The Choice on Long Term Growth


This article was first published on the Huffington Post on 21 August 2014.

And the prime minister appointed his cabinet secretary and a senior Treasury mandarin to negotiate with Pfizer over the heads of the AstraZeneca board.

As the extent to which tax inversion was driving Pfizer's interest in the deal was becoming clear, this ought to have been ringing alarm bells. But Conservative ministers, fixated on the short term, were undeterred by the possible long term adverse consequences of a deal. This led to the government undermining the ability of AstraZenica's board to act at the start of the bid process, leaving chairman Leif Johansson to plea for greater neutrality on the deal.

This was not about foreign ownership; AstraZeneca is an Anglo-Swedish company, with operations right across the globe. The real difference was this: whereas the Conservatives were willing to put at risk our science base for short term political advantage, Labour's focus was on the long-term.

Britain faces huge challenges to compete in a world being transformed by the pace of technological change and the rapid rise of emerging economies, which whilst intensifying competition are also creating huge new markets and new opportunities.

The government is failing to meet these challenges and to tackle the cost-of-living crisis and ease the burden on households. After four years of Conservative-led government, wages after inflation are on average £1,600 a year lower than in 2010. The Conservatives promised to rebalance the economy across all regions but abolished Regional Development Agencies, putting in place a flagship Regional Growth Fund that's been mired in chaos and delay. Now the government's own figures show the scheme failing to meet its private investment target by almost £1billion.

The link between growth in the economy and average wages was broken before the recession. Recovery alone has not fixed it. Across the OECD, the average change in productivity - the ultimate determinant of living standards - between 2010 and 2013 was growth of 2%, whereas in the UK it reduced. Despite a recent modest rise, business investment remains almost a fifth lower than its 2007 peak and exports remain weak.

But, above all, if we are going to pay our way in the world and generate growth that benefits all, we need to take a different and much longer-term approach. That is why Labour has set out Agenda 2030, our long-term plan to earn and grow our way to a higher standard of living for all.

First, we must release the talents of all our people. So Labour will ensure that there are clear vocational as well as academic pathways in education. Starting in school, and from high quality apprenticeships right through to technical degrees. We'll ensure entrepreneurs with good ideas from all backgrounds get the support needed to start their own businesses. And we'll decentralise decision making powers and control of budgets to cities and regions.

Second, to capture new markets around the world and generate more, well-paid jobs we must put innovation at the heart of our economy - solving tomorrow's problems today. Social and environmental challenges shouldn't be seen as limits on prosperity, but as a spur for innovation. We should invest in our science base and preserve it as a unique national capability, not treat it as a pawn in a tax planning game - the real risk posed in the Pfizer/AstraZeneca bid.

Third, we must structure the rules of the game so that firms are encouraged, supported and ultimately rewarded in the market for taking a longer-term view. Government must set clear strategic direction, supporting development of industries where we have a competitive edge, and create a more certain environment for business investment.

Fourth, we must engage with the world beyond our shores, starting with our nearest and largest market, the EU, which is also a gateway to trade with emerging markets. We should be focused on reforming the EU, not flirting with exit.

Growing our way out of the cost-of-living crisis means long-haul reform, not short-term fixes: investing in all our people; viewing problems of today as opportunities for tomorrow; taking a strategic approach; and looking outwards to the world. This way, we can nurture and build more world beating companies like AstraZeneca not fewer.