What does a left-wing 'rebalancing' look like?

To stand apart from Cameron and Clegg, Miliband needs a radical agenda for the bottom half of the labour market.

With a little over two years until the next general election, Labour's objectives for economic reform feel ambitious yet vague. We can all sign up to the UK being a bit less reliant on the financial sector, but then what? When people on the left talk about rebalancing the economy we need to understand what it is we are trying to rebalance and how - and say loud and clear why the right's version of rebalancing will fail. This weekend Ed Miliband needs to respond to this challenge, when he addresses the Fabian New Year Conference on his plans for 'one nation' Britain.

In his recent speeches, Miliband has used words like "responsibility" and "rebalancing" a lot, but they raise as many questions as they answer. Economic rebalancing can’t be achieved by a few eye-catching attacks on gas companies or millionaires’ pension funds. Reforming capitalism so that it works in everyone’s interests, which is what ‘one nation’ must mean, implies the UK turning its back on its 30-year mid-Atlantic experiment and transforming itself into a mainstream north European economy.

The coalition loves to talk about our unbalanced public finances but every pound borrowed is a pound lent, so Miliband must retort that excessive saving by companies is the flip-side of excessive public borrowing. Labour should promise to unwind the economic forces which have led companies to accumulate and lend so much cash, by creating the conditions in which firms want to investment for the long-term. This will mean sweeping reforms to the financial system whose short-termism has incentivised corporate executives to deliver fast profits not long-term value.

Labour also needs to expose the coalition’s ill-disguised plot to turn temporary deficit reduction into a permanent contraction of the state. Rather than aiming for public spending to return to the long-term average of 42 to 43 per cent of GDP, the chancellor plans a retreat from the crisis peak of 47 per cent all the way down to 39 per cent. Miliband has little choice but to argue for a different path because he believes that public spending matters for economic growth as well as social justice. For George Osborne’s cuts make it almost impossible to spend decent amounts on infrastructure, housing, science or skills.

The coalition has set the terms of the debate so well that retaining public spending at more than 40 pence in the pound has become a controversial proposition. But with Obama-style tax rises for the rich, Labour can set out an alternative route to sound public finances that avoids ’overshooting’ Britain’s historic levels of spending.

This is not to say that Miliband should defend every corner of public spending. This week’s debate on benefit uprating focused on how many working families receive tax credits, but it dwelt little on why so much money needs to be spent topping up low pay in the first place. The truth is that Britain has the highest share of low paid workers in any EU country outside eastern Europe. The Treasury would save huge sums on in-work benefits if rather than having 21 per cent of workers on low pay we could match Finland’s eight per cent.

So Labour’s next priority for a rebalanced economy must be a radical agenda for the bottom half of the labour market. Jobs need to be designed and people trained so work is more productive and secure, which in turn can bring about better pay and progression. This is about culture not just economics, because there are huge disparities in the pay, status and value of low earning  ’women’s work’ across Europe.

Labour must accept that transforming the bottom of the labour market will take change within companies, including laws to require greater worker representation and ownership. And Miliband should say that if industrial sectors and supply-chains do not work together to improve conditions he will impose new public solutions like wage councils or training levies.

But he also needs to promise a decent floor on low pay for everyone. Miliband has talked a lot about the ‘living wage’ but has never quite embraced it as a national policy.  This week he should promise an ‘escalator’ to take the minimum wage, in small increments over five years, to the level of the living wage, which is £7.45 per hour today. Even for the worst hit sector, hospitality, this would mean an increase in payroll costs of a little more than one per cent per year.

If Labour’s ‘one nation’ version of economic rebalancing is to mean anything, it must be about reducing the entrenched inequality of the British labour market and making it harder for employers to make a profit through public subsidies on poverty pay. To stand apart from Cameron and Clegg, this should be Miliband’s first step in a concrete plan to change the character of British capitalism and take the country towards the mainstream of northern European economies.

Andrew Harrop is general secretary of the Fabian Society and editor of the Fabians’ new pamphlet The Great Rebalancing: how to fix the broken economy

"We can all sign up to the UK being a bit less reliant on the financial sector, but then what?" Photograph: Getty Images.

Andrew Harrop is general secretary of the Fabian Society.

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How to explain Brexit to your kids

It’s not hard. The Brexiteers’ tantrums are a parody of how children behave.

My parents never sat me down for “the politics talk”. I suspect they were too embarrassed. Like many children of my generation, I was left to develop my own ideas about what adults did in private.

We didn’t have the internet and our arms were too short to open most newspapers (scientists were still working on the tabloid-broadsheet hybrid). Hence we picked up news randomly, either by overhearing snippets on the radio while buying sweets in the newsagent’s or by accidentally watching the start of the six o’clock news following the end of Charles In Charge.

By the time I was nine, the same age my eldest child is now, I had unrealistic expectations of politicians and the democratic process. Due to the fact that I had no idea what anyone was talking about, I assumed everyone in the House of Commons was having serious, informed thoughts about the most important issues of the day.

I now know that the real reason I couldn’t understand what anyone was saying was because what had sounded like “roargh roargh [insult] <braying laughter>” really had been “roargh roargh [insult] <braying laughter>” all along. I’d assumed it was a language I had yet to learn, one of the more specialised dialects of Adult-ese. I’d already wasted one vote by the time I realised that Prime Minister’s Questions was basically Jeremy Kyle with posher accents and minus the lie detector tests.

I don’t want my children to make the same mistakes as me. Thankfully, it turns out Brexit Britain is the ideal place to teach your kids how politics really works. Never has there been a time when those stalking the corridors of power were more in tune with the average tantruming toddler. There’s no point in rational argument; you just have to hope that those in power burn themselves out before too much damage is done.

This particular tantrum has of course been building for some time. The dominant rhetoric of the Leave campaign – like that of the Tory party itself – always offered a spoilt child’s view of the world, one in which you are the centre of the universe, depending on no one else for your survival.

When others point out that this isn’t the case – that perhaps you wouldn’t have a home and food on the table if it wasn’t for Mummy or Daddy, or perhaps the UK would not have a strong economy were it not a member of the EU – you simply tell them they’re being mean. You’ll show them! They’re not the boss of you! So you pack your bags and leave.

If you are six, you might get to the corner of your road, realise with disappointment that no one is following you and turn back, hoping no one noticed you were gone. If you are the UK, you hang around for a while, maybe hiding in some bushes, thinking “any minute now they’ll come looking for me.”

But they don’t, so eventually you think “sod ‘em, I’ll go to my mates’. Unfortunately, you cannot get there without Mummy to drive you. This is a problem. But at least you can tell yourself that you were doubly right to leave, since everything that is happening now is Mummy’s fault.

Never in British politics has the panicked outrage of those who know they are making a terrible mistake been so palpable. It reminds me of the time when I was teaching my eldest son to drink from a beaker. He kept spilling small amounts, which caused him so much distress he’d end up pouring the rest of the juice onto the carpet to make it look deliberate. Whenever I tried to stop him, I’d only make him more panicked, thus even more likely to get juice everywhere.

I have since asked him if he remembers why he did this. He says he does not, but I have told him this is what the British government is doing with Brexit. The referendum was the initial spillage; we now have to sit and watch, biting our tongues, in the hope that the “well, anyhow, I totally meant to do that!” response can be averted.

There is little chance of that, though. When my middle son told his older brother he could fly, he quickly backed down on being asked to demonstrate this by jumping from an upstairs window. Liam Fox would have thrown himself headlong, then blamed Project Fear for his broken neck. Or rather, he’d have thrown someone else – one of the millions of people whose lives really will be ruined by Brexit – then tried to argue that the exceptionally bendy necks of UK citizens could be used as one of the “main cards” in negotiations.

The behaviour is beyond childlike; it is a parody of how children behave. When I asked one of my sons to clean his teeth this morning, he called me a “poo head” and said his teeth wouldn’t get decay. He still brushed them, though.

He did not conclude I was some sinister sore loser out to trick him because his teeth are young and white and mine are old and stained. He still has some basic sense that people who ask you to do things you don’t want to do might yet have your best interests at heart, regardless of who is right or wrong. He did not call me a sneering member of the elite trying to override the will of all toothpaste-rejecting British children (to be fair, I think “poo head” may have been meant to capture that, but at least he only called me it once).

Then again, the teeth in my son’s head are his alone. The consequences of neglect would be his to endure. Those stage-managing the Brexit tantrum are insulated from its most devastating consequences. Thus they can hurl insults, stick their fingers in their ears and take more than a little pleasure in the sheer recklessness of it all. It is not just an extended childhood; it is childhood without having to come to terms with the consequences of your own behaviour, because others will suffer them for you.

I want my own children to understand that what they see now is not what politics should be. That there is not some deep, meaningful logic underpinning what the adults in charge are doing. What looks like bitterness, point-scoring and sheer lack of self-control is, more often than not, just that. We have indulged these people too long. Let’s raise a generation with higher expectations of those who will claim to speak on their behalf.

Glosswitch is a feminist mother of three who works in publishing.