Tag: Rachel Reeves

Below is the text of the speech made by Rachel Reeves, the Labour MP for Leeds West, in the House of Commons on 20 January 2020.

It is a pleasure to follow the hon. Member for West Worcestershire (Harriett Baldwin), and I echo her concerns about the financial ​services sector in any future relationship with the European Union. I also put in a plea for the manufacturing sector and its supply chains, which rely on regulatory convergence with our closest trading partners.

I will concentrate my remarks on the employment Bill, but first I will speak about my worries for the economic outlook, especially ahead of the Budget in a few weeks. Business investment, which is essential for our long-term prosperity and productivity, has been falling for six quarters—the sharpest decline for a decade. The economic growth we have seen is anaemic at best, and the economy is likely to have grown by just 1.3% last year, with even lower rates of growth expected this year. That is half the average growth experienced over the past 50 years.

Far too much of the growth we have seen is premised on unsecured household debt, which now stands at more than £15,000 per household—a record 30.4%. We cannot go on like that if we want to build a strong and sustainable economy. Yet we have heard very little, if anything, on that from the Chancellor this afternoon. Many of our cities are growing and have become richer, but inequalities are increasing, too. In other areas, particularly our towns that were once powered by industry, industries have largely disappeared thanks in large part to previous Conservative Governments, leaving an acute legacy of deprivation and disadvantage that I hope the Government will now make their focus.

Turning to the employment Bill, behind the overall positive employment statistics a few facts should be ringing alarm bells to all of us who care about the living standards and the job security of those we represent, particularly the poorest. We welcome increases in the national minimum wage, even if it is not at a rate that we on the Labour Benches would like it to be, but underpayment has been steadily rising over the past two years. Some one in four workers aged over 25 earning about the legal minimum report that they were underpaid two years ago, yet only seven firms have been prosecuted in the past 10 years for underpayment of the national minimum wage, despite violations being in their thousands. Why is that? Even when fines are levied, the full penalties are not applied. Only half the penalties that could be imposed are being imposed.

If we want our workers to be paid a minimum wage, we must ensure that laws are enforced. I support the Government’s commitment to a single enforcement agency to help workers enforce their rights, but I hope that it will be properly resourced and that the barriers the Government have sought to put in the way of workers looking to enforce their rights through the courts will not be repeated in this Parliament.

I urge the Government to look seriously at the recommendations of the Business, Energy and Industrial Strategy Committee from the previous Parliament, which called for workers to be granted worker status as a default, rather than having to take their case to the courts.

Two other changes not in the Queen’s Speech would also be useful: an actual right to a contract reflecting hours worked, not just a right to request one, and, as the TUC has argued, two weeks’ notice of shifts, rather than an early morning text message to let people know whether they have work that day; and payment when shifts are cancelled without reasonable notice.​

Too many firms, particularly in the gig economy, try to get out of paying full taxes, national insurance, the national minimum wage, and holiday and sick pay. That is a disgrace and we need much stronger action, yet the Government have let the issue drift while a growing number of workers miss out on the rights that we have fought so hard to secure both in this Parliament and, indeed, through the European Parliament. It is hardly surprising that work is now no longer always a route out of poverty. Some 14 million people live in poverty, including nearly 5 million children, and 60% of them are in households where at least one person works. This is a problem that is set to get worse under this Government, with the number of people in zero-hour contracts and in bogus self-employment on the rise yet again.

I also want to say something this afternoon about business excess and the lack of regulatory oversight. We are now more than two years on from the collapse of Carillion. When Carillion failed, thousands lost their jobs, suppliers went unpaid and large-scale infrastructure projects, including hospitals in Liverpool and the west midlands, went unfinished. The collapse was caused by the recklessness, hubris and greed of its directors, yet they have not paid the price—others have. Carillion was a notorious late payer. Suppliers had to wait 120 days to be paid, or pay Carillion if they wanted to be paid on time. When it collapsed, 30,000 suppliers were owed £2 billion.

Meanwhile, its pension scheme had a £2.6 billion deficit. Ordinary workers—but not, of course, the directors—will not get the full pension that they were entitled to. Yet its auditors, KPMG, signed off Carillion’s accounts for 19 straight years in a row without qualifying them or raising concerns.

Here we are, two years on, and nothing has changed. The Government’s obsession with outsourcing and privatisation continues. The hands-off regulation and light-touch auditing continues. The employment Bill says it will give more powers to the Small Business Commissioner. That is welcome, but it does not really suggest the degree of urgency or priority that is needed.

The corporate failure and the audit failure happened then and it could just as easily happen today. Our audit firms are too powerful. The assumption that the private sector is always best has to end. Small businesses should not be at the mercy of dominant big businesses that determine whether their suppliers are paid, and regulators should clamp down on abuse and not just turn the other way.

This is not some abstract ideal. It is the basis of an economy that: values workers by paying them a decent wage and offering them some dignity and security in the workplace; supports businesses that play by the rules and invest in our economy while ensuring that big businesses do not exploit the system; and invests in every region and nation of our country—in green energy and transport, infrastructure and skills to help our economy to thrive for everyone.

The Queen’s Speech touches on some of those themes but I fear that it lacks the conviction to do what is needed. There is a common theme in all this: the failure to put in place rules to stop workers being exploited; the chipping away of regulations that protect the most vulnerable; the remorseless faith in the private sector, with more outsourcing and privatisation; and the creation ​of city Mayors but a reluctance to devolve the power and money to let them do their jobs as effectively as they can.

The real problem with the Government and the Conservative ideology is that they do not allow for a challenge to the neo-liberal economic model and do not account for the social value of the public sphere—the glue that binds our society together. While the Government speak on some of these themes, I do not believe that they have the willingness to see them through to deliver the economy that we need.

Below is the text of the speech made by Rachel Reeves, the Labour MP for Leeds West, in the House of Commons on 20 June 2016.

I stand here today to honour a friend and a colleague. Along with shock, anger and grief, I have very many fond memories of Jo. Jo and I knew each other for around 10 years. I have known her husband Brendan for longer than that: we first met at a Labour student conference about 18 years ago, and it was through Brendan that I first met Jo.

I remember Jo and Brendan coming round for dinner at my and my husband’s house in London and our visiting them on their boat—first in Ladbroke Grove and later in Wapping. I remember worrying that I had drunk too much wine early in the evening, until I realised that it was the boat that was swaying and not me.

I remember talking with Jo about her future shortly after I became an MP. She was thinking about standing for Parliament and spent a day shadowing me in my constituency of Leeds West, talking to constituents about their problems, campaigning with local party members and attending meetings. By the end of the day, a lot of people were not sure who was the MP and who was doing the shadowing. Jo had a way with people—a way of relating to people from all walks of life. She had a real way of doing that.

Jo’s main hesitation about a parliamentary career was her young family. She worried, as many of us do, about whether she could be a great MP and a great mum at the same time. But when the opportunity came up to represent her home seat of Batley and Spen, Jo felt a special responsibility to step up and do what she could for the place where she was born, grew up and went to school—the place that Jo called home.

Jo wanted to make the world fairer, more equal, more tolerant and more generous. We all have better instincts and deepest fears. Jo appealed to our better instincts—our sense that, as she said in her maiden speech, what we have in common is greater than what divides us.

On Friday morning, less than 24 hours after Jo was killed, I sat in a coffee shop in Batley just a few minutes away from where Jo had been murdered. A woman came over to me and said that she had not known Jo, but that Jo’s death had made her want to be a bit more like her—a better person, a better mother, a better daughter, a better wife. It is ironic that, having travelled to some of the most damaged, war-ravaged places in the world, Jo died so near to her home. But she died doing the job she loved, in the place she loved, representing the people she loved. Her mum and Dad said to me that Jo would not have changed a thing. She lived the life she wanted to live. And yet, in her Mum’s words:

“She had so much more that she could have done”.

Jo was struck down much too soon. So it now falls on all our shoulders—the woman I met in a Batley coffee shop, Jo’s friends, MPs, all of us—to carry on Jo’s work: to combat and guard against hatred, intolerance and injustice and to serve others with dignity and love. That is the best way we can remember Jo and all she stood for.

But lastly, let me say this. Batley and Spen will go on to elect a new MP. But no one can replace a mother.

Below is the text of the speech made by the Shadow Chief Secretary to the Treasury, Rachel Reeves, to the Resolution Foundation on 4th September 2013.

Thank you so much for having me today.

The Resolution Foundation has been rightly recognised for its role in placing the pressures faced by ordinary working households at the centre of political debate.

And it’s a great credit to the work of Gavin and his team that the next general election will be about living standards.

Let me start by saying it’s welcome that we are now finally seeing growth again in our economy – growth that is essential to making up the ground we have lost over three wasted years during which the economy stagnated as a result of the Tory-led Government’s mistakes.

David Cameron and George Osborne would like us to think that our troubles are over, good times are here again.

But most families know that this complacency is misplaced.

Not just a few families on the lowest incomes – but many who thought they were doing alright, yet now find themselves struggling.

They know that things are getting harder, not easier.

They feel the effects of real falls in wages that are down an average £1,500 since David Cameron became Prime Minister, and are taking the hit from tax rises and cuts to benefits and tax credits.

They can see that prices continue to race ahead of their pay.

They worry about the prospects for their children when almost one million young people are out of work.

It’s an economy that no longer seems to offer the promise of a better life for the next generation.

And it’s an economy that, for far too many people, seems only to offer work that is insecure, poorly paid, and in the worst cases simply exploitative.

Just this week, on my first official day back from maternity leave, I visited a family in Thurrock who told me what they were up against.

The father, once a partner in a thriving small business, lost his livelihood during the recession three years ago.

Desperately trying to keep up their mortgage repayments, he has spent the past three years taking whatever work he could get through employment agencies, often on zero hour contracts.

And only recently has he found a permanent job as a driver that, topped up with evening shifts doing deliveries, gives them a bit more security but falls far short of making full use of his talents and experience.

His wife abandoned her dream of training to be a primary school teacher so she could hold onto her relatively secure, but modestly paid, job in retail.

Their daughter is studying for university and should do well, but worries about the fees.

All of them pointed to a gaping and growing disconnect between their rates of pay and the costs they faced – for travel, housing, and other basic necessities.

They all, it was clear to me, had so much to contribute to our recovery and to our country – but weren’t being given a fair chance to play their part.

This family’s experience is all too illustrative.

There are now more than one in ten people who want to work more hours, but can’t get the extra shifts.

At the same time there are 700,000 people working more than one job – more often out of desperation than choice.

One million people are thought to be on zero hours contracts.

And today we learn in this incredibly important report from the Resolution Foundation, a surge in the number of people paid less than a Living Wage – up from 3.4 million in 2009 to 4.8 million today.

The report provides worrying evidence that the problem of low pay – which we know is not a new problem in the British economy – is becoming exacerbated and entrenched under this Government.

Indeed, figures provided for me by the House of Commons library show that almost 60 per cent of new jobs created since the Spring of 2010 have been in low paid sectors of the economy.

This contrasts with the record of the last Labour Government under which such jobs made up around 25 per cent of new jobs between 1997 and 2010.

Why does this matter?

First and foremost, for moral reasons. We simply can’t be satisfied with a situation where an honest day’s work does not bring a decent day’s pay.

It’s about parents who want to spend more time with their family and children, but hardly see them because they have to take on a second job.

It’s about a young worker who wants to go to evening classes to improve their chance of progression, but instead has to take a shift in the pub on the side to make ends meet.

It’s about the women who are cleaning the offices of a building like this while most of us are just getting out of bed, and when we are on our way home are still at work, perhaps on the supermarket tills.

It just isn’t right that these people – real strivers, putting in the hours and doing the right thing for themselves and their families – are, in Ed Miliband’s phrase, “working for their poverty”.

Too many people not making the most of their skills and talents is a missed opportunity for Britain.

And as Shadow Chief Secretary to the Treasury, this issue is of huge fiscal importance too. Research from the Resolution Foundation and IPPR shows that if everyone was paid a living wage or above, then the Treasury would gain £3.6billion a year.

And all of these problems – falling or stagnating living standards for the majority; widespread insecurity, underemployment and low pay, are interrelated aspects of an economy that isn’t working for ordinary families.

For three years, we have had weak demand, high unemployment and underinvestment , which is doing damage to Britain’s competitiveness and productivity.

And instead of doing whatever it takes to support Britain’s families, this government has focused on the fortunes of those at the top, hoping prosperity trickles down.

Average wages have been falling behind prices for 37 out of 38 months of David Cameron’s Premiership.

Which month is the odd one out?

April of this year – when the bankers reaped the rewards of deferring their bonus until George Osborne’s decision to cut the top rate of tax was implemented.

Meanwhile not one firm has successfully been prosecuted for non-payment of the National Minimum Wage over the past two years

This government are on the side of the wrong people.

The difference with Labour is clear.

Ed Miliband has argued that we need to rebuild Britain as a One Nation economy where everyone plays their part, and everyone has a stake.

Ed Balls and I have continued to press the case for action to secure the recovery and create the sustainable growth that will be essential to raising living standards at the same time as getting the deficit down.

We have urged the government to boost capital investment now in areas such as housebuilding, as the IMF has recommended, and a compulsory jobs guarantee for young people and the long-term unemployed.

We have also been clear that, while the next government will face tough choices on public spending and taxation, Labour would find a fairer way to get the deficit down.

We wouldn’t be cutting income tax or increasing pension tax relief for the very wealthiest while cutting tax credits for hard pressed families, and we will seek to reintroduce a 10p starting rate of tax funded by a mansion tax on properties worth more than £2 million.

A Labour government would also tackle vested interests to ensure that every part of the private sector plays its part in easing the squeeze on ordinary families.

That includes proposals already set out for ending rip-off rail fares, getting the energy market working properly, standing up for tenants in the private rented sector, curbing pay day lenders, and reforming the pensions industry so it works for ordinary savers.

And we have made clear that tackling insecurity and exploitation in the labour market is central to this agenda.

Ed Miliband has set out how a Labour government would prevent exploitation of agency workers through loopholes in the rules, and prevent the use of migrant workers to undermine pay and conditions.

But my main topic for today is Labour’s agenda for tackling low pay.

Confronting low pay is part of the very DNA of the Labour movement.

Our party was born of the self-organisation of workers in the nineteenth century who fought for a share of the fruits of the industrial revolution.

It was Sidney and Beatrice Webb who made the argument that the livelihood of ordinary people could not be left to market forces alone, but that a “doctrine of the living wage” must be applied.

But it was not until 1998 that we finally implemented a policy that we know would have featured on Keir Hardie’s own preferred pledge card, a National Minimum Wage

– a legacy that sits alongside the creation of the NHS as one of Labour’s greatest achievements.

It raised the pay of millions, reduced income inequality and helped to narrow the gender pay gap – all the while flouting the predictions of doomsayers – not least in the Conservative Party – that it would stifle business investment and create unemployment.

So I am pleased that Sir George Bain, the founding chair of the Low Pay Commission and someone who says his back still bears the scars of its original introduction, is leading the Resolution Foundation’s work on how best to build on this achievement.

The success of the National Minimum Wage depends critically on government coming together with representatives of both employers and employees to find consensus and work jointly towards a shared goal.

In that sense, its success and durability provides evidence of the effectiveness of the One Nation approach that Ed Miliband has espoused.

But a One Nation economy also has to be built from the bottom up.

The living wage movement exemplifies this spirit.

The work of community organisers like London Citizens and Citizens UK has been central to this – building relationships through dialogue, and involving and empowering ordinary workers.

The success of their campaign has demonstrated that there are people on all sides willing to play their part in tackling low pay.

First and foremost we can be proud that the best of British business has always sought to do the best it can by even its lowest paid workers.

In 1851 Titus Salt, the highly successful textiles manufacturer in Bradford, was so appalled by the pollution in his home town that he built Salt’s Mill – purposefully built to minimise noise pollution with houses for his employees, schools, hospitals, libraries and a bath house.

Joseph Rowntree appointed a welfare worker in 1891, introduced sick funds in 1902, and a pension scheme in 1906. He also built four hundred homes for his employees with educational facilities attached.

These and so many other pioneering industrialists were philanthropic characters but wily businessmen too. They understood the importance of fairness in the workplace, to encourage workers, build morale and team work.

And the same insights are well appreciated by the best employers today – including those in sectors such as care, cleaning and retail where rates of pay have traditionally been the lowest.

For example, the British Retail Consortium has highlighted the efforts that many of its members put into improving job quality and providing good opportunities for training and progression.

And the British Cleaning Council, which brings together employers and expert bodies from across the contract cleaning industry, has been vocal in its support for a living wage.

Now we all know that paying the living wage is a big ask for many businesses, especially in sectors such as these. Many employers say they would love to do it if they could but face formidable challenges.

And yet progress is being made. Not only have we seen the commitment by the large financial services companies who were the early targets of living wage campaigns.

Intercontinental has now become the first hotel group to pay the London living wage, with Whitbread, the UK’s largest hotel and restaurant group, have said they want to move towards it.

And the Joseph Rowntree Foundation has been taking forward the traditions of their founder by paying the living wage in the four care homes it runs in the north of England.

This progress should encourage us to think that, whatever the challenges, there need be no “no go” areas for the living wage.

In many cases employers have found ways of improving wage rates for lower paid staff by working with trade unions.

Of course a significant feature of low paid segments of the British labour market is often low levels of union membership. But again there are areas where we can point to progress.

The innovative methods of recruitment and organisation developed by unions – like Unite in the hospitality sector, USDAW in retail, or UNISON and GMB in the care sector, are helping build momentum and commitment to modernise business models and invest in lower paid staff.

And at the heart of this, of course, are the workers themselves, who gain so much more than a boost to their pay – valuable though that is – when they take part in, or lead, campaigns to win a hearing, and discussions with employers to secure the living wage for themselves and their colleagues.

As well as employers and employees, and their representatives, we are seeing an increasingly pivotal part played in this movement by shareholders.

ShareAction have been mobilising UK and international investors and pension funds to encourage the adoption of living wage standards by FTSE 100 companies since 2011.

In the future one of the most critical roles will be played by consumers, who thanks to these campaigns are becoming increasingly aware of the issues affecting workers who provide the goods or services they enjoy.

The brilliant work of the Living Wage Foundation in encouraging and helping employers to win formal accreditation is already moving us towards a time when the Living Wage kitemark could function in a way similar to the Fair Trade badge – encouraging and enabling ethical choices.

But I haven’t provided this overview so that we can sit back and wish them all well, satisfied that government need do no more.

On the contrary – for me, the progress and the potential we can already see is an invitation and an imperative for government to get involved, play its part, do whatever it can.

That’s why it’s such a point of pride that, even while in opposition at Westminster, the Labour Party is playing its part.

Across the country, Labour councils have been leading the way in signing up to the living wage – even amid unprecedented cuts to their budgets.

15 Labour Local authorities, from Lewisham to Preston; Norwich to Cardiff; Oxford to Selby; have now been accredited by the Living Wage Foundation, and dozens more have made commitment to pay the living wage.

And many councils have used their procurement powers to extend the living wage into the private sector. Islington Council, for example, has now built a living wage requirement into 97% of its contracts.

And Labour councils have acted as champions and leaders for the living wage across their local economies – promoting its benefits to local businesses and encouraging collective commitments to make progress as Birmingham City Council is creating with its Birmingham Business Charter for Social Responsibility.

Ed Miliband wants Labour to learn from this experience so we can build on this work in government.

It means learning from what Labour councils have done in the area of procurement to see how central government could further extend the requirement to pay the living wage through public sector supply chains, as well as requiring greater transparency from employers on the numbers of their staff paid less than a living wage.

And one of the most exciting ideas is that of “living wage zones”. Local employers coming together to pay the Living Wage, in exchange for government sharing some of the tax credit and other savings that it makes from the higher wage being paid.

This could be through time-limited cash rebates, or funding for the costs of training or new equipment that would mean firms can move to the higher wage business models that mean a living wage makes business sense.

Or it could be through support provided locally – involving for example councils, LEPS, education and training providers, and local chambers of commerce – for businesses looking to develop their staff or invest in training to enable productivity-enhancing work reorganisation.

This is an idea that perfectly exemplifies a One Nation Labour approach to tackling low pay.

It means employers, employees, communities, local authorities and others working together to improve pay and strengthen businesses.

But it is also based on government recognising the fiscal, economic and social benefits of higher quality, better paid jobs and higher productivity businesses too.

There remain questions and challenges over how this could be put into practice.

So I am delighted to be able to announce that Alan Buckle, Deputy Chairman of KPMG international, has agreed to lead a consultation with employers to better understand the barriers that they face in improving pay and prospects for their staff, and the way in which government can best encourage and enable them to do so.

KPMG was one of the first major UK employers to commit to paying all staff a living wage in 2006 and has since been a key advocate of the idea in alliance with the Living Wage Foundation. So I am really pleased that Alan is leading this work for us.

This is just one example and illustration of Labour’s approach to tackling low pay, and getting this economy working for everyone:

– from Ed Balls’ work with Sir George Cox on overcoming short-termism and raising levels of business investment,

– or Larry Summers on the economic reforms needed to more fairly share prosperity;

– through Stephen Twigg’s work with Chris Husbands on revolutionising our skills system;

– to Chuka Umunna and Andrew Adonis’s work with small enterprises and key growth sectors;

– working together with stakeholders and social partners to build a One Nation economy that brings benefit to all.

Underpinning and driving all of this work is a determination to reverse the squeeze on living standards we have seen and build a fairer and more inclusive economy.

This is the goal upon which government’s sights should be focused – and it should be reflected in the measures by which we judge our success.

Every quarter we pore over the GDP data – rightly so, because growth is the precondition for raising living standards for the majority.

But as Gavin and his team have argued, while growth may be a necessary condition, it is not sufficient for raising living standards for all.

And an exclusive focus on GDP can blind us to what is happening to ordinary families, and the divisions and inequalities in our economy.

Unlike GDP, data on median household income and on how the bottom quarter and decile is faring, is published only annually, and with a lag of more than a year.

This was a point raised by the LSE Growth Commission earlier this year, which argued that:

“Prosperity is strengthened when everyone has the capacity to participate effectively in the economy and the benefits of growth are widely shared”

and recommended:

“reforming the way we measure and monitor changes in material wellbeing and its distribution, including regularly publishing median household income alongside the latest data on GDP.”

And I know the Resolution Foundation are planning to carry out some preparatory work on this, looking at whether this can be done from the existing data.

This simple change could have a powerful and profound effect, informing public debate and focusing policymaking – putting pressure on government to find ways of ensuring that we are growing in a way that benefits ordinary households and leaves no one behind.

So I will be writing to Andrew Dilnot, the Head of the Statistics Authority, to ask if he will look at the feasibility of preparing statistics on real household incomes – the median and wider distribution – more frequently and promptly so that we can better monitor them alongside the GDP numbers.

In conclusion, let me return to my starting point.

The cost of living is a real problem for too many families and the economy is not working for the majority of working people.

Deep problems in the way our economy has been developing – or, more accurately, not developing – over the past few years are resulting in stagnant real wages and increasing insecurity for the majority, and persistent low pay and outright exploitation for far too many.

Fixing these problems is in everyone’s interest – essential both to relieving immediate financial pressures, and securing a better future for our country.

None of this is on the current Government’s agenda.

It is central to Labour’s.

We have begun to set out policies to tackle the squeeze on living standards, the spread of insecurity, and, my particular focus today, low pay.

It’s an approach based upon bottom up solutions – but where government does not shy from playing its part.

It’s an approach in which the mutual benefits of solving these problems are recognised and shared – but where we are ready to challenge those who are not upholding their own responsibilities.

It’s an approach where we join together and work together to build an economy that allows us to grow and prosper together, as One Nation.

We have already begun the journey – and I am very excited about where it could take us.

The next election will be a living standards election. Thank you.

Below is the text of the speech made by Rachel Reeves, the Shadow Chief Secretary to the Treasury, to the Resolution Foundation Conference on 28th June 2012.

How a Labour government would raise living standards for those on low to middle incomes in the decade ahead

I want to thank the Resolution Foundation for inviting me here today, and to thank Gavin and his brilliant team for all the work they have been doing to put the issue of living standards for low and middle income families so firmly on the political agenda.

When Ed Miliband first started talking about the “squeezed middle”, many in the political and media establishment professed confusion. But it didn’t take long before the phrase began to appear in newspaper headlines, with the Oxford English Dictionary pronouncing Ed’s coinage their new “word of the year” in 2011.

Why has this phrase gained such currency in such a short space of time? It’s because household incomes and living standards are under pressure in a way that is historically unprecedented and this is being felt particularly sharply by those around the middle and bottom half of the income distribution.

As a constituency MP, and in my role as Shadow Chief Secretary, I see the way this slow, remorseless squeeze is wearing people down.

Ed Miliband has called it “a quiet crisis that is unfolding, day-by-day, in kitchens and living rooms in every town, village and city up and down this country”.

It’s the worry about keeping up with the rent or the mortgage, or keeping on top of bills or credit card debt, or the worry that you won’t be able to properly provide for your children.

This doesn’t just put strain on people’s self respect and immediate relationships. It is corrosive of a broader sense of social solidarity and shared responsibility, especially when people hear of other groups in society who seem to be able to rise above it all, untouched by the tough times the majority are living through.

This is why Ed Miliband has dedicated the Labour Party to the task of building a different kind of economy for Britain: an economy that works for everyone, not just a few at the top.

As we’ve just seen some of the trends have been in evidence for as much as thirty years.

The deep causes of the cost of living crisis are complex, but the key factors include a hollowing out or polarisation of the labour market, driven by a combination of technological and institutional change, and the operation of increasingly globalised market forces reducing the availability of reasonably paid, semi-skilled manual or clerical work and leaving too many workers trapped in low-skilled, low-paid, often casualised segments of the labour market.

Coming on top of these trends, the global financial crisis and recession have taken a heavy toll on the earnings and employment rates of British workers.

We can debate where the responsibility for that crisis lay and I certainly think it’s right that we in the Labour Party take our share for failing to challenge the fashion for “light touch” regulation that other countries (and parties) espoused. But there’s also no doubt that Labour did much in government to protect hard-pressed families from its harshest effects.

The tragedy we are seeing today is that the legacy of that crisis, and the long running trends I have touched on are being compounded and exacerbated by the mistakes and the choices of the Conservative-led government.

Families with children are, on average £450 a year worse off as a result of last year’s VAT rise and, according to the Institute for Fiscal Studies, another £511 worse off this year because of further cuts, freezes and restrictions to benefits and tax credits.

But this morning I want to highlight something that is arguably even more important:

the effect the government’s decisions are having on the state of the economy and what that means for people on low and middle incomes – now and for the future.

As Ed Balls warned, and has now been confirmed, abandoning the balanced plan for deficit reduction that the Labour government had put in place, by raising taxes and cutting spending too far and too fast, has choked off the recovery and taken the economy back into recession.

The unemployment figures tell one part of the story, but in many ways understate the full effect of the economy’s weakened state on people’s living standards.

For one thing, the headline figures for employment and unemployment conceal deeper weaknesses in the labour market. Analysis of the data reveals a growth in part time and temporary work, with the latest figures showing 600,000 people who want permanent positions but can’t get them, and 1.4 million working part time who want to be working full time.

And for those who are in full time work, and indeed, for many who work extremely long hours, sometimes with two or more jobs, the blunt reality is that the wages they earn are not nearly enough to cover the costs of a decent standard of living.

Unemployment, underemployment, and stagnant or falling wages are weighing heavily on the incomes of most households today.

Indeed, new analysis that I commissioned from the House of Commons Library shows that the deterioration of the economic outlook since George Osborne’s Spending Review in November 2010 has led the Office of Budget Responsibility to revise down projections for real household disposable income:

– by £800 per household last year;

– £1,100 per household this year;

– £1,700 next year;

– and another £1,800 and £1,700 for 2014 and 2015.

That’s the real disposable income of the average UK household £1,700 lower in 2015 than the Chancellor expected when he first set out his plans, and a permanent loss to households over the life of this parliament of £7,100.

Economic weakness and the double dip recession are taking a heavy toll on living standards. Even these figures are based on the OBR’s March forecasts that don’t fully reflect the depth of the double dip recession that we have now entered.

And the truth is – every month our economy stagnates, every month of lost growth is another hit to the incomes and living standards of ordinary households not just now but for years into the future.

The longer this goes on, the harder it will be to turn the situation around. The Conservative MP Nick Boles gave a thoughtful speech earlier this year, the argument of which I’m sure he’ll develop when he comes to the Resolution Foundation next month, in which he pointed out that the key to sustainable wage growth for British workers is rising productivity for the hours they work.

Critical to this is investment in new technologies and innovative work processes. As he said then:

“without a sustained increase in business investment, Britain can kiss goodbye to any increase in labour productivity”.

He is right on this.

But today, confidence in our economy is so low, businesses are holding back investment, and banks are cautious about lending to firms. The OBR’s projections for the Chancellor’s hoped for renaissance in business investment has been repeatedly postponed and pushed back and the recent worsening of the economic outlook is likely to have set back prospects even further.

An 8 per cent increase in investment was promised for 2011, but it actually fell by 2 per cent. A further 10 per cent increase had been projected for this year, but less than 1 per cent growth is now forecast. And the role of investment in driving growth for future years has been significantly written down.

Every investment delayed or deferred is a permanent setback to the ability of UK plc to raise productivity and raise competitiveness in the years ahead.

There is also compelling evidence that the economic slowdown and recession are eroding the productivity and future earnings potential of the UK workforce.

There are now worrying signs that investment in skills is under pressure. With the latest data from the UK Commission for Employment and Skills showing that the proportion of employers providing no training for their staff jumped from 32 per cent in 2009 to 41 per cent in 2011.

And the “scarring” effects of joblessness translate directly into lower lifetime earnings and living standards. Analysis undertaken for the ACEVO Commission on Youth Unemployment chaired by David Miliband showed that people who experience unemployment in their younger years are not only more likely to suffer spells of unemployment in later life but also, even in work, suffer an average wage penalty of more than 15%.

So the 407,000 young women now unemployed will, a decade from now, be earning on average £1,700 a year less as a result of being unemployed today. And the 607,000 young men now unemployed will, on average, be earning £3,300 less.

These effects worsen the longer someone is unemployed. Work by Paul Gregg at the University of Bath and Emma Tominey at the University of York suggest that the 264,000 young people who have now been out of work for more than a year are, on average, likely to spend another two years either unemployed or economically inactive between the ages of 28 and 33, and the men will, by age 42, be suffering a wage penalty of more than £7,000.

So it’s pretty clear that the first thing we need to do to improve the living standards of these people over the next decade, and beyond is to get them into work as a matter of urgency.

So the economic slowdown and recession this government’s policies have resulted in doesn’t just create extra costs and hardship today it’s also doing permanent damage to our productive capacity and long term growth potential.

Because the longer businesses postpone investment, losing their edge in competitive global markets; and the longer people are unemployed or underemployed, missing opportunities to gain experience or develop new skills, the less productive and competitive our economy will be in future and the lower our trend rate of growth making it even harder to maintain or improve incomes and living standards.

So George Osborne’s years of lost growth mean lost opportunities to improve our ability to pay our way in the world that we will never recover. Britain’s businesses, working families and young people will be paying the price of this government’s economic errors for years and decades to come. And the longer we go on like this, the heavier that price will be.

As the failure of the government’s economic plan becomes clear with the years of austerity and uncertainty stretching on into the future and no sign of light at the end of the tunnel people are asking if we just have to accept all this or if there is an alternative.

And that poses a real challenge to Labour. We need to show that there is much more that could be done by an active government that is in touch with what life is like for ordinary people and determined to find a fair way through the tough times we are living through.

There are three broad areas I want to highlight where government could be doing more:

– first, urgent action to get our economy out of recession

– second, a fairer approach to deficit reduction

– and third, long term reform and rebalancing of our economy.

First: an absolute precondition for real improvement in living standards for most families is economic growth. It’s right, as the Resolution Foundation, has stressed, that growth is not sufficient but no one can be in any doubt that it is necessary.

That’s why we have been urging the government to take action to restore business and consumer confidence, stimulate investment, and tackle the crisis of joblessness and underemployment which, as we’ve seen, will extract a heavy and rising toll on living standards in Britain for decades to come as well as making it harder to get the deficit down and our public finances onto a sustainable path.

Second, as Ed Miliband and Ed Balls have both stressed: although we need a growing economy to deliver the rising tax revenues and falling unemployment that will help us get the deficit down, tough decisions on tax, spending and pay cannot be avoided.

When money is tight, our values and priorities matter all the more and we have been clear that a Labour government would be asking those who can to bear a heavier burden which would allow us to do more to protect the living standards of those on low and modest incomes.

For example: We have said we would repeat the tax on large bank bonuses, to fund a major youth jobs programme. We would hold back pay rises for public servants on the highest salaries, so we can guarantee increases for those on the lowest pay. And we would crack down on tax avoidance, and reverse tax give-aways to the richest one per cent of the population, so that we can better protect those who are most feeling the squeeze by, for example, reversing the withdrawal of Working Tax Credit from couples with children unable to meet the government’s new higher working hours threshold to make work pay and support working families.

Defending the tax credit system from the government’s onslaught is important, because if you listen to the Tories, you might get the impression that the tax credits were a costly and complex folly.

But you get a very different picture if you listen to independent, objective observers such as Professor Lane Kenworthy, an international expert on income trends who cites tax credits as the key reason that the UK’s record on low- to-middle incomes has been better than most comparable countries in recent years; or Jane Waldfogel of Columbia University, who has held up Labour’s anti-poverty drive as an example for other countries to learn from.

There are also areas of spending where the impact on employment, earnings, and by that token, economic growth and the public finances can be even more directly demonstrated.

As part of Labour’s new commission on childcare I am working with Stephen Twigg, Yvette Cooper, and Liam Byrne to look at how we can build on the successes of Sure Start and childcare to get more help to parents who want to work, which the Resolution Foundation has identified as a critical frontier in the drive to defend household incomes.

And with Liz Kendall I am looking at how we can deliver the radical reform of social care funding we need – so that people can look forward to a dignified life in old age, without fear of spiralling costs or a funding lottery – but also because, as I know from my work as Shadow Pensions minister, and from my own family, improving the availability and affordability of good care services could be a huge help for those who struggle to remain in work when they find themselves first in line to look after older family members.

Finally, tax credits and support for families have been critical to reducing poverty and rewarding work over recent years. But a Labour government could achieve far greater leverage over social and economic outcomes at much lower cost to the taxpayer if it found ways of addressing what Jacob Hacker has called the “predistribution” of income and opportunity: rebalancing and restructuring our economy to improve the availability of good jobs paying a decent wage as well as regulating and reforming markets to contain the costs that families face.

That way we don’t have to just rely on redistributing the proceeds of growth to compensate for the outcome of market forces but also look to tackle these dynamics at source with structural reforms that get our economy working in a way that benefits everyone, not just a few at the top.

This is an enormous challenge, but it is opening up exciting new frontiers for policy development.

For example, a bold government ready to challenge powerful providers could do much to cut the cost of living that families face:

– ensuring energy providers offer cheaper and fairer tariffs;

– preventing rail companies from exploiting loopholes in fare regulation;

– improving the availability of affordable housing, for first time buyers but also in the rental sector; and

– empowering savers and regulators to root out excessive fees charged by banks and pension providers.

We must also do everything we can to improve opportunities for workers.

So as well as giving businesses the confidence to invest, we need an active government strategy to encourage investment in high value sectors and high quality jobs.

I am working with Ed Balls and Chuka Umunna to identify the levers we could use: from a more strategic use of government procurement powers to promote apprenticeships and incentivise innovation; to examining the role that a British Investment Bank could play in increasing the flow of finance into productivity-raising infrastructure, or small businesses with high growth potential.

But raising living standards isn’t just about the high productivity traded sectors such as high tech manufacturing or business services. It’s also about raising standards and investment in high employment sectors like retail or social care.

In the German retail sector, for example, 8 in 10 employees have completed vocational qualifications lasting two-to-three years, and are therefore more likely to progress to managerial careers. In the UK only three in ten have comparable qualifications.

Also in Germany, care workers are trained to a level comparable to that of general nurses, whereas in the UK only one-third of care workers and two thirds of senior care workers hold NVQ level 2 qualifications.

It may be neither feasible nor desirable to recreate the semi-skilled, routine jobs that have been displaced by technology or trade. But we must make it our mission to turn the lower-status, low-paid jobs that for too many have taken their place into jobs that properly valued, better paid, and offer a real chance of career progression and personal development.

Finally we need to take steps to ensure that the proceeds of rising productivity are broadly shared. The work of the Resolution Foundation shows that we can’t take it for granted that the gains will trickle down and that productivity and pay can and have been decoupled for large parts of the workforce if wages aren’t set in a way that is responsible, accountable, and equitable.

The fact that one in four British workers are paid less than the living wage and workers at the median have seen their wages stagnate or fall has as much to do with their power as their productivity.

The public sector can take a lead in this, setting an example for the rest of the economy.

As Shadow Chief Secretary, I will be pressing the government to follow through on Will Hutton’s recommendations for monitoring and managing high pay in the public sector; including the publication of ratios between top, middle and bottom pay in every department.

And I am working with Ed Miliband to encourage and support more Labour councils to become living wage employers and use their procurement power to promote the same standard among their private contractors.

Lewisham and Islington councils have already become accredited Living Wage employers and we hope that more will soon be able to join them.

A Labour government could also build on the success of the National Minimum Wage by introducing stronger checks on excessive remuneration at the top, such as binding shareholder votes and employee representation on remuneration committees; and looking at how we can bring greater transparency, and a stronger voice for employees to bear at every level of the pay scale.

But we know we have a long way to go, and we know we don’t yet have all the answers. That’s why the work of the Resolution Foundation, and its Commission on Living Standards, is so valuable.

What’s most important at this stage is that we shift the parameters of political debate so that that the challenges facing households on low-to-middle incomes are at the forefront of politicians’ and policymakers minds.

Since I entered politics, I have often been struck by how skewed our public conversation can be, and how people doing ordinary jobs for modest incomes are bound to feel ignored when we talk so much about university education, but so little about those who never get to university. When restricting child benefit for higher rate taxpayers creates more of a media storm than cutting tax credits for millions of workers paid below the average. And even when fairness and inequality is the issue, there’s far more moral concern about how much companies are paying their top executives than whether they doing enough to improve pay for those at the middle or the bottom of the scale.

The Resolution Foundation is beginning to change this. And it’s for the Labour Party to take up the cause. The greatest danger of all is of people losing hope and giving up on the idea that any government can do anything to make things better.

Labour’s job is to give people reason to believe again that we are in touch with their lives, in tune with their hopes and fears, and relentlessly focussed on doing everything we can, from the moment we win power and even from opposition, to get immediate relief to hard-pressed households now facing unprecedented challenges and put the economy on the path to a fairer future.