Leader: The wrong kind of economic recovery

Even the most depressed economies eventually recover. The return of growth in the UK, after three years of stagnation under the coalition government, is merely a reflection of this truth. With GDP still at 2.5 per cent below its pre-recession peak, in 2007, the economy has yet to make up the lost output from the crisis. In the US, by contrast, where the Obama administration maintained fiscal stimulus by cutting taxes and increasing infrastructure spending, the economy is now 5.2 per cent larger. But after convincing much of the public that the post-2010 downturn was inevitable, George Osborne has been the beneficiary of low expectations.

According to the Chancellor’s account, the surge in growth is a vindication of his decision to pursue austerity after entering office. This claim is faithfully echoed by a media that loudly endorsed his deficit reduction programme in 2010. Not only does this narrative ignore the tardiness of the recovery – the slowest for more than 100 years – it also obscures the sources of the growth we are now experiencing. It is not austerity but its reverse that explains the upturn.

To the extraordinary monetary stimulus provided by the Bank of England, in the form of quantitative easing and record-low interest rates, have been added large-scale state interventions such as Help to Buy. After imposing damaging policies such as the VAT rise and the dramatic reduction in infrastructure spending in 2010, Mr Osborne has also eased the pace of austerity. Rather than sticking to his original deficit reduction timetable, the Chancellor allowed borrowing to rise and extended his programme from four years to seven. Even under the most optimistic scenario, the deficit is still expected to be at least £100bn this year, £40bn more than forecast by the Office for Budget Responsibility in 2010.

When he entered office in 2010, Mr Osborne pledged to rebalance the economy away from its reliance on property and debt-financed consumer spending, cynically fostered by Labour, and towards investment and exports. But growth is again being driven by the former. Exports fell by 2.4 per cent in the most recent quarter, despite the continuing weakness of the pound, while business investment remains 6.3 per cent below its 2012 level. With wage growth (0.8 per cent) still lagging behind inflation (2.2 per cent), the recovery is being built on consumer credit and rising house prices. Like Gordon Brown before him, Mr Osborne has found the attractions of debt-driven growth impossible to resist. If the economy is not to become permanently reliant on ultra-low interest rates, he must act now to promote both public and private investment. Rather than risking the creation of another property bubble through Help to Buy, he should concentrate on increasing the supply and the affordability of housing.

A programme of the kind pursued by Harold Macmillan as housing minister in the early 1950s, when 300,000 homes a year were built, would stimulate growth (for every £100 invested in housebuilding, £350 is generated in return), create employment and reduce welfare spending. As some MPs in his own party have suggested, the Chancellor should also offer incentives to firms to pay the living wage in order to reduce consumers’ reliance on borrowing to maintain their living standards.

At present, GDP is rising but living standards are not. The north-south divide in England is widening, rather than narrowing. Meanwhile, household savings are falling at their fastest rate for 40 years. The economic cycle may finally have turned but the structural conditions for a repeat of the crash remain firmly in place.

Mark Carney, Governor of the Bank of England. Photo: Getty.

This article first appeared in the 04 December 2013 issue of the New Statesman, Burnout Britain

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The government must demand that Iran release Nazanin Zaghari-Ratcliffe

Iran's imprisonment of my constituent breaches the Convention on the Rights of the Child.

I grew up with a very paranoid mother. She had tragically lost members of her family as a teenager and, as a result, she is extremely fearful when it came to her children. I used to laugh at her growing up – I indulged it but often scoffed at her constant need to hear from us.

A few days ago, I was in Parliament as normal. My husband, his parents and our baby daughter were all in Parliament. This rare occasion had come about due to my mother in law’s birthday – I thought it would be a treat for her to lunch in the Mother of Parliaments!

The division bells rang half way through our meal and I left them to vote, grabbing my phone of the table. “See you in ten minutes!” I told them. I didn’t see them for more than five hours.

The minute the doors bolted and the Deputy Speaker announced that we were indefinitely being kept safe in the chamber, all I could think about was my daughter. In my heart of hearts, I knew she was safe. She was surrounded by people who loved her and would protect her even more ferociously than I ever could.

But try explaining that to a paranoid mother. Those five hours felt like an eternity. In my head, I imagined she was crying for me and that I couldn’t be there for her while the building we were in was under attack. In reality, I later found out she had been happily singing Twinkle Twinkle little star and showing off her latest crawl.

That sense of helplessness and desperate impatience is hard to describe. I counted down the minutes until I could see her, as my imagination ran away with me. In those 5 hours, I started thinking more and more about my constituent Nazanin Zaghari-Ratcliffe.

Here I was, temporarily locked in the Parliamentary chamber, surrounded by friends and colleagues and door keepers who were doing all they could to keep me safe. I knew I was going to be let out eventually and that I would be reunited with my daughter and husband within hours.

Nazanin has been detained in the notorious Evin prison in Iran for nearly a year. She only gets an occasional supervised visit with her two-year-old daughter Gabriella. She’s missed Christmas with Gabriella, she missed Gabriella’s second birthday and no doubt she will be missing Mother’s Day with Gabriella.

But it’s not just the big occasions, it’s the everyday developments when Gabriella learns a new song, discovers a new story, makes a new friend. Those are the important milestones that my mother never missed with me and the ones I want to make sure I don’t miss with my daughter.

Unfortunately, Nazanin is just one of many examples to choose from. Globally there are more than half a million women in prison serving a sentence following conviction, or are awaiting trial. Many of these women are mothers who have been separated from their children for years.

In 2010, the United Nations General Assembly unanimously adopted the Bangkok Rules - the first international instrument to explicitly address the different needs that female prisoners have. It was also the first instrument to outline safeguards for the children of imprisoned mothers.

The Bangkok Rules apply to all women prisoners throughout all stages of the criminal justice system, including before sentencing and after release. However, Nazanin’s case has seen a wilful flouting of the rules at each and every stage.

Rule 23 states that ‘Disciplinary sanctions for women prisoners shall not include a prohibition of family contact, especially with children’. Tell that to her daughter, Gabriella, who has barely seen her mother for the best part of a year.

Rule 26 adds that women prisoners’ contact with their families shall be facilitated by all reasonable means, especially for those detained in prisons located far from their homes. Tell that to her husband, Richard, who in almost a year has only spoken to his wife via a few calls monitored by the Iranian Revolutionary Guard.

Iran has ratified the Convention on the Rights of the Child and supported the Bangkok Rules, yet it is breaching both with its treatment of Nazanin. It is therefore incumbent upon our government to take the formal step of calling for Nazanin's release - it is staggering they have not yet done so.

As I pass the window displays in shops for Mother’s Day, most of the cards have messages centred around ‘making your mother happy’. If there’s one mother I’d like to make happy this year, it’s Nazanin Zaghari-Ratcliffe.

Tulip Siddiq is Labour MP for Hampstead and Kilburn