The living standards crisis is hitting Britain's wealth creators


This article was first published on the Guardian on 6 August 2013. 

The squeezed middle that Ed Miliband has been so focused on over the past three years isn't just employees – it's also people who might not have a boss, but are certainly feeling the squeeze.

This isn't just a matter of fairness for "One Nation" Labour. It's about how Britain competes in the 21st century. We need a recovery – and an economy – built on the talents of all, where rewards reflect the fact that wealth isn't just created by a few at the very top, but by the many. That's why the economic effects of the living standards crisis we are seeing are so worrying.

As Chris Leslie has set out in great detail, soaring prices and stagnating incomes have left working people £1,350 worse off than in 2010 in real terms. By 2015 they will on average have lost a staggering £6,660 in real terms since the Tory-led government took office. While ministers stand up for the few earning millions, millions of hard-working people on middle and lower incomes are struggling because of the government's failed economic plan and refusal to stand up for the interests of hard-working families across Britain. For example, this week we learned that a far greater number of people than previously thought are employed on zero-hours contracts for whom the weekly uncertainty of whether they will get work and whether money is coming in make it impossible to plan ahead and put even more pressure on family budgets.

As well as the impact on employees, the living standards crisis is hitting small businesses and the self-employed equally hard. We need to see many more people starting businesses and becoming their own boss, but the squeezed middle exists as much within this group as in the population at large as rising costs are hitting small businesses – who after all are consumers too.

On energy, while prices continue to soar small firms are not afforded the same protections as individual consumers – we have pledged to change this. At the Federation of Small Businesses annual conference in March I told the members that under a Labour government energy companies will be banned from rolling small businesses over on to more expensive tariffs without consent while we would act to limit back-billing to one year instead of six and require energy companies to offer realistic repayment plans for small firms who fall behind.

And Royal Mail is a service which many of our small businesses and those who work in them rely on day to day, but the government is pushing ahead in the face of huge opposition with its plans for a fire sale of the treasured service to generate a quick buck for the chancellor. There have already been hikes in the cost of stamps under this government, but there are fears that privatisation will lead to further price rises, coupled with a poorer service for customers. For example, there is nothing to stop a private buyer of Royal Mail cashing in by closing delivery offices, selling them off and re-siting in less convenient locations. With Tory privatisations in the past we've seen how service users can end up losing out and getting a raw deal.

So, in a recovery made by the many, businesses and those who work in them all have a crucially important role to play – unleashing new ideas, creating new jobs, driving growth and helping people realise their full potential. But the living standards crisis is hitting the business owners of today and the potential entrepreneurs of tomorrow, making it less likely that people set up on their own. It is hitting their employees too. At a time when we need to be doing all we can to support Britain's wealth creators, we cannot afford for this to happen and for this talent to be lost.