Labour will give people the power to shape their communities

Faced with austerity and a crisis of public confidence, we need to get money out of Whitehall and down to communities where it can be used to best effect.

The communities in which we all live and work are facing enormous social, economic and demographic changes. It’s going to be harder for councils to keep services going, let alone cope with rising demand for social care as the number of older people increases, because they are bearing the brunt of the coalition’s austerity. Councils are having their government funding nearly halved and the poorest areas have unfairly been hit the hardest.

What this means is that we have to change the way in which public money is spent on the things we all value and rely on. We need to get money out of Whitehall and down to communities where it can be used to best effect. And we need to devolve to councils and groups of councils (like the combined authorities and city regions) more powers over transport investment, planning, skills, and finding jobs for the long-term unemployed. This is one of the ways in which we can radically change the way in which England is run to make it a much less centralised country.

But perhaps most important of all, we need to do this to address the crisis of confidence, and alienation there is in our politics. The global economic crash came as a great shock, we have a cost of living crisis, and parents think about pensions, housing or the environment and wonder whether the future for their children will be better than the life they have enjoyed. Many people feel that too many decisions are taken too far away from them.

And that’s why the only way we are going to rebuild confidence in the power of people working together to create something better – the thing we call politics – is to give people the power to do precisely that for themselves.

For too long, we have fallen prey to consumerist politics – people demanding of government and then sitting back to wait for things to happen. The changes I want to see are based on the idea of contributory politics – it’s up to all of us to put something in because by taking responsibility we can take back power over our own lives.

And that’s what Labour’s One Nation idea is all about. Reform of the market to tackle the cost of living crisis and vested interests. Getting finance to encourage and support innovation and a longer term view. Pushing power down to communities so that people locally can build the homes they need, tackle the payday lenders, and generate renewable energy. England’s big cities are already leading the way on this and showing what can be done – a wonderful antidote to gloom and despair.

At the end of this month, Jon Cruddas and I are organising a Policy Review symposium that will bring together council leaders, MPs, members of the shadow cabinet, policy makers, academics, and those working in the third sector to discuss all this and more. 

At a time when money is tight, how exactly are we going to change the relationship between central and local government, social institutions and the market?  How do we reorganise our public services around people, households and places rather than administrative structures? And how do we tell the story of what this will make possible? These are the questions informing our policy making so that we can win the election in 2015 and provide the groundwork for a radical, reforming government.

Hilary Benn is shadow communities and local government secretary, and MP for Leeds Central 

Ed Miliband speaks at the Labour conference in Brighton last year. Photograph: Getty Images.

Hilary Benn is shadow foreign secretary, and Labour MP for Leeds Central.

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The 2017 Budget will force Philip Hammond to confront the Brexit effect

Rising prices and lost markets are hard to ignore. 

With the Brexit process, Donald Trump and parliamentary by-election aftermath dominating the headlines, you’d be forgiven for missing the speculation we’d normally expect ahead of a Budget next week. Philip Hammond’s demeanour suggests it will be a very low-key affair, living up to his billing as the government’s chief accounting officer. Yet we desperately need a thorough analysis of this government’s economic strategy – and some focused work from those whose job it is to supposedly keep track of government policy.

It seems to me there are four key dynamics the Budget must address:

1. British spending power

The spending power of British consumers is about to be squeezed further. Consumers have propped up the economy since 2015, but higher taxes, suppressed earnings and price inflation are all likely to weigh heavily on this driver for growth from now on. Relatively higher commodity prices and the sterling effect is starting to filter into the high street – which means that the pound in the pocket doesn’t go as far as it used to. The dwindling level of household savings is a casualty of this situation. Real incomes are softer, with poorer returns on assets, and households are substituting with loans and overdrafts. The switch away from consumer-driven growth feels well and truly underway. How will the Chancellor counteract to this?

2. Lagging productivity

Productivity remains a stubborn challenge that government policy is failing to address. Since the 2008 financial crisis, the UK’s productivity performance has lagged Germany, France and the USA, whose employees now produce in an average four days as much as British workers take to produce in five. Perhaps years of uncertainty have seen companies choose to sit on cash rather than invest in new production process technology. Perhaps the dominance of services in our economy, a sector notorious hard in which to drive new efficiencies, explains the productivity lag. But ministers have singularly failed to assess and prioritise investment in those aspects of public services which can boost productivity. These could include easing congestion and aiding commuters; boosting mobile connectivity; targeting high skills; blasting away administrative bureaucracy; helping workers back to work if they’re ill.

3. Lost markets

The Prime Minister’s decision to give up trying to salvage single market membership means we enter the "Great Unknown" trade era unsure how long (if any) our transition will be. We must also remain uncertain whether new Free Trade Agreements (FTAs) are going to go anyway to make up for those lost markets.

New FTAs may get rid of tariffs. But historically they’ve never been much good at knocking down the other barriers for services exports – which explains why the analysis by the National Institute for Economic and Social Research recently projected a 61 per cent fall in services trade with the EU. Brexit will radically transform the likely composition of economic growth in the medium term. It’s true that in the near term, sterling depreciation is likely to bring trade back into balance as exports enjoy an adrenal currency competitive stimulus. But over the medium term, "balance" is likely to come not from new export market volume, but from a withering away of consumer spending power to buy imported goods. Beyond that, the structural imbalance will probably set in again.

4. Empty public wallets

There is a looming disaster facing Britain’s public finances. It’s bad enough that the financial crisis is now pushing the level of public sector debt beyond 90 per cent of our gross domestic product (GDP).  But a quick glance at the Office for Budget Responsibility’s January Fiscal Sustainability Report is enough to make your jaw drop. The debt mountain is projected to grow for the next 50 years. All else being equal, we could end up with an incredible 234 per cent of debt/GDP by 2066 – chiefly because of the ageing population and rising healthcare costs. This isn’t a viable or serviceable level of debt and we shouldn’t take any comfort from the fact that many other economies (Japan, USA) are facing a similar fate. The interest payable on that debt mountain would severely crowd out resources for vital public services. So while some many dream of splashing public spending around on nationalising this or that, of a "universal basic income" or social security giveaways, the cold truth is that we are going to be forced to make more hard decisions on spending now, find new revenues if we want to maintain service standards, and prioritise growth-inducing policies wherever possible.

We do need to foster a new economic model that promotes social mobility, environmental and fiscal sustainability, with long-termism at its heart. But we should be wary of those on the fringes of politics pretending they have either a magic money tree, or a have-cake-and-eat-it trading model once we leap into the tariff-infested waters of WTO rules.

We shouldn’t have to smash up a common sense, balanced approach in order for our country to succeed. A credible, centre-left economic model should combine sound stewardship of taxpayer resources with a fairness agenda that ensures the wealthiest contribute most and the polluter pays. A realistic stimulus should be prioritised in productivity-oriented infrastructure investment. And Britain should reach out and gather new trading alliances in Europe and beyond as a matter of urgency.

In short, the March Budget ought to provide an economic strategy for the long-term. Instead it feels like it will be a staging-post Budget from a distracted Government, going through the motions with an accountancy exercise to get through the 12 months ahead.

Chris Leslie MP was Shadow Chancellor in 2015 and chairs Labour’s PLP Treasury Committee

 

 

 

Chris Leslie is chair of Labour’s backbench Treasury Committee and was shadow Chancellor in 2015.