Harriet Harman's speech to Labour conference: full text

The full version of the Labour deputy leader's closing speech to the party's conference.

Hi Conference.

I'm Hattie, 62, from Camberwell.

And here’s today’s news in briefs.

It’s been a great week for the Labour Party.

And it’s been a great week for Ed Miliband.

I've known Ed for more than 20 years.

In fact, it was me that gave him his first job in politics.

And, you know, when Ed worked for me, people were always saying, I don't know how you do it, with all that you do and so busy with 3 young children, you make such brilliant speeches.

But my secret weapon was Ed Miliband.

Ed, with your speech you showed everyone, the qualities you've always had:

  • Your conviction.
  • Your confidence.
  • Your compassion.
  • Your courage.

And when you told us the story about your family, you showed everyone why you have

  • Such faith in this country.
  • And such faith in the power of politics as a force for good.

Ed, we all know you love baseball, of course, you're a Red Sox fan.

So, can I just say to you...

You knocked the ball right out of the park.

Conference, since we met last year, I've taken up my new role as Shadow Culture Secretary.

I was lucky enough to go the Brits.

The wine was flowing, the music was loud and I did that thing that politicians must never do.

I hit the dance floor.

I know what you're thinking.... why is it that our Deputy Leaders always have to make such a prat of themselves at the Brits?

The next morning I was mortified.

As I feared, someone had tweeted about it – ‘LabourMP in dodgy dancing cringe fest’.

But the good news was it then said - 'honestly.... you'd think @tessajowell would know better'.

And the other good news is that people are still stopping me in the street and saying:

"Thank you so much for bringing the Olympics to Britain, Tessa!”

And I say, “you're welcome.”

And we all want to say a huge thank you to Tessa for all her years on Labour's front bench and the brilliant job she did on the Olympics.

Thank you, Tessa.

And in my new role as Shadow Culture Secretary, I'm always asked what I'm reading.

And just the other week, I had an awkward moment when a journalist asked me if I'd read "that" book.

Women here will know the one...

The one about a sado-masochistic relationship - you know...

…with a dominant superior controlling a naive submissive...

And I said: "don't be silly - of course I've read the coalition agreement."

Now, as it happens I have also read ‘50 Shades of Grey’ - for ‘research purposes’.

But I have to say I don't think it's very realistic.

Because, let's be honest, what most women want is not a man who ties you to the bed, but one who unstacks the dishwasher while you watch the Great British Bake-Off.

Each and every Conference has its own defining point.

This is the Conference - here in Manchester 2012 - where Ed fired the starting gun for the next general election.

Because of what Ed's done since he became leader – we are now in with a fighting chance of forming the next government.

But we all know that we still have a long way to go.

We've got to fight the Tories.

We've got to fight the Lib Dems.

We've got to work as a team.

And we've got to have no no-go areas for Labour.

Because people all over this country are suffering with this Government. Young people are finding it really hard to get their first job.

And women are finding it hard to hang onto their jobs - and that's just the women in David Cameron's Cabinet.

You know Angry Birds used to be David Cameron's favourite computer game - now it's his pet name for Caroline Spelman and Nadine Dorries.

But there is one woman who can always rely on David Cameron's unswerving, unconditional support – Rebekah Brooks.

But when it comes to the next election, I suspect women in this country will have seen enough and won’t give Cameron one of those famous 'second chances' he's so fond of.

And what about the Lib Dems.

They claim to be a brake on the Tories – but they are nothing of the sort – they are their accomplices.

They boast of the pupil premium – all well and good – but then they vote with the Tories for the biggest education cuts since the 1950s.

They boast of taking people out of tax by raising the tax threshold – all well and good – but then they vote with the Tories to slash those people’s tax credits.

They boast of a clamp-down on tax avoidance – all well and good – but then they vote with the Tories for tax cuts for millionaires.

People say you get the politicians you deserve.

But no-one deserves Nick Clegg.

Calamity Clegg who has propped up this miserable Tory Government every step of the way.

It's no wonder Vince Cable is on manoeuvres.

But let’s not forget Saint Vince is in it up to his neck too. After all, it was his policy to treble tuition fees.

So I have a message for Vince. Don't bother texting Ed - he's changed his number.

We have a first-past-the-post system and voters get just one vote - we're saying to them vote Labour.

We are not fighting to be part of a coalition Government - we are fighting to win.

So now, in that all important by-election in Corby:

 

  • We have got to campaign as never before
  • And make sure people use their vote - their one precious vote
  • To elect our fantastic local Labour candidate Andy Sawford.

To win the next General Election we must – all of us – adopt a marginal seat mindset and listen to the people where we don't have Labour MPs as well as where we do.

That's why every one of our Shadow Ministers will adopt a marginal seat – working alongside our Labour candidate, to listen to and understand the concerns of people there.

Ed Balls has twinned with Clair Hawkins in Dover and Deal. Chuka is backing Clive Lewis and Jessica Asato in Norwich and I'm proud that I'm twinned with Andrew Pakes in Milton Keynes.

Conference, we’ve got to be the voice speaking up for the young couple in Dartford, as well as the young couple in Darlington.

We’ve got to speak up for the pensioner in Gloucester, as well as in Grimsby.

The commuter in Milton Keynes as well as in Manchester.

And at a time when many people have no faith in politicians and think that politics is a dirty word – it’s even more important that people can see, in Parliament:

  • Someone like them.
  • People they can relate to.
  • People they can trust.

And over the months ahead, in your local parties, you’re choosing your candidates for the next General Election I know you will want to choose candidates from all walks of life - from our factories and shop floors, from business to our armed services, people from all different backgrounds and cultures and a balanced team of men and women.

We must reflect the country we seek to serve.

And because we're determined to achieve the difficult task of making this a one-term coalition there's no place for complacency - or business as usual.

We have to – and are – doing things in a different way.

We’ve got to reach out beyond our Party faithful into communities, connecting with people who otherwise feel that politics has nothing to offer them.

We have to build our Party with more members and more supporters – so let's each and every one of us play our part in Labour’s Plus One Campaign.

Which has already been a great success. Since just the start of this conference, more than 1200 new members have joined, and 5000 have registered as supporters.

Conference, we all celebrated the Olympic games-makers who came here this week. I want us to thank our very own conference games-makers - our fantastic army of stewards.

And there's another group of people I know we'll all want to pay tribute to - our brilliant and hardworking party staff.

This has been a difficult year but the work you put in – in our headquarters and all around the country – is nothing short of heroic.

Thanks to each and every one of you.

And I want to thank our General Secretary Iain McNicol.

Iain, you have led the party staff through those difficult times and I have no doubt, with you at the helm, our party will go from strength to strength.

It's always great to be at Conference.

But this week has been special.

This week – the game has changed.

We know we have big challenges ahead.

But we leave Manchester emboldened, enthused, with a strong sense of purpose.

We have grown in confidence.

We have grown in self-belief.

This country needs a government of and for all its people, not a coalition that plays divide and rule.

This country needs a One Nation Labour Party and a One Nation Labour government.

Labour deputy leader Harriet Harman delivers her closing speech at the party's conference in Manchester. Photograph: Getty Images.
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We're racing towards another private debt crisis - so why did no one see it coming?

The Office for Budget Responsibility failed to foresee the rise in household debt. 

This is a call for a public inquiry on the current situation regarding private debt.

For almost a decade now, since 2007, we have been living a lie. And that lie is preparing to wreak havoc on our economy. If we do not create some kind of impartial forum to discuss what is actually happening, the results might well prove disastrous. 

The lie I am referring to is the idea that the financial crisis of 2008, and subsequent “Great Recession,” were caused by profligate government spending and subsequent public debt. The exact opposite is in fact the case. The crash happened because of dangerously high levels of private debt (a mortgage crisis specifically). And - this is the part we are not supposed to talk about—there is an inverse relation between public and private debt levels.

If the public sector reduces its debt, overall private sector debt goes up. That's what happened in the years leading up to 2008. Now austerity is making it happening again. And if we don't do something about it, the results will, inevitably, be another catastrophe.

The winners and losers of debt

These graphs show the relationship between public and private debt. They are both forecasts from the Office for Budget Responsibility, produced in 2015 and 2017. 

This is what the OBR was projecting what would happen around now back in 2015:

This year the OBR completely changed its forecast. This is how it now projects things are likely to turn out:

First, notice how both diagrams are symmetrical. What happens on top (that part of the economy that is in surplus) precisely mirrors what happens in the bottom (that part of the economy that is in deficit). This is called an “accounting identity.”

As in any ledger sheet, credits and debits have to match. The easiest way to understand this is to imagine there are just two actors, government, and the private sector. If the government borrows £100, and spends it, then the government has a debt of £100. But by spending, it has injected £100 more pounds into the private economy. In other words, -£100 for the government, +£100 for everyone else in the diagram. 

Similarly, if the government taxes someone for £100 , then the government is £100 richer but there’s £100 subtracted from the private economy (+£100 for government, -£100 for everybody else on the diagram).

So what implications does this kind of bookkeeping have for the overall economy? It means that if the government goes into surplus, then everyone else has to go into debt.

We tend to think of money as if it is a bunch of poker chips already lying around, but that’s not how it really works. Money has to be created. And money is created when banks make loans. Either the government borrows money and injects it into the economy, or private citizens borrow money from banks. Those banks don’t take the money from people’s savings or anywhere else, they just make it up. Anyone can write an IOU. But only banks are allowed to issue IOUs that the government will accept in payment for taxes. (In other words, there actually is a magic money tree. But only banks are allowed to use it.)

There are other factors. The UK has a huge trade deficit (blue), and that means the government (yellow) also has to run a deficit (print money, or more accurately, get banks to do it) to inject into the economy to pay for all those Chinese trainers, American iPads, and German cars. The total amount of money can also fluctuate. But the real point here is, the less the government is in debt, the more everyone else must be. Austerity measures will necessarily lead to rising levels of private debt. And this is exactly what has happened.

Now, if this seems to have very little to do with the way politicians talk about such matters, there's a simple reason: most politicians don’t actually know any of this. A recent survey showed 90 per cent of MPs don't even understand where money comes from (they think it's issued by the Royal Mint). In reality, debt is money. If no one owed anyone anything at all there would be no money and the economy would grind to a halt.

But of course debt has to be owed to someone. These charts show who owes what to whom.

The crisis in private debt

Bearing all this in mind, let's look at those diagrams again - keeping our eye particularly on the dark blue that represents household debt. In the first, 2015 version, the OBR duly noted that there was a substantial build-up of household debt in the years leading up to the crash of 2008. This is significant because it was the first time in British history that total household debts were higher than total household savings, and therefore the household sector itself was in deficit territory. (Corporations, at the same time, were raking in enormous profits.) But it also predicted this wouldn't happen again.

True, the OBR observed, austerity and the reduction of government deficits meant private debt levels would have to go up. However, the OBR economists insisted this wouldn't be a problem because the burden would fall not on households but on corporations. Business-friendly Tory policies would, they insisted, inspire a boom in corporate expansion, which would mean frenzied corporate borrowing (that huge red bulge below the line in the first diagram, which was supposed to eventually replace government deficits entirely). Ordinary households would have little or nothing to worry about.

This was total fantasy. No such frenzied boom took place.

In the second diagram, two years later, the OBR is forced to acknowledge this. Corporations are just raking in the profits and sitting on them. The household sector, on the other hand, is a rolling catastrophe. Austerity has meant falling wages, less government spending on social services (or anything else), and higher de facto taxes. This puts the squeeze on household budgets and people are forced to borrow. As a result, not only are households in overall deficit for the second time in British history, the situation is actually worse than it was in the years leading up to 2008.

And remember: it was a mortgage crisis that set off the 2008 crash, which almost destroyed the world economy and plunged millions into penury. Not a crisis in public debt. A crisis in private debt.

An inquiry

In 2015, around the time the original OBR predictions came out, I wrote an essay in the Guardian predicting that austerity and budget-balancing would create a disastrous crisis in private debt. Now it's so clearly, unmistakably, happening that even the OBR cannot deny it.

I believe the time has come for there be a public investigation - a formal public inquiry, in fact - into how this could be allowed to happen. After the 2008 crash, at least the economists in Treasury and the Bank of England could plausibly claim they hadn't completely understood the relation between private debt and financial instability. Now they simply have no excuse.

What on earth is an institution called the “Office for Budget Responsibility” credulously imagining corporate borrowing binges in order to suggest the government will balance the budget to no ill effects? How responsible is that? Even the second chart is extremely odd. Up to 2017, the top and bottom of the diagram are exact mirrors of one another, as they ought to be. However, in the projected future after 2017, the section below the line is much smaller than the section above, apparently seriously understating the amount both of future government, and future private, debt. In other words, the numbers don't add up.

The OBR told the New Statesman ​that it was not aware of any errors in its 2015 forecast for corporate sector net lending, and that the forecast was based on the available data. It said the forecast for business investment has been revised down because of the uncertainty created by Brexit. 

Still, if the “Office of Budget Responsibility” was true to its name, it should be sounding off the alarm bells right about now. So far all we've got is one mention of private debt and a mild warning about the rise of personal debt from the Bank of England, which did not however connect the problem to austerity, and one fairly strong statement from a maverick columnist in the Daily Mail. Otherwise, silence. 

The only plausible explanation is that institutions like the Treasury, OBR, and to a degree as well the Bank of England can't, by definition, warn against the dangers of austerity, however alarming the situation, because they have been set up the way they have in order to justify austerity. It's important to emphasise that most professional economists have never supported Conservative policies in this regard. The policy was adopted because it was convenient to politicians; institutions were set up in order to support it; economists were hired in order to come up with arguments for austerity, rather than to judge whether it would be a good idea. At present, this situation has led us to the brink of disaster.

The last time there was a financial crash, the Queen famously asked: why was no one able to foresee this? We now have the tools. Perhaps the most important task for a public inquiry will be to finally ask: what is the real purpose of the institutions that are supposed to foresee such matters, to what degree have they been politicised, and what would it take to turn them back into institutions that can at least inform us if we're staring into the lights of an oncoming train?