Ed Miliband's speech on the cost of living crisis: full text

"The first and last test of economic policy is whether living standards for ordinary families are rising."

It is great to be here in Battersea with you today.
Last Friday, I was in my constituency, at the local Citizens Advice Bureau.

And I talked to some people who had been preyed upon by payday lenders.

There was a woman there in floods of tears.
She was in work.

But she took out a payday loan for her deposit so she could rent somewhere to live.

And then disaster followed.

A payday loan of a few hundred pounds became a debt of thousands of pounds.

She still faces bullying, harassment and threats from multiple payday lenders.

Like the young mum I met who described sitting at home with her daughter and seeing an advert on the TV for a payday lender.

She said she was down to the last nappy for her baby.

She took out the payday loan.

And one led to many more, with her ending up spending most of the money she had each week on repayments and charges.

She was so frightened by the harassment she faced that she had given her mobile phone to her mum.

Her mum showed me the phone and told me that she’d had fifteen calls that day.

The woman who worked at the CAB said the problem had got far, far worse in the last couple of years.

She said: “payday lenders are running riot through people’s lives in this community.”

Yesterday Wonga released a film all about themselves.

And last night the boss of Wonga said he was speaking for the ‘silent majority’, who are happy with their service.

But the truth is he wants us to stay silent about a company where in one year alone their bad debts reached £120 million.

An industry in which seven out of ten customers said they regretted taking out a loan.

With half saying they couldn’t pay it back.

Payday lenders don’t speak for the silent majority.

They are responsible for a quiet crisis of thousands of families trapped in unpayable debt.

The Wonga economy is one of the worst symbols of this cost of living crisis.

And as I listened to these stories, my overwhelming thought was: how is this being allowed to happen in Britain, 2013?

Because these stories of payday lenders are just one part of the cost of living crisis facing families across our country.

Low skilled jobs.

Wages that are stagnating.

Predatory behaviour by some companies.

This isn’t just an issue for the lowest paid, it affects the squeezed middle just as much.

A country where a few at the top do well, but everybody else struggles.

This is not just an issue facing Britain.

It is the issue facing Britain.

It is about who our country is run for.

How it is run.

And whether we believe we can do better than this.

I do.

The Nature of the Problem

Now, David Cameron said recently that I wanted to “talk about the cost of living” because I didn’t want to talk about “economic policy.”

So we have a Prime Minister who thinks we can detach our national economic success from the success of Britain’s families and businesses.

He doesn't seem to realise that there is no such thing as a successful economy which doesn't carry Britain’s families with it.

And he obviously doesn't get that the old link between growth and living standards is just broken.

Growth without national prosperity is not economic success.

The first and last test of economic policy is whether living standards for ordinary families are rising.

And the scale of the problem is familiar to millions of people in our country.

The official figures say that on average working people are £1,500 a year worse off than they were at the election.

And it has happened because prices are rising faster than wages.

In 39 out of the 40 months that David Cameron has been Prime Minister.

But the average doesn’t tell you the whole story.

We don’t just need average wages to creep higher than prices.

For people to be genuinely better off, we have to do much better than that.

Ordinary families are hit harder than average by higher prices.

They rely more on expensive basic necessities, like electricity and gas.

And ordinary families do worse than the average when it comes to wage increases.

Because those increases are scooped by a few at the top.

Chief executive pay went up by 7 per cent last year.

When everyone else’s wages were falling.

We can’t just make do and mend.

We need to do much better than we are.

Can Anything Be Done?

And that means we can’t just carry on as we are.

We have to permanently restore the link between growth and living standards for all of Britain’s working people.

This Government can’t do it.

And the reason is because they are wedded to Britain competing in a race to the bottom.

Listen to their silence on our plans for a living wage.

Nothing to say.

On the falling value of the minimum wage.

Nothing to say.

On zero-hours contracts.

Nothing to say.

On the exploitation of low-skill migrant labour which undercuts wages.

Nothing to say.

They’re silent because of what they believe in.

In his speech to the Conservative Party Conference, George Osborne described my argument that they believed in a race to the bottom as something straight out of “Karl Marx” and “Das Kapital.”

No.

He’s wrong.

It is about what is happening in this capital city.

Right here.

And towns and cities across the country.

Right now.

Now, they think that this low wage economy is the best we can do.

Because they believe doing anything about it means intervening in markets in ways that we shouldn’t.

I disagree.

A dynamic market economy, with profitable private sector companies is essential for creating the wealth we need.

But markets always have rules.

The question is: what do those rules allow?

And what do they encourage?

Do they encourage companies to create high-skill, high-wage jobs, as part of a race to the top?

And provide the support they need to do so?

Or do they encourage a race to the bottom of low wages and low skills?

Do the rules mend broken markets?

Or allow some firms to take advantage of broken markets at the expense of everybody else?

All governments set rules for what they want to see.

This Government does intervene in markets but in the wrong way.

They make it easier to fire people.

Water down rights for agency workers.

Turn a blind eye to the failure to pay the minimum wage.

Pushing companies to compete on low wages, low skills and worse terms and conditions.

They introduce tax cuts for the richest.

Defend bonuses for the bankers.

Stand up for a powerful few.

Supporting their belief that wealth will trickle down from those at the top to everybody else.

Don’t believe it when they say they are stepping away, they are stepping in all the time, stepping in to stand up for the wrong people.

High hopes for those at the top.

Low expectations for everyone else.

A race to the bottom.

When what we need is a race to the top.

Dealing with the Cost of Living Crisis: Jobs

To win that race to the top, we are going to earn and grow our way out of this cost of living crisis.

Not by spending money we don’t have.

Because we have to bring the deficit down.

But by building a different kind of economy.

One that really works for working people.

That starts with the jobs our country creates.

David Cameron is still on his lap of honour.

To celebrate how brilliantly he has done.

In the slowest recovery for a hundred years.

We still face a massive challenge of creating jobs in this country.

There are still nearly two and half million people unemployed in Britain and nearly a million young people are still looking for work.

And when we look at the jobs in our economy, too many are low paid, part-time and temporary.

Half of new jobs have been in low paid sectors of the economy.

We have 1.4 million people working part-time when they want full-time work.

More than ever before.

And we’ve got more people in a temporary job because they can’t find a permanent one.

The Tories don’t think we can do anything about it.

They think it is the way we compete with China and India.

But they are wrong.

A Labour government will put all our country’s effort into winning a race to the top.

And that means taking action on both the quantity and quality of jobs that we are creating.

We can only win a race to the top if we transform our vocational education system and apprenticeships in this country, which is what we will do.

We can only win a race to the top if we radically transform the way we support business in every part of our country, with a proper regional banking system learning the lessons of Germany, which is what we will do.

We can only win a race to the top if we support the small businesses that will create the jobs of the future, by cutting business rates, which is what we will do.

We can only win a race to the top if we help parents get back to work and start earning to support their families by extending childcare for working parents to 25 hour a week, which is what we will do.

And we can only win a race to the top with a proper industrial policy, including for environmental jobs, which is what we will do.

All this is about re-engineering the British economy so that we make a difference to the kinds of jobs we create.

You can’t do it if you believe in a race to the bottom.

You can only do it if you believe in a race to the top.

Dealing with the Cost of Living Crisis: Wages

So dealing with the cost of living crisis starts with jobs.

But it is also about wages.

Wages for millions of people have been in decline for far too long.

I am talking about people battling to do the right thing and struggling and struggling.

Hard, honest work, in supermarkets, on building sites, in call centres.

Working harder, for longer, for less.

We have a low pay emergency in this country.

Five million people now paid less than the living wage.

Working for their poverty.

Up at least 1.4 million in just the last four years.

To one in five of all employed workers.

More of Britain’s poor children today are being brought up in working families than in jobless families.

And low wages aren’t just bad for working people.

They cost money in benefits too.

As the country has to subsidise more and more low paid jobs with higher and higher tax credits and benefits.

The government now pays more out on tax credits and benefits to those in work than it does for who are unemployed.

So to those who say we can’t afford to do anything about wages in our country today:

I say we can’t afford not to.

And many businesses now recognise that a low pay economy is bad for them too.

I was in Bristol last Thursday night talking to cleaners who are paid the living wage.

They told how proud to work for a firm like that.

Better pay means lower turnover of staff.

Higher productivity.

So we have to end the scandal of poverty pay in this country.

We would strengthen the minimum wage, which has lost 5 per cent of its value under this government.

We are looking at the case for higher minimum wages in particular sectors of the economy, like financial services, where they can afford to pay more.

And we will go further than that too.

That is why the next Labour government from its first day in office, will offer “make work pay” contracts to employers all over Britain.

It is a simple deal.

For the first year of a Labour government, we will say to every firm:

You start to make work pay, through a living wage.

And we will give you a 12 month tax rebate of 32p for every extra pound they spend.

Make work pay contracts will raise wages, keep the benefit bill down and tackle the cost of living crisis.
It is a good deal for workers, business and the taxpayer too.

And by tackling low pay we won’t just strengthen our economy, we will strengthen our society as well.
It is not good for our country for people to be working 60 or 70 hours a week, doing 2 or 3 jobs, not having time to see their kids.

We will change it.

Under a One Nation Labour government: work will pay.

Dealing with the Cost of Living Crisis: Broken Markets

And tackling the cost of living crisis is also about ensuring markets work for working people.

And that means fixing markets when they are broken.

This power station was built in the 1920s after a Conservative government intervened to fix a broken energy market.

That government, of Stanley Baldwin, knew that if government didn’t fix broken markets, nobody else was going to.

Stanley Baldwin knew it.

John Major seems to understand it.

But David Cameron doesn’t.

His response to Labour’s energy price freeze shows how out of the mainstream he is.

He took issue with the whole idea of government intervention in a broken market.

Ever since, on energy he seems to have had a different policy every day of the week.

But what we know is that we can never expect him to stand up to the energy companies, because they are a large and powerful interest.

It is not who David Cameron is.

It is not what he does.

He stands up to the weak, never to the strong.

For the next eighteen months, people will hear scare stories from the unholy alliance of the energy companies and David Cameron.

The Big Seven.

It will just reinforce in people’s minds who he stands up for.

The six large energy companies.

Not the 60 million people of Britain.

Today, new figures confirm that most of the recent price rises weren’t caused by government levies or by a rise in wholesale prices.

But are the direct result of a broken market.

For the average increase in the price for electricity and gas since 2011, over half went straight to the costs and profits of the companies themselves.

This shows exactly why we need a price freeze now.
Because only a price freeze will protect customers while we re-set the market.

A price freeze until 2017 will happen if Labour wins the election.

A freeze that will benefit 27 million families and 2.4 million businesses.

It is workable and it will happen.

And tomorrow, Parliament will vote on that price freeze.
So Conservative and Liberal Democrat MPs could vote for it now.

And if they line up against it, the British people will know the truth:

This Government is on the side of the big energy companies not hard-pressed families.

And our price freeze until 2017 will pave the way for us to radically improve the energy market for the long term.

We will publish an Energy Green Paper for:

A regulator that can cut unjustified price rises.

A ring fence between the generation and supply businesses of the energy companies, so there is proper transparency.

Forcing energy companies to trade the energy they produce in the open market.

And a new simple tariff structure that people can understand.

So we will change the way the energy market works.

In a way that will provide long-term confidence for investors and a better deal for consumers.

And we will mend other markets that aren’t working in the public interest.

Opening up competition in banking.

A cap on the cost of credit in payday lending.

Proper regulation of our train companies.

Ending unjustified charges and fees in the private rented sector.

And new social tariffs in the water industry.

The Conservative Party defends broken markets and the few people that profit from them.

I am proud that the Labour Party stands up for markets that work for working people.

Conclusion

The next general election will offer a big choice.

A choice about whether we tackle the cost of living crisis or shrug our shoulders.

A choice about whether we run a race to the top or a race to the bottom.

A choice about whether we reform broken markets or defend them.

A choice about how we succeed as a country.

Above all, the choice will be about who our country is run for.

There is a Tory vision for Britain that has low expectations for what most people should be able to expect.

Payday lenders can prey on the vulnerable.

Millions of families see stagnating living standards.

Energy companies can just carry on as they are, ripping off consumers.

My vision is different.

We can run Britain in a different way.

Different from the past.

Building a different future for our country.

Where ordinary people feel the country is run for them.

In their interests.

And for their future.

Earning our way to a better standard of living.

Sharing rewards fairly.

And making markets work for people, not the other way round.

Britain can do better than this.

And that’s what One Nation Labour will do.

 

Ed Miliband speaks to people affected by pay day loan users at the London Mutual Credit Union in Peckham. Photograph: Getty Images.
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Owen Smith interview: “I’m pretty red”

The Labour leadership challenger is struggling to win over a left suspicious of his past. 

The south Wales valleys embody the history of the labour movement: its victories, its defeats, its heroes, its villains. It was this resonant location that Owen Smith chose for his speech on the morning of 22 August. Labour Party members had that day begun voting on whether the 46-year-old Pontypridd MP should replace Jeremy Corbyn as their leader.

“Our history, our party was literally hewed from the hillsides around where we sit today,” Smith told a small audience at the Ely Valley Miners Welfare Club in Tonyrefail, a short distance from his home. The Welshman cited the Taff Vale judgment of 1901, which ruled that trade unions could be sued for losses caused by industrial action. It was this decision that spurred on the establishment of a Labour Party in parliament to repeal the law (as it would do in 1906 in alliance with the Liberal government).

Smith spoke later of marching with miners from the Maerdy Colliery as a 14-year-old, on the day they returned to work at the end of the 1984-85 strike. “I saw that they were utterly unbowed,” he recalled. “But they were ultimately defeated.”

Such moments, he concluded, proved the need for Labour to win power and to maintain “a powerful voice in parliament” – something he believes Jeremy Corbyn is incapable of providing. On 28 June, less than a year after Corbyn’s landslide victory, 172 MPs (81 per cent of the Parliamentary Labour Party) endorsed a no-confidence motion in him. Sixty-five shadow ministers, including Smith (who was then the shadow work and pensions secretary), resigned from the front bench.

Yet though Smith enjoys the overwhelming backing of the PLP, few believe he will prevail among members. He achieved only 53 constituency nominations, against the leader’s 285. On social media, where internal party contests are increasingly decided, Smith’s reach is minuscule compared to that of Corbyn (who has 795,000 Facebook fans to his 14,000).

The day before Smith spoke in south Wales, he won the endorsement of Sadiq Khan, the Mayor of London and Labour’s most senior elected politician. He was subsequently also backed by the Scottish Labour leader, Kezia Dugdale. Neil Kinnock and Ed Miliband have trumpeted his cause. Yet Smith-supporting MPs fear that such declarations count for little. “It’s like the Remain campaign and the Archbishop of Canterbury,” one told me, suggesting that Labour members, like Leave voters, ”weren’t listening” to such grandees.

Corbyn’s allies and foes alike are already preparing for the aftermath of the leader’s anticipated victory. The former warn that rebel MPs put themselves at risk of deselection by members. In response, some have threatened privately to form a parliamentary breakaway group and bid for the status of the official opposition.

Smith, unsurprisingly, insists that he can win. “I think the CLP [Constituency Labour Party] nominations don’t truly reflect the views in CLPs,” he told me when we spoke after his 20-minute address. The challenger, dressed in his favoured combination of dark suit and open-necked white shirt, welcomed the black coffee proffered by his aide. “They reflect the fact that some of the people who are new members and are supportive of Jeremy were very organised . . .

“Anybody who knows the Labour Party knows that selections are very often won by the sleepers: the people who don’t go to CLP meetings and don’t necessarily shout from the rooftops.” Smith’s hopes rest on those who share Oscar Wilde’s view: “The problem with socialism is that it takes up too many spare evenings.”

Cartoon: George Leigh

Smith first publicly revealed his leadership ambitions in an interview with me back in January. “It would be an incredible honour and privilege,” he said. I wrote then of a widespread view among Labour MPs that the next leader “will at least need to be from the party’s soft left to be acceptable to the party membership”. When the rebellion against Corbyn came, it was this consideration that proved decisive. Smith was embraced as a Miliband-esque socialist and a parliamentary “clean skin”, untainted by the New Labour years, having been elected in 2010. By contrast, his initial rival, Angela Eagle, had been an MP since 1992 and voted for the Iraq War.

However, Smith proved to have a more ambiguous past than some of his backers anticipated. Corbyn’s supporters swiftly unearthed a series of interviews from 2006 in which their opponent made a notably centrist pitch. Smith, then a by-election candidate in Blaenau Gwent, south Wales, defended Tony Blair (suggesting that they differed only over the Iraq War), supported private-sector involvement in the National Health Service and praised city academies. “I’m not someone, frankly, who gets terribly wound up about some of the ideological nuances,” he told Wales Online.

Since then, he has struggled to reconcile these positions with his increasingly left-wing programme: opposing private provision in the NHS, returning academy schools to local authority control, banning zero-hours contracts and imposing a wealth tax of 1 per cent.

“To be honest, my opponents have extrapolated rather a lot in an attempt to brand me as a ‘Blairite wolf in sheep’s clothing’,” Smith told me. “Well, I’m nothing of the sort, I’ve always been a democratic socialist and I always will be. My views haven’t really changed at all, I’m someone who has been on the left of the party.

“My dad [the Welsh historian Dai Smith] is someone who’s been on the left of the Labour movement all his life. I’m someone who’s been surrounded by people who’ve been on the left of the Labour movement all their lives. It should come as no surprise that I’ve come out of that background and I’m pretty red. Because I am.”

Yet a former shadow cabinet colleague told me that Smith did not stand out as “a radical” in meetings: “The only time that I remember him becoming really animated was over further tax-raising powers for Scotland and the implications for Wales.”

What Smith believes in most, some say, is himself. The shadow chancellor, John McDonnell, described him as “one of the most ambitious career politicians I’ve met”. Others have dismissed him as a “Big Pharma lobbyist” because of his past as head of policy and government relations for Pfizer.

“I’m not ashamed that I had a life outside politics before I became an MP,” Smith told me. “Yes, I worked for Pfizer and I also worked as a BBC journalist and as an adviser to the last Labour government on the peace process in Northern Ireland.

“People don’t want career politicians – they want men and women who have had experience of working in business and in the different sectors that make up our economy. Critics may use it against me, but my time in business has helped me understand what’s wrong with it and how we can make it work better.”

Corbyn’s supporters, however, allege that Smith’s left-wing pledges would not withstand contact with centrist colleagues. The degree to which the challenger has rebutted this charge shows that he recognises its potency.

He has offered to make Corbyn party president or chair if he wins, to allow Corbyn to act as “a guardian of Labour’s values”. In his speech, Smith vowed to increase member influence by making conference votes binding on the leadership.

Throughout the 1980s, another soft-left Welshman, Neil Kinnock, struggled to assert authority as the hard left retained control of vital bodies. Smith’s proposals risk replicating this conflict. But he told me that he would respect Labour’s conference even if it endorsed stances such as Trident abolition (Smith joined CND as a teenager but later renounced unilateralism). “I do think in order to reassure members that, under my leadership, we would listen hard to them and act in accordance with their views, conference does need to become sovereign once more,” he said.

Tony Benn’s dream of internal democracy appeared to be within reach. I asked Smith whether he would support other reforms such as a reduced MP nomination threshold for leadership candidates (Corbyn allies have proposed a cut from 15 per cent to 5 per cent). “All of these things can be debated,” he told me. “I’m not sure it should be 5 per cent: I need to look at it when we get closer to it. But I am convinced that the left needs to be able to put up candidates in this contest, I’ve always felt that.”

Smith’s assertion is contradicted by a colleague who described him as having been “furious”, “apoplectic” when Corbyn made the ballot last year (he supported Andy Burnham’s campaign).

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Smith is less equiovcal over the mandatory reselection of MPs. “That would be a really retrograde step for the party,” he told me. “It would be an uncomradely way for us to do business.” He is critical of the Corbyn-aligned group Momentum, some of whose members are spearheading deselection efforts. “I fear an attitude within Momentum that they are a separate organisation and they shouldn’t be,” he told me. “It’s hard to argue that they’re loyal and supportive if they’re organising a bloomin’ great really in the same town at the same time in competition to the Labour Party” (the group will hold its own four-day conference alongside Labour’s in Liverpool).

Some of those close to Corbyn, such as John McDonnell, have unhesitatingly described themselves as Marxists (in 2006, the shadow chancellor named Marx, Lenin and Trotsky as his “most significant” intellectual influences). I asked Smith whether he believed Labour could encompass such views. “Yes, I think we’ve always been a broad church and there have always been people who’ve come from that tradition,” he replied. “There are two broad traditions: the extra-parliamentary tradition, that has always seen parliament as a compromise and parliamentary socialism as a compromise, from [the trade unionist and theorist] Noah Ablett here in south Wales with The Miners’ Next Step through to Ed Miliband’s dad [Ralph, a Marxist historian] ... and the mainstream social democratic tradition that I came from.”

He added: “We’ve had this battle in the Labour Party over the ages, haven’t we? Except now I think it’s more serious because there is a very real danger, with Labour at such a low ebb and politics fragmented more broadly, and so many more parties and so many options for people and such a lesser tribal attachment to the Labour Party, that we can’t afford those fractures.

"If we splinter, there’s lot of other places for people to put their vote.”

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Though they will not say so publicly, some of Smith’s supporters believe Labour would remain unelectable under his leadership. A former shadow cabinet minister told me that he was offering a “warmed-up Ed Milibandism, which was rejected by the voters”. Smith naturally contests this analysis. “I don’t think that we lost the last election because we were too left-wing,” he said. “The proof is that the Tories have engaged in all sorts of these policies ... Theresa May’s opening speech upon becoming leader was to talk about social injustice, economic insecurity, lack of security in the workplace. Labour values, Labour words in a Tory mouth, evidence that the broad story we’re telling about Britain is right.”

Smith said that, unlike Corbyn, he would resign if he became leader and lost a confidence vote by MPs. “Yes - I would [resign]. We are a party that believes in parliamentary democracy and, as such, it is only right that the leader commands the support of his or her colleagues in the Commons.”

Should Corbyn win the contest, as expected, Smith will not return to the shadow cabinet but act as “a loyal backbencher”.  He pledges to resist any breakaway: “I'm Labour, I've always been Labour and I will never stop being Labour," he said. 

Speaking of his fear that Corbyn would seek to remain leader even if the party lost the next general election, he said: “I’m deeply worried about it. I think he’s determined to hang on come hell or high water. And what does that say about him? ... I think he is more concerned with his version of the Labour Party being sustained and being victorious than he is with the Labour Party being victorious in elections. I think he is actually prepared to sacrifice unity and victory - two great words that have traditionally been emblazoned on Labour banners through the ages - in order to secure control of the party.”

The trouble for Owen Smith is that, for all his combative talk and appeal to the left, he is trapped between his past pragmatism and his present radicalism. 

Tony Benn, Corbyn’s late mentor, divided politicians into “signposts” and “weathercocks”: those who shape opinion and those who are shaped by it. He would have branded Smith a “weathercock”. Even if he wins, Smith risks being remembered not as a politician who resolved his party’s contradictions, but as one who embodied them.

George Eaton is political editor of the New Statesman.

This article first appeared in the 25 August 2016 issue of the New Statesman, Cameron: the legacy of a loser