The 50p tax rate is an essential part of a fair deficit reduction plan

At a time when the incomes of ordinary families are falling, the highest earners must contribute more to reduce government borrowing.

Labour’s campaign on the cost-of-living-crisis has clearly struck a chord. People know that – whatever the Treasury may claim – it has been getting harder to cover all their costs as prices rise and wages fall. Raising living standards for the long-term will be a huge challenge, particularly at a time when getting the deficit down means that there is very little money around. But with the right mix of policies I believe that we can do it.

Paying down the deficit is a necessary part of that mix. The Tories’ failure to balance the books in this Parliament, as they had promised, means that a Labour government will have to finish the job. Ed Balls’ commitment that Labour will get the current budget into surplus as soon as possible, and get the nation’s debt falling in the next Parliament, gives a firm foundation for the long-term reform we need.

And that deficit reduction must be done in a fair way. At a time when the incomes of ordinary families are falling, the priority should not be tax cuts for the highest earners, but help for those on middle and low incomes. The Tories were wrong to cut taxes for the top one per cent and we now know that over the three years that the 50p tax rate was in place, those with incomes of £150,000 and above paid nearly £10bn more in tax than thought when George Osborne chose to cut it. Restoring the 50p rate will ensure that everyone is making a fair contribution to paying down the deficit.

But while getting down the deficit is necessary, it is not sufficient. We also need to take some long-term – and difficult – decisions to change the way our economy works. Only then will we raise productivity and living standards. This is at the heart of my review into how we sustainably grow the economy. My work has taken me up and down the country and I’ve been struck by the creative energy which can drive our economy if only we can tap into it.

How can we do that? Devolving the right economic powers to our cities and regions will be key. They are best placed to make long-term decisions based on the potential of their area. Providing the right funding networks for small but growing businesses is also vital. This is partly about reforming our banking system so that it is competitive and focused on the needs of the businesses they serve, and it is also about finding innovative ways of linking those with the money to those with the ideas. Underpinning it all we need an infrastructure system which is modern and focused on long-term growth.

None of this is easy. Getting the deficit down will be tough. Devolving decision making and investing in infrastructure will at times be unpopular. But I believe that with a fair deficit reduction plan and long-term economic reforms we can raise living standards for all.

Andrew Adonis is shadow infrastructure minister and is leading Labour's growth review

The highest earners "paid nearly £10bn more in tax than thought when George Osborne chose to cut it". Photograph: Getty Images.
Getty
Show Hide image

Labour's establishment suspects a Momentum conspiracy - they're right

Bernie Sanders-style organisers are determined to rewire the party's machine.  

If you wanted to understand the basic dynamics of this year’s Labour leadership contest, Brighton and Hove District Labour Party is a good microcosm. On Saturday 9 July, a day before Angela Eagle was to announce her leadership bid, hundreds of members flooded into its AGM. Despite the room having a capacity of over 250, the meeting had to be held in three batches, with members forming an orderly queue. The result of the massive turnout was clear in political terms – pro-Corbyn candidates won every position on the local executive committee. 

Many in the room hailed the turnout and the result. But others claimed that some in the crowd had engaged in abuse and harassment.The national party decided that, rather than first investigate individuals, it would suspend Brighton and Hove. Add this to the national ban on local meetings and events during the leadership election, and it is easy to see why Labour seems to have an uneasy relationship with mass politics. To put it a less neutral way, the party machine is in a state of open warfare against Corbyn and his supporters.

Brighton and Hove illustrates how local activists have continued to organise – in an even more innovative and effective way than before. On Thursday 21 July, the week following the CLP’s suspension, the local Momentum group organised a mass meeting. More than 200 people showed up, with the mood defiant and pumped up.  Rather than listen to speeches, the room then became a road test for a new "campaign meetup", a more modestly titled version of the "barnstorms" used by the Bernie Sanders campaign. Activists broke up into small groups to discuss the strategy of the campaign and then even smaller groups to organise action on a very local level. By the end of the night, 20 phonebanking sessions had been planned at a branch level over the following week. 

In the past, organising inside the Labour Party was seen as a slightly cloak and dagger affair. When the Labour Party bureaucracy expelled leftwing activists in past decades, many on went further underground, organising in semi-secrecy. Now, Momentum is doing the exact opposite. 

The emphasis of the Corbyn campaign is on making its strategy, volunteer hubs and events listings as open and accessible as possible. Interactive maps will allow local activists to advertise hundreds of events, and then contact people in their area. When they gather to phonebank in they will be using a custom-built web app which will enable tens of thousands of callers to ring hundreds of thousands of numbers, from wherever they are.

As Momentum has learned to its cost, there is a trade-off between a campaign’s openness and its ability to stage manage events. But in the new politics of the Labour party, in which both the numbers of interested people and the capacity to connect with them directly are increasing exponentially, there is simply no contest. In order to win the next general election, Labour will have to master these tactics on a much bigger scale. The leadership election is the road test. 

Even many moderates seem to accept that the days of simply triangulating towards the centre and getting cozy with the Murdoch press are over. Labour needs to reach people and communities directly with an ambitious digital strategy and an army of self-organising activists. It is this kind of mass politics that delivered a "no" vote in Greece’s referendum on the terms of the Eurozone bailout last summer – defying pretty much the whole of the media, business and political establishment. 

The problem for Corbyn's challenger, Owen Smith, is that many of his backers have an open problem with this type of mass politics. Rather than investigate allegations of abuse, they have supported the suspension of CLPs. Rather than seeing the heightened emotions that come with mass mobilisations as side-effects which needs to be controlled, they have sought to joins unconnected acts of harassment, in order to smear Jeremy Corbyn. The MP Ben Bradshaw has even seemed to accuse Momentum of organising a conspiracy to physically attack Labour MPs.

The real conspiracy is much bigger than that. Hundreds of thousands of people are arriving, enthusiastic and determined, into the Labour party. These people, and their ability to convince the communities of which they are a part, threaten Britain’s political equilibrium, both the Conservatives and the Labour establishment. When the greatest hope for Labour becomes your greatest nightmare, you have good call to feel alarmed.