This article was first published on Politics Home on 4 March 2014.
The return of our economy to growth is welcome and a credit to the hard work of British business and their employees. But after almost four wasted years, the British economy is far from rebalanced. The continuing cost-of-living crisis for many means working people are, on average, £1,600 a year worse off. We are not seeing a recovery which benefits all and tackles the cost-of-living crisis. We are not seeing the sustainable growth we were promised. In fact, it looks a lot like the kind of growth we swore we would never return to.
Of course, there are those who will tell you that the central economic challenge facing the nation is not the size or nature of our economy, but the size of our government. Of course, nobody wants big government for the sake of it and we must bring the public finances back into balance following the huge costs of the global crash that irresponsible behaviour in the banking sector created. But reducing the deficit is neither the only economic challenge we face, nor – in the longer term – the most important. Permanent austerity may be an ideological choice, but it is not an economic policy.
No, if we’re going to set a foundation for future success, we need to take a different approach. The investment horizons for business stretch well into the next decade. Government’s should too. To succeed as a nation we need an Agenda for 2030, based on a clear sense of destination. For us in the Labour Party, that destination is clear: a high-productivity, high-skilled, innovation-led economy. In other words, a balanced, resilient economy succeeding in the world, creating good jobs and opportunities, offering people a ladder up and the chance to make the most of their potential.
It is bold and ambitious, but it’s the only way we can secure the future the British people deserve. And it is achievable. I have glimpsed the future as I have visited so many successful British-based businesses, creating good jobs, investing, innovating and exporting. If Britain is to succeed, we need these companies to succeed, and we need more of them – in manufacturing and engineering, but also our creative industries, the life sciences, business and professional services and other leading sectors. Our job as politicians is to support them to grow.
How? Labour’s approach is built on four pillars. First, we must liberate the talents of everyone in Britain. We can’t hope to thrive if we are not giving everyone – in every part of Britain – the platform to succeed. This means removing structural barriers to success – fixing broken markets, intensifying competition and supporting entrepreneurship. It means getting more growth capital to business through a proper, independent British Investment Bank and a network of regional banks. It is why Labour stands for radical devolution of economic powers to our cities and regions. But, most importantly, it means addressing the skills gap.
There can be no future for Britain competing on cost not quality, on low-wage strategies in a self-defeating race to the bottom. We must win a race to the top – supporting businesses to create more jobs people can build a life on, and ensuring people have the skills to do them. So we will strengthen vocational education for 14s to 19s based on plans set out by Tristram Hunt, the Shadow Education Secretary, yesterday. We will reform apprenticeships, putting employers in the driving seat and asking in return that they create more high-quality apprenticeships in their sectors and supply chains. And just as Catapult Centres are at the cutting edge of technology, so we will support them to train apprentices in the latest and best ideas too.
Second, we must innovate to secure our future, developing solutions to tomorrow’s problems today. It will be a priority for us to invest in our science base and our national innovation system. But to solve the problems of tomorrow, you must first acknowledge they exist. This is difficult if half your Cabinet and your party do not accept the basic science of climate change. You can’t claim to be pro-innovation if you are anti-science. Instead of denying change, we need to support business so that – as our automotive sector are discovering – the transition to a low-carbon economy becomes an opportunity to lead and build market share, not a drag on growth.
Third, we need business and government to take a longer-term view and to work together strategically. This means rules of the game that encourage and support business to focus on long-term value creation. It means putting decisions on infrastructure on a consistent, long-term path. That is why we will implement Sir John Armitt’s recommendation of a National Infrastructure Commission. It also means implementation of an ambitious industrial strategy to support the development of UK industry in targeted sectors to make the most of our competitive edge.
Finally, we must remain open to the world, shaping the forces of change in partnership with other countries – in Europe and beyond. Too many within the Conservative Party welcome the prospect of our exit from the EU, choosing isolation instead. That would be disastrous for Britain. We should stay in and focus on making the EU work better for growth. That is why we have proposed the appointment of a specific Growth Commissioner to remove unnecessary barriers to enterprise and to bring greater coherence to European industrial policies.
Success in a changing word requires more than a return to business as usual. It requires an economy retooled for a world of change. Agenda 2030 is our long term plan to do build a different kind of economy that benefits us all and supports British business to succeed.