheritance is now more likely because of the missed opportunity of this Spending Review.

My message to David Cameron, George Osborne and the Tory-led coalition is this:

Our country should not be forced to put up with two more years of your failing plan.

Your experiment with austerity economics has failed on living standards, jobs and growth and on deficit reduction too – and the British people are paying the price for this failure.

Your doctrine of so-called ‘expansionary fiscal contraction’ – that the faster you cut public spending, the greater the boost to private investment and growth – has been exposed as intellectually bankrupt. Even the IMF now says your plans are ‘a drag on growth’.

And your fixation on unbalanced, old-style ‘trickle-down economics’ – the belief that cutting taxes only for the highest earners will lead to more investment and growth, with wage rises trickling down for everyone else – has been equally discredited.

Because while the highest earners have got their tax cut, everyone else is seeing prices rising faster than wages – which are falling in real terms.

Where the Conservatives have failed, our task is to strike the right balance for the British economy:

– between living standards, growth and deficit reduction;

– about where the burden falls between the wealthy and everyone else;

– and between short-term priorities and the vital long-term investments we must make now to safeguard future generations.

But I have an equally tough message for my Labour colleagues.

The situation we will inherit will require a very different kind of Labour government to those which have gone before.

We can expect to inherit plans for further deep cuts to departmental budgets at a time when the deficit will still be very large and the national debt rising.

At the time of the 2010 Spending Review, the Office for Budget Responsibility forecast that the deficit would fall to £18bn in 2015-16.

It is now forecast to be £96bn – that’s £78bn higher, even with the further deep cuts in public spending which the Chancellor has programmed in for 2015-16.

And this means that, because this Government’s austerity economics has failed, we will have to govern in a very different way and in circumstances very different to what we have known for many years. We will inherit a substantial deficit. We will have to govern with much less money around. We will need to show an iron discipline.

Delivering our Labour goals – supporting families and communities, tackling disadvantage, spreading educational opportunity, safeguarding our NHS, investing for the future – will be more difficult than at any time in our living memory, certainly since the post-war Labour government of 1945. But it can be done.

And it will make our economic task – to raise living standards, increase growth and wealth creation by building a reformed One Nation economy where we use, and invest in, the talents and industry of all and not just some – even more vital.

Today is the right time to start the discussion about how we should prepare for the difficult decisions we will face in 2015 – our different priorities for Britain, the plans we must make, the strength of our resolve and the trust we must win.

A FAILED ECONOMIC PLAN 

First, this summer’s Spending Review is happening now because the Chancellor’s economic plan has failed.

Following the global financial crisis, any Government would have been cutting spending and raising taxes in this Parliament. Family budgets would be under pressure, and protecting jobs would have had to come before pay rises in the public sector.

The challenge was to strike the right balance between economic growth and deficit reduction, and to do so in a fair way so that middle and lower income families did not bear the whole burden and those on higher incomes pulled their weight.

But instead the Conservative-led coalition gambled on getting the pain over quickly – early tax rises, including the VAT rise they ruled out pre-election, alongside faster and deeper spending cuts – on a political timetable to create room for pre-election giveaways.

A further round of deep spending cuts after 2015 was certainly not part of the plan.

At the last Spending Review, George Osborne attacked those who urged a more balanced plan and a greater focus on supporting economic growth, saying this alternative course:

“envisaged the Chancellor of the Exchequer standing here in 2014 and presenting a spending review that still had years of cutting public spending ahead of it.”

Which is exactly what he is now preparing to do.

In Budget 2011, he said:

“We have had to undertake difficult measures. But we have already asked the British people for what is needed, and.. we do not need to ask for more.”

Now the Chancellor says he has no choice but to come back for more – more cuts in 2015/16.

And the reason is simple – the 2010 Budget and Spending Review, which were supposed to make things better, have in fact made things much worse – choking off the recovery, crushing living standards and flatlining the economy.

At a time when confidence was fragile, living standards falling, interest rates already at record lows, banks weak and inward-looking and when our main trading partner was in crisis…

… trying, at that very time, to have the fastest fiscal tightening in our post-war history – too far, too fast – was a reckless gamble.

And George Osborne’s austerity plan has not worked.

A fortnight ago the International Monetary Fund, which once backed the Chancellor’s plan, called for a change of course – proposing “near-term support for the economy” – an immediate £10 billion boost to infrastructure investment to support growth.

They changed their mind because they concluded that the impact of tax rises and spending cuts on economic growth – the fabled ‘fiscal multipliers’ – has turned out to be a much bigger drag on growth than they, the Government or the OBR originally thought.

At the time of the 2010 Spending Review, the Government forecast that it would have grown by a healthy 6 per cent by now.

Since 2010, we have seen growth of just 1.1 per cent in Britain – the slowest UK economic recovery for 100 years – compared to 2.9 per cent in Germany and 4.9 per cent in America.

The Government tries to blame global forces – Euro zone weakness, and the impact of higher oil and food prices worldwide. But higher world prices cannot explain why over the last three years the UK has had a higher inflation rate than every other G7 country. Or why we have had the slowest growth of any G20 country other than Italy and Japan and actually lost export market share.

As the Bank of England has pointed out, higher VAT, higher tuition fees and the sharp fall in the value of sterling since 2010 have driven up inflation and reduced the living standards of British families.

It was the decision to try to accelerate fiscal tightening in 2010 that has proved, in the words of Financial Times commentator Martin Wolf, to be ‘a spectacular own goal.’

An own goal because falling living standards, low growth and higher inflation – at a very high personal cost to communities and people – has also been toxic for the public finances and thrown deficit reduction wildly off course.

The Government is now planning to borrow £245bn more than it planned up to 2015.

And this has not happened because they have failed to cut departmental spending.

This rise in borrowing has been almost entirely caused by a drastic fall in tax receipts compared to the Government’s 2010 plans, even after all the tax rises introduced in their first Budget.

The impact of the failure to get growth could not be clearer.

Tax receipts over this parliament are now set to be £274 billion lower than forecast in 2010. And while a small portion of this fall reflects discretionary policy decisions, such as cuts in corporation tax rates, the vast bulk – 95% – are non-discretionary forecast revisions.

Which in the real world reflects squeezed families and companies that are earning less, making lower profits and paying less tax as a result of flatlining growth.

The Government likes to boast that it has reduced the deficit by a third.

But that reduction happened before their economic policies choked off the recovery.

Since then, the collapse in tax revenues means that deficit reduction in this Parliament has now stalled.

As the head of the OBR said in March:

“We expect the underlying deficit to be stable at around £120 billion last year, this year and next year…”

Which means that both of the Chancellor’s fiscal rules, as set in 2010, have been broken.

In 2010 he said his first fiscal rule required the structural deficit, adjusted for the economic cycle, and excluding investment spending, to be in balance by 2015-16.

The structural deficit is now forecast to be not a surplus of 0.9 per cent of GDP but a deficit of 1.2 per cent of GDP in 2015-16 – breaking that objective by a wide margin, even with the extra spending cuts that have now been programmed in for that year.

And the second fiscal rule – to get the national debt falling by 2015 – has also been broken.

The national debt is now set to be not 67.2 per cent in 2015-16 but 85.1 per cent of GDP, and it is now expected to rise until 2016-17 when it is forecast to peak at 85.6 per cent – a full £309 billion more debt than planned in 2010.

This is the real background to this summer’s Spending Review – living standards falling, growth flatlining, a deficit reduction plan wildly off track and a coalition forced to extend cuts to public services into the next parliament.

THE ECONOMIC IMPERATIVE 

Of course, what matters now is not the bad choices that the Government has made, but what their policies promise for the future.

Which is why the most worrying finding in the IMF report is that they believe the UK economy today is still ‘a long way from a strong and sustainable recovery’ and that ‘the risks are on the downside’.

We know that the coalition is determined to stick with George Osborne’s austerity economics. We now know what the consequences are likely to be – squeezed living standards, sluggish growth and, despite all the pain, the deficit still high.

But politics aside, there is no operational need for the Chancellor to set budgets now for 2015-16.

It makes no economic sense for this Spending Review to ignore what is happening now in our economy, and focus only on departmental spending in 2015-16 – the first ‘one year only’ spending review since the mid-1990s.

If he followed the pattern of 2010, he could wait until the autumn of 2014 before he sets them.

Which takes me to my second central argument: this summer’s review of spending and the economy should be about action now to boost living standards, growth and long-term investment – this year and for future years.

We need to shift now to a balanced plan – focusing on rising living standards and growth, maintaining a commitment to reduce deficits and spending, and making sure the burden is fairly shared.

Given the Government’s failure so far, there are going to be big and painful choices on spending in 2015-16 and beyond.

But those choices in the next Parliament will be hugely shaped by what happens in this.

After nearly three years of flatlining, the Chancellor says any growth is better than no growth at all.

Of course that’s true. But slow growth is nowhere near good enough.

It won’t make up the ground we have lost over the last few years as other countries have raced ahead.

Nor will it get long-term unemployment down, boost living standards, recoup lost business investment or generate the tax revenues we need to get the deficit down.

Our analysis shows that to get the economy back to where it was forecast to be in 2015-16, the government now needs growth of 5.3 per cent a year, 1.3 per cent a quarter, over the next two years.

But over that period the OBR currently expects average growth of just 1.7 per cent a year – 0.4 per cent a quarter – which means lower living standards, less tax, less investment and many billions less deficit reduction too.

I fear, too, that if the world economy were to take another turn for the worst over the next few years – a second demand shock following the global financial crisis – this time the UK will be in a very much weakened position to deal with the consequences because of the stagnation of the last three years.

The IMF said last month that the UK economy continuing to bump along the bottom “could permanently damage medium-term growth prospects” – compounding mistakes, not correcting them.

Because the longer it takes to get the recovery moving, investment flowing and long-term unemployment down, the greater the damage to the underlying strength of the economy.

If the fiscal multipliers are indeed higher, as the IMF now believes, then a balanced plan can do now to boost growth and job creation this year, next year and the year after will have a significantly larger impact on the public finances than the OBR estimates.

But unless something is done in this spending review to get our economy growing sustainably faster this year and next, and so deliver higher tax revenues and lower spending on unemployment, then the prospects for departmental spending and public services in the next parliament will be much tougher than necessary.

WHAT THE SPENDING REVIEW SHOULD DO NOW 

That is why any spending review this summer should take immediate action to get the economy growing, invest in our long-term future and reform social security.

Over the past two years, when the economy was totally stagnant, and when our economy has needed a quick and fast-acting shot in the arm, we have advocated a temporary VAT cut – alongside infrastructure spending, action on youth unemployment and targeted tax measures for business as part of our five point plan for growth.

Today, with growth prospects still very uncertain and interest rates too low to be of use, a temporary VAT cut now is still the right prescription before extra capital spending can come on stream – although any immediate tax cut which helps middle and lower income families is better than nothing.

But over the coming year if, as we all hope, some kind of recovery does take hold, then the balance of advantage will shift from temporary tax cuts to long-term capital investment.

So we support the IMF’s call, consistent with medium-term fiscal consolidation, for the Government to act to boost capital spending over the next two years – financed by a temporary rise in borrowing as Labour has also urged – to build our way to a stronger recovery.

With thousands of construction workers out of work and interest rates at record lows, there is a growing consensus that investing now in improving our infrastructure, particularly housing, would give an immediate boost to the economy, encourage more private sector investment, and give us a long-term return as we strengthen our economy for the future.

If the entire infrastructure boost recommended by the IMF was spent on housing over the next two years, we calculate that it would allow the building of around 400,000 affordable homes across the country, and support over 600,000 new jobs in construction, including 10,000 apprenticeships…

… supporting small businesses, helping people aspiring to buy their own home, reducing waiting lists, and easing upward pressure on rents and housing benefit bills.

So to the Treasury and the Chief Secretary I say this: there is no point in vague promises about more capital spending in 2017 or 2020. We need action now. To secure the recovery and get tax revenues coming in, we need that capital spending boost brought forward – and invested this year and next year.

The spending review also needs to end the current dither and delay on industrial policy and put in place long-term reforms to build a One Nation economy for the future.

On long-term infrastructure, not only has the government invested billions less than the plans they inherited, but major projects are beset by dithering and delay.

This is why we have called for the Davies Commission on aviation to report before the General Election; and why Ed Miliband and I have asked the chair of the Olympic Delivery Authority, Sir John Armitt, to examine how our country can have a process to take long term infrastructure decisions in a better way – across Parliaments and across the Parliamentary divide. Ministers should act on Armitt’s recommendations when he reports later this year.

On energy, chronic policy uncertainty and the absence of any agreed plan across government means, as Caroline Flint has highlighted, vital investments and the opportunity to create green jobs are being lost. The government should be legislating now in the Energy Bill for a decarbonisation target for 2030 in order to give a framework for those seeking to invest in renewable, nuclear, and clean gas and coal technology.

Labour, business and environmental groups are united on the urgency of acting now. But Ministers have shown an abdication of leadership by choosing to wait until 2016 before even making a decision. We will vote on Tuesday to make this happen – and, while the Conservative leadership has now set its face against action, I call on every Liberal Democrat who supports a low carbon future to join us and vote with us to make this change happen.

On banking reform, the same pattern of fudge and delay is now characterising the government’s approach where the Chancellor is rejecting the recommendations of the Parliamentary Commission he set up. We need a back-stop power to break up the big banks if we don’t see real reform and cultural change.

And, as Shadow Business Secretary Chuka Umunna has argued, a modern industrial policy also requires a proper British Investment Bank, support for vocational education and action on Sir George Cox’s recommendations on over-coming short-termism within British business.

A Spending Review this summer also needs to make a start on long-term social security reform which rewards work.

The fact is, for all the tough and divisive rhetoric, the benefits bill it is still rising, as Liam Byrne has exposed – revised up by over £20 billion since the 2010 spending review – the direct consequence of George Osborne’s austerity economics.

The Conservative approach to welfare has simply been to slash tax credits and benefits across the board – regardless of who they hit. Millions of working people, redundant nurses desperately looking for work, disabled people in homes that Ministers have decided contain a ‘spare room’ – all hit just at the time when prices are rising faster than wages and unemployment is rising.

Labour proposes serious policy action to tackle the underlying drivers of rising working-age benefits, with:

– A compulsory jobs guarantee – a paid job for every young person out of work for 12 months or more and over 25 unemployed for over two years – which they will be obliged to take or face losing benefits;

– A fair cap on household benefits – not one that costs more than it saves, and which takes account of housing costs in different parts of the country – with an independent body, like the Low Pay Commission, advising on whether the cap should be higher in high-cost housing areas like London, but potentially lower in other parts of the country;

– And housing benefit reform which tackles high rents and addresses the shortage of affordable housing.

These are issues which Ed Miliband will return to later this week.

LABOUR’S FISCAL RULES 

These are the actions a responsible spending review should take this summer.

Because action now on growth is the best way to mitigate the scale of the cuts the Government says it has to make to public services in 2015-16 and beyond.

But, as the Chancellor’s response to the IMF report shows, we cannot rely on the coalition government to see sense and act responsibly.

Which brings me to my third argument today.

Where this government’s failure on growth and jobs has led to their failure on the deficit, the next Labour government will rise to the challenge: action to strengthen the recovery and our economy for the long-term; alongside a tough deficit reduction plan.

But with the Chancellor refusing to change course, Labour must start planning now for what will be a very tough inheritance in 2015. It will require us to govern in a very different way with much less money around. We will need an iron discipline and a relentless focus on our priorities.

We cannot write our first Budget today – two years ahead when we do not know the state of the economy and public finances that we will inherit.

Instead, Labour will set out, in our general election manifesto, tough fiscal rules that the next Labour government will have to stick to – to get our country’s current budget back to balance and national debt on a downward path.

Tough rules, which will be independently monitored by the Office for Budget Responsibility.

A clear and balanced plan to support growth, alongside a clear timetable to get the deficit and the debt down – finishing the job where this Government has failed.

That is why we have said every penny of windfall from the sale of the government’s stakes in the banks must be used to repay the national debt – not for a politically timed pre-election giveaway at the expense of taxpayers and the economy.

But given how catastrophically off track the government’s plans have gone in the last three years, it would be irresponsible to set out those fiscal rules two years in advance, banking on things turning out in line with government forecasts. We will not make promises we cannot keep.

So today I am going to have to disappoint my opponents and my colleagues.

I am going to disappoint the Tories – we will not set out our plans for 2015-16 this year, however much you want us to, in order to divert political attention from your own abject economic failure.

We all know why the Chancellor is focussing now on spending cuts in 2015-16, when he does not know the economic circumstances he will face in two years time. Once again, he is trying to turn his economic failure into some kind of short-term political advantage.

No-one should be surprised. After all, this is the Chancellor who claimed for three years that he had to stick to his plan or the UK would be downgraded by the credit rating agencies; and then when he lost the UK’s AAA rating, said this meant he had no choice but to stick to his plan.

The same Chancellor who still tries to claim that a global financial and banking crisis, which began in the USA and echoed round the world, was somehow caused by or made worse by levels of public spending here in Britain – when as Shadow Chancellor, before the crash, he had pledged to match Labour’s spending plans.

And you can see the new political game – to set out deep cuts to policing, defence, local government, social care or early years funding or in support for children and the disabled – all for after the General Election – and challenge Labour to make a decision now to reject his plans two years ahead.

We will not play that game – when we do not know the economic circumstances two months ahead, let alone two years.

But that also means I am going to disappoint my Labour colleagues too.

Because for the same reason, we cannot plan now on the basis that our inheritance in 2015 will be better than currently forecast.

We cannot decide now to spend money that we do not know, and do not expect, will be there.

Even if the Government were to implement Labour’s growth plan now, given the failure of the last three years it would not avoid the need for cuts in departmental spending in the next Parliament.

It will take years to sort out George Osborne’s fiscal mess

And the longer the government carries on with these failing policies, the bigger the challenge will be for the next Labour government.

Jobs and growth are vital to getting the deficit down – but they cannot magic the whole deficit away at a stroke.

Nor can we rely on tackling tax avoidance to avoid difficult decisions.

We are determined to crack down on irresponsible tax practices. Our recent multinational tax reform document sets out the way ahead. We need international action, and Britain must take the lead and act if others will not. So we will continue to say more in this area.

But this is not some easy pot of gold. Tax avoidance has to be tackled billion by billion. Given the global complexity of this problem, the suggestion that any individual government can easily find billions more in unpaid tax simply through one Budget speech or a Finance Bill clause is not realistic.

So this is the hard reality.

The last Labour government was able to plan its 1997 manifesto on the basis of rising departmental spending in the first years after the election.

The next Labour government will have to plan on the basis of falling departmental spending.

Ed Miliband and I know that, and my shadow cabinet colleagues know that too.

So my message to the country is this:

My job is to make sure that we have a plan to grow the economy and get the deficit down.

With tough decisions and by investing in the future we can do this.

And set the country in a different direction from this government.

– not giving the banks a tax cut, but putting a tax on bankers bonuses to get young people back to work;

– not attacking those who cannot find work, but making sure the long-term jobless are given a guaranteed job which they will have to take up or face losing benefits;

– not giving tax cuts to the richest, but keeping the 50p tax rate now and supporting working families by not going ahead this year with real terms cut to tax credits;

– and not wasting money fragmenting the NHS, and other services, or on vanity schools projects, but focusing on the real needs in adult social care and primary school places – and bringing public services together to save money and improve services.

But my message to my shadow cabinet colleagues is this.

To serve the country and win its trust:

We must work together to find efficiency savings and switch resources to Labour’s priorities; but you cannot prepare now on any basis other than that you will inherit very tough spending plans from this year’s Spending review. They will be our starting point.

We know these plans for current spending in 2015-16 are likely to place a very significant burden on public services.

But because of the overall financial situation we inherit, and the need to look ruthlessly at every pound we spend, the relentless focus of my Shadow Cabinet colleagues must be on how to re-prioritise money within and between budgets for current spending, rather than coming to me with proposals for any additional spending.

Any changes to spending plans for 2015/16 must be fully funded, agreed with Ed Miliband and myself, and set out in advance in our manifesto.

As far as capital spending is concerned, it certainly does make economic sense now, as the IMF has urged, to bring forward capital spending to support growth and invest in our long-term infrastructure – creating jobs now, bringing long-term returns and taking advantage of very low interest rates.

And for the future, we need to invest in the homes, transport and infrastructure Britain needs and ensure a recovery made by the many. Of course, here too we will only set our plans for investing in Britain’s future in the light of the economic circumstances at the time, and the needs of economic growth, informed by the findings of the Armitt review into Britain’s long-term infrastructure needs.

So we will match an iron discipline on spending control with a fairer approach to deficit reduction.

Which will mean asking important questions for our manifesto:

– With primary school places in short supply in many parts of the country, and parents struggling to get their children into a local school, can it really be a priority to open more free schools in 2015 and 2016 in areas with excess secondary school places?

– When we are losing thousands of police officers and police staff, how have we ended up spending more on police commissioners than the old police authorities, with more elections currently timetabled for 2016?

– With family budgets under such pressure and living standards falling, surely it makes sense to introduce a mansion tax on properties worth over £2m to pay for a lower 10p starting rate of tax?

– And when our NHS and social care system is under such pressure, can it really remain a priority to pay the Winter Fuel Allowance – a vital support for middle and low income pensioners – to the richest 5% of pensioners, those with incomes high enough to pay the higher or top rates of tax?

We believe the winter fuel allowance provides vital support for pensioners on middle and low incomes to combat fuel poverty. That’s why we introduced it in the first place. At that time, and when the pattern of pensioner incomes was different to today, we paid pay it to all pensioners.

But in tough economic times we have to make difficult choices about priorities for public spending and what the right balance is between universal and targeted support. So at a time when the public services that pensioners and others rely on are under strain, it can no longer be a priority to continue paying the winter fuel allowance to the wealthiest pensioners.

THE ZERO-BASED SPENDING REVIEW 

These are issues which we will address now as we prepare for the zero-based spending review – a root and branch review of every pound the government spends from the bottom up – which Labour will complete in our first year in office.

We in the Labour Party value the huge contribution that public services – and public service – make to the strength of our economy and the fairness and stability of our society.

We celebrate the excellence of our teachers and school support staff, the service of our police officers and non-police staff; and the quality of care that our doctors, nurses and health workers deliver – and the efficiency that our publicly funded NHS delivers compared to private health care around the world.

But it is the duty of government to make difficult choices about priorities and to get maximum value for every pound of taxpayer money it spends.

As I have said before, the last Labour government did not spend every pound of public money well. No government, including this one, can honestly say that.

That is why Rachel Reeves, the Shadow Chief Secretary to the Treasury, has already set up a public sector efficiency advisory board, with Shadow Cabinet Office Minister Jon Trickett, to ensure we are ready for the challenges we will face in 2015, covering:

– making best use of information and communication technology;

– effective public sector procurement;

– collaboration and joined-up government, including shared services; use of consultants and temporary staff;

– and how we improve organisational incentives in the civil service.

All of this work will feed into our zero-based review.

Our preparations for this review will proceed in three phases:

First, over the next year, each Labour spending team will prepare a report on Public Service Reform and Re-Design setting out how we deliver better public services with less money, involving employees, charities, and the voluntary sector in our deliberations, as well as business and public providers. We will publish a summary of these reports next spring.

On that basis, the Labour Treasury team will work with spending teams to identify savings and switches for 2015-16 to reflect Labour’s priorities and report before our manifesto.

And these detailed departmental reports will then inform our full zero-based examination of every pound we spend – in every department, including in any department whose spending we choose to ring-fence in our manifesto, and in annually managed expenditure too – which will be completed within the first year of the Labour government.

The review will be guided by the following principles:

– how can we use public money more efficiently;

– how can we use departmental budgets to support growth and job creation;

– how can we ensure fairness and consumer choice in service delivery;

– and how can we ensure preventative spending – early years spending, support for troubled families, public and mental health services, scientific research into new cures and treatments – areas where spending now saves billions in the future – is given a high priority.

The great advantage of this zero-based review is that it can ask basic questions about all aspects of government and spending, big or small.

– Does it really make sense to have separate costly management and bureaucracy for so many separate government departments, agencies, fire services and police forces – the same number as when this Government came into office – all with separate leadership structures and separate specialist teams?

– Should industries pay a greater share of the costs of their regulators?

– Do we really need four separate government agencies delivering services to motorists?

– Should we be spending millions on a separate company to deliver High Speed 2 when we already have Network Rail, which after all is responsible for rail infrastructure?

– Has the Ministry of Justice properly made the case for a major new “Titan” prison, at a time when the prison population is falling?

– Do we need more admirals than ships and more officers in our forces than our international counterparts at a time when frontline armed forces are under pressure?

– Can we improve care and save money, as Andy Burnham has proposed, by thinking of health and social care as a single service, looking after the whole person, with a single budget and joint management?

– And on infrastructure, how should we set priorities within rail spending, and between rail investment, trunk roads, expanding airport capacity, delivering super-fast broadband across the whole country, modernising our energy infrastructure and improving our flood defences?

These are some of the questions our zero-based spending review will ask.

CONCLUSION 

In conclusion, let me say this.

These are challenging times.

How Labour responds will shape not just the politics of the general election but our economic future and the cohesion of our country over the next decade.

Because in opposition or in government, the tax and spending priorities a political party chooses to set out reveal much about its values, its resolve and steel, its understanding of how the economy works.

The British people know that George Osborne’s austerity economics has failed. They are worse off, growth has stalled, investment has fallen and the deficit is not coming down.

But the last thing they want to hear from any politician is ‘we told you so’.

What they want to know from Labour is that there is a better way.

That we will put in place the polices now and for the future that can produce the investment and growth that bring sustained increases in living standards.

And that Labour will take a tough and fair approach to deficit reduction.

This is what we mean by striking the right balance for the British economy:

– Action now to raise living standards, growth and long-term investment;

– Bringing down the deficit steadily, with an iron discipline on spending control;

– Making sure ordinary people do not carry the burden of meeting fiscal targets and ensuring those with the broadest shoulders bear their fair share.

Where this government’s failure on growth and jobs has led to their failure on living standards and on the deficit, the next Labour government will get things back on track to finish the job.

Ed Balls – 2012 Speech to TUC Conference

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Below is the text of the speech made by Ed Balls, the Shadow Chancellor of the Exchequer, to the TUC Conference on 11th September 2012.

 

Congress, it’s a great honour to speak to you today.

Thank you Paul for that introduction and for your leadership and support over recent years: fighting the BNP, campaigning for free school meals, standing up for jobs and a fair deal for working people across our country.

And in the days after the fabulous and frankly nation-changing Paralympic Games – a week in which the whole country saw first-hand not what disabled people cannot do, but the excellence they can achieve – contrast that to the thousands of disabled working people who have proved that with the right help they can work, but have now be en thrown on the scrapheap with no guarantee of a new job to go to.

So let me commend, too, the work the GMB has led to campaign against the betrayal of Remploy workers.

But Congress, what do you expect.

From a Government and a Prime Minister who think you:

– restore consumer confidence and tackle insecurity at work by allowing employers to hire and fire at will;

– end recession and kick-start the housing market simply by making it easier to get planning permission for a conservatory;

– and tackle gender discrimination by telling a 54 year old woman Cabinet minister she is too old to do the job, and then appointing a 56 year old man instead.

What a contrast to this Trade Union Congress – proudly set to anoint your first female General Secretary in 100 years.

Let us take this opportunity to congratulate your General-Secretary-Elect, Frances O’Grady.

Congress, I can think of no better person than Frances t o teach David Cameron that you don’t have to be ‘butch’ to be a strong and tough and principled leader.

And let me start by adding my congratulations and thanks to all the deserved winners of the gold awards that we have presented this morning.

Congress, we rightly celebrate the fabulous volunteers who made the Olympics such a success.

Let us also celebrate all the trade unions lay members who – day in, day out – voluntarily give their time and energy and commitment standing up for the rights of their members.

And on a personal note, I want to say – there is no one who has fought harder to defend members in tough times and make the case for a fairer, long-term future than the GMB’s President, our friend and colleague, Mary Turner.

Paul, no-one here needs me to tell them that these are tough times.

Britain is just one of two G20 countries in recession – the longest double-dip recession since the Second World War.

Living standards face the biggest squeeze since the 1920s with prices rising faster than wages.

Unemployment is high, with long-term youth unemployment rising month by month.

And the costs of this economic failure are rising with borrowing up by a quarter so far this year.

But Congress, it does not have to be this way.

There is an alternative.

And the Conservatives cannot say they were not warned.

Remember what your General Secretary, Brendan Barber, said to this conference here in Brighton two years ago.

Brendan highlighted the reckless gamble the Coalition Government was taking with our economy.

He warned that the Cameron-Osborne plan risked choking off recovery and making a difficult situation worse.

Brendan, you called it right. You and this Congress stood out against the consensus, not just on behalf of your members but on behalf of working people across the country.

And Brendan, may I say, once a gain you showed the courage and calm judgement and commitment to jobs and social justice which have characterised your tenure as TUC General Secretary over the past decade.

And I am proud to say that with Ed Miliband and my Shadow Cabinet colleagues we have stood side by side with you and argued and campaigned and marched to make the case for the economic alternative.

Just remember what the Tories promised two years ago:

That their faster tax rises and spending cuts plan would secure the recovery and make Britain a safe haven.

That their economic plan would deal with the national debt.

And that ‘we are all in this together.’

The recovery secured?

We’re in a double-dip recession and our economy has contracted by 0.6% since the Spending Review.

Deal with our debts?

Conference, the latest figures show that so far this financial year borrowing is £9bn higher than last year.

Not borrowing falling… but borrowing rising – up by a quarter.

Rising borrowing not to invest in the jobs of the future but simply to pay for the mounting costs of economic failure.

And as for ‘we’re all in this together’, we don’t hear that line anymore.

Not from a Chancellor whose Budget decisions have so far hit middle and lower income families harder than those on the highest incomes, women hit harder than men and families with children hit hardest of all.

Not from a Chancellor who tried to raise taxes on pasties, caravans, churches, charities and pensioners, while cutting the top rate of tax only for the rich – a £3 billion tax cut giving £40,000 a year to a millionaire. Millions paying more in tax to pay for a tax cut for millionaires.

No wonder trade union members up and down the country are saying – it’s the same old Tories, hitting the many to help out a privileged few.

And as Brendan said at the weekend, we now risk a lost decade of slow g rowth and high unemployment which will do long-term damage.

Over 33,000 companies already gone bust since the General Election.

Investment plans cancelled – or diverted overseas.

New ideas and new ventures being promoted in other countries.

Our economy weaker, capacity lost, and I very much fear that the result will be an economy more prone to inflationary pressures when the recovery finally comes.

And above all, long-term youth unemployment becoming entrenched – damaging young lives, and racking up costs which we will all have to pay.

Not short-term pain for long-term gain, but short-term pain causing long-term damage and a long-term price for this government’s economic failure.

And yes, at the same time, this coalition government is also using the cover of deficit reduction to mount a full-scale assault on our public services and those who work in them:

– A reckless NHS reorganisation which will waste billions and risks putting profit before patient care;

– Market-based school reforms, with Michael Gove now talking openly of profit-making schools;

– And deep cuts to policing which are already hitting front-line services.

All of which are rightly being challenged by Unison, the NUT, NASUWT, ATL, the Police Federation and many others.

So let me say to Frances and to all the General Secretaries in this hall today.

We understand that you need action now – a change of course and a plan for jobs and growth.

The fact is you and your members cannot just sit back and wait for a Labour government .

Because despite the valiant efforts of Labour councils up and down the country, the damage is being done now.

That is why we have set out five immediate steps the government can and should take right now, steps the Labour would take now if we were in power:

– repeat the bank bonus tax again this year – and use the money to build 25,000 affordable homes and guarantee a job for 100,000 young people;

– genuinely bring forward long-term investment projects – schools, roads and transport;

– reverse the damaging VAT rise now for a temporary period;

– an immediate one year cut in VAT to 5 per cent on home improvements, repairs and maintenance to help home-owners and boost construction;

– and a one year national insurance tax break for every small firm taking on extra workers to help small businesses grow and create jobs.

Families and businesses – and every one of your members – are crying out for a change of course and some hope for the future.

So Ed Miliband and I understand and share your frustration and worry and concern.

You say that strikes must always be a last resort.

And I am sure that the last thing the vast majority of trade union members want, at a time of such uncertainty, is strikes over the coming months.

It is not what we want.

It is not what the public wants either.

But when coalition ministers warn that they will have to act and legislate if we see a return to the un-rest of the 1980s, what we are really seeing is Tories itching to provoke a row about strikes so they can blame the stalling recovery on trade union members and working people.

When it should be David Cameron and George Osborne and Nick Clegg who must now admit their plan has failed and change course.

So let us say loud and clear:

We don’t want to see a return to the 1980s.

We don’t want a return to the hatred, division and confrontation of the 1980s.

We don’t want a return to the strikes and lost working days of the 1980s – seven times more days lost than under the last Labour government.

We don’t want a return to the rising child poverty, decaying school buildings and long NHS waiting lists of the 1980s.

And above all we don’t want to return – ever again – to the mass youth unemployment of the 1980s – when young people left school or college and went straight into long-term unemployment – opportunity denied, a terrible waste of talent, which scarred our country for years to come.

Congress, we know now that it will fall to the next Labour government to clear up George Osborne’s economic mess.

And it’s going to be hard.

As Ed Miliband and I have said for many months, this Government’s failure – no growth, rising borrowing, our economy permanently weakened – means the next Labour government is now set to inherit a substantial deficit that we will have to deal with.

Which is why – however difficult this is for me, for some of my colleagues and for our wider supporters – when we don’t know what we will inherit, we cannot make any commitments now that the next Labour government will be able to reverse particular tax rises or spending cuts.

Unlike Nick Clegg, we will not make promises we cannot keep.

Credibility is based on trust and trust is based on honesty.

And we must be honest with the British people that under Labour, there would have been cuts, and that – on spending, pay and pensions – there will be disappointments and difficult decisions from which we will not flinch.

Because the question the public will ask is: who can I trust?

Who will have the discipline and the strength to take tough decisions which will be needed?

George Osborne has shown there is no credibility in piling austerity on austerity, tax rise on tax rise, cut upon cut in the eventual hope that it will work when all the evidence is pointing the other way.

But a radical plan to kick start our recovery, put jobs first and transform our economy will only be possible if we can win the trust of the British people that our plan is credible.

We can stand up for jobs, social justice, equality and fairness – but if we re out of government , we just can’t deliver.

Last Friday I met with a Morley constituent of mine, David, a construction worker and UCATT member for over 20 years with UCATT’s Yorkshire regional officer, Mark Martin.

David told me that work is hard to come by at the moment, with the housing market still flat on its back and the cancellation of Building Schools for the Future.

But he also described how employment in the construction sector has changed over his working life.

Dave currently has an agency contract, which he knows will be restarted before he hits 12 weeks, so he gets limited employment rights. He is paid above the minimum wage, but only because his £7 an hour job includes compensation for holiday pay foregone. He has no sickness pay. No pension.

And he told me he was still better off on the books of his agency than those of his work colleagues who have been forced into bogus self-employment. And much better off than if he was unemployed.

What my constituents, like David, want to know is that we have a credible plan that will work:

– action now to kick-start the recovery ;

– and reforms so that we can change the way our economy works and make his life better for the future. And that is why, in tough fiscal times, as Ed Miliband and I said last week, we must begin to set out long-term reforms we need to unlock long-term investment, tackle insecurity and invest in skills which is the only route to long-term prosperity.

– a modern industrial policy to support long-term wealth creation, with strategic support for our manufacturing and service industries.

– stronger corporate governance to make sure decisions are taken in the long-term interests of wealth creation and jobs.

It’s why we are examining the case for a proper British Investment Bank and why we want to see an international financial transactions tax too.

And let’s make sure that government procurement is not done in a way that disadvantages UK-based manufacturing production.

And that is why, too, on the issue of bogus self-employment, in the construction sector and more widely, I am determined that we look at this issue again.

There is a careful balance to be struck. I do not want in any way to undermine genuine self-employment.

But nor should contractual arrangements be distorted and misrepresented to avoid tax and undermine terms and conditions.

It’s not fair to taxpayers.

And it’s not fair to your members either.

So I have asked the Shadow Chief Secretary, Rachel Reeves, to look again at the Treasury’s 2009 proposals for reform – abandoned by this government – and to consult employers, UCATT and the wider TUC to see if there is a better and fairer way forward.

Construction is one of our most important industries.

Let’s work together to make it stronger, safer and fairer for the future.

And yes, we do need radical reform in our banking system, reform which this Government is now watering down.

We were right to reject the absurd Tory claim that the global financial crisis was caused by too much public spending in Britain.

We can’t say this often enough: it wasn’t too many teachers, and nurses and police officers here in Britain which made Lehman Brothers investment bank in New York go bankrupt.

But nor was the global financial crisis caused by the hundreds of thousands of working people, earning ordinary salaries, who work hard every day behind the counter on every high street.

People employed in financial services – in Leeds, Edinburgh, Manchester, Birmingham and Bristol as well as London – who were as shocked and dismayed as everyone else at the gross irresponsibility of a few millionaire bankers at the top who caused such damage and gave their industry a bad name.

People who want tough regulation, w ho want banks to work for the long-term interests of our economy – and who do not deserve to be pilloried for their hard work and service.

So let us work together to make our economy stronger for the long-term and improve the working conditions for trade union members and working people.

I stand here proud to have served in the last Labour Government.

Where we got things right – even where at times we disagreed – I won’t be shy in saying it.

But when TUC members made calls which we did not hear – and which in hindsight we should have – I hold up my hands.

It was TUC members who were telling us to address the housing shortage – and we were too slow to unlock the door to councils investing in new housing.

And it was TUC members who first told us to implement the Temporary and Agency Workers Directive and strengthen enforcement of the minimum wage.

But over those thirteen years, working together, based on common values, we did make real progress for working people.

From tax credits and a national minimum wage to guaranteed holidays and our campaigning to promote the living wage.

From the right to join a trade union and be represented to new rights for parents and carers in the workplace.

From the windfall tax and the New Deal, to the action we took, supported by the Fair Tax campaign, to tackle tax avoidance.

And we must keep working together on these vital issues for the future.

In my time at education, our work together on school standards, discipline, anti-bullying and free school meals showed how Labour, working with unions, can get things right.

And because fair pay and progression is just as important to teaching assistants, caretakers, cleaners, cooks and lunchtime supervisors as for teachers, nurses, doctors and the police, I was proud to work with colleagues in Unison, GMB and Unite to establish the school support staff negotiating body.

Michael Gove has now abolished that body.

And just as this is a profound mistake, so the Government is mistaken to undermine the independent pay reviews and pursue an agenda for wholesale regional and local pay bargaining – which will set hospital against hospital, school against school and be both unfair and cost us more.

Frances, Brendan, we are not always going to agree on every issue.

But I sincerely hope that, whatever disagreements we may have along the way, that you and your members will never stop giving me and the rest of the Shadow Cabinet plenty of tough and straight advice.

Because we in the Labour Party value the commitment to a strong economy and a fair society that is this Congress at its best.

Congress, we know the Government has failed.

But this is no time for complacency for Labour.

Yes, we are ahead in the polls.

And yes, David Cameron does look increasingly trapped:

– with an economic plan which isn’t working;

– a Conservative Party deeply divided;

– and a Chancellor he cannot sack, even though he knows George Osborne is the problem and not the solution.

But Labour cannot just sit back and wait for Tory failure to hand us victory.

That is the complacent road to failure.

We have to make the case – a credible case – for how a Labour government will kick-start recovery and transform our economy if we are to win the support of working people in the ballot box when the General Election finally comes.

Because we know, as you know better than anyone:

– when living standards are squeezed, we know who pays the price;

– when public services are scaled back, we know which communities lose out;

– when unemployment becomes entrenched, we know which areas suffer most;

– when only some children succeed, we know which children will be left behind;

So rest assured, Ed Miliband and I and the whole of the shadow cabinet are determined to take the fight to the coalition and show – for the sake of millions of workers across our country – that there is a better way.

Congress, there is an alternative.

Let us win the argument together.