Full transcript | Ed Miliband | speech to the TUC congress | London | 13 September 2011

"While negotiations were going on, I do believe it was a mistake for strikes to happen. I continue t

Friends, 10 years ago, Tony Blair came to the TUC. But he didn't deliver the speech he came with. We all know why. Indeed some of you were there that day in Brighton. Trying to comprehend what had happened. United in shock and sorrow with those who feared for their loved ones. We said at the time, we would never forget. And we won't. So let us today remember all those who died, including the British citizens and the heroic public service workers, the 343 New York City firefighters.

I am proud to come here today as Labour's leader. Proud of the relationship between the trade unions and the Labour Party, based on shared values of equality, fairness and social justice. But most of all, I'm proud to be here because of who you represent:

The hard working men and women of Britain.

The people who look who look after the sick, who teach our children, and who through their hard work create the wealth of this country.

People like the Sodexo dinner ladies I met in Richmond last year. They told me of their situation:

No sick pay.

Shift patterns changed without any notice.

Having to buy their own uniforms.

We can all imagine the strain that put on them and their families. Struggling to make ends meet. Not knowing when they were going to be called to work. Losing money if they were ill. This is the story of too many people in Britain today.

And surely these low-paid women had no chance against one of the most powerful companies in the world? Wrong.

They got together, they sought the help of a union, Unison, and they campaigned for these basic rights. And friends, thanks to their determination, things have changed. They won better pay, sick pay, and recognition for their union. Let us applaud them for what they have achieved and the example they have shown.

I also think of the Vauxhall car workers I met in Ellesmere Port. During the recession in 2008, their whole plant and the livelihoods of those workers were under threat. What did they do?

They sat down with the management. They worked through the problems. They made some sacrifices. And by doing that they saved their jobs. Let us applaud them too for what they achieved.

These two stories show what trade unions can do for the hard working people they represent. But you won't hear about this in most discussions of your work. Too often the spotlight of publicity falls elsewhere.

But I come to this conference as a Labour leader who be lieves you deserve credit for these stories, the daily work you do. And what do people say about new democracies around the world? Even the Tories. They say the right to join a trade union is vital.

If we say it abroad, we should say it at home too.

These are the reasons why I value the link between the trade union movement and the Labour Party. It is why I will resist any attempt to break it. And it explains why I want reforms to the Labour Party to strengthen our movement.

The three million trade union levy payers - working men and women - are a huge asset to our party. They should never, ever, feel like passive or unwanted members of our movement. I want them to feel part of it. Proud of it.

And I want us reaching out to the people who are not members of our party, not even members of the trade unions, to hear their voices too.

That is the way we become a stronger movement.

Of course, there are times when you and I will disagree. You will speak your mind. And so will I.

But our link is secure enough, mature enough, to deal with disagreement. Because the relationship between party and unions is not about romance or nostalgia. It is about respect and shared values. It is a relationship in which we listen to each other when we disagree. And we know that what unites us is greater than what divides us.

Ok, by now maybe you're thinking, hang on, we've seen this movie before. He's about to get to the bit where he tells us to "modernise or die."

You're half right.

I am going to talk about change. But I'm not just going to talk about how people need to change to suit our economy. I'm also going to talk about how we change our economy to suit the needs of people. Because I reject the fatalism and pessimism that can surround the debate about economic change.

Leadership is not simply about telling people to accept change being forced upon them. It is also about helping people to shape change, and shape their futures. That is what our movement at its best has always been about.

So today I want to talk about the big choice our country faces over the coming years. Whether we carry on as we are, or change the way our country works for the hard working men and women you represent.

Let's face facts.

The British economy isn't working for millions of people in our country. Most people's living standards are squeezed while those at the top see runaway rewards.

In the face of massive competition from countries like China and India, too often the British answer has been to compete on the basis of low pay and low skills. And too often it leaves workers facing insecure prospects.

My message to you today is not simply about this Government. Not simply about the immediate economic difficulties we face. It is something more profound. We have to challenge many of the assumptions on which economic policy has been based for a generation. If we don't, we will fail the next generation.

Financial services are important to Britain and will continue to be so. But unless we broaden our economic base and tackle irresponsibility of the banks we will be exposed to crisis as we were in 2007.

Jobs must be our priority, and we must ensure they are decent jobs at decent wages and opportunities are extended to all our young people. We need to reward entrepreneurship and wealth creation. But if we just shrug our shoulders about inequality, as we have too often in the past, it will hurt not just our society but our economy too.

Changing these assumptions presents huge challenges for all of us. For the next Labour Government. For business. And for the trade union movement.

I want to talk to you today about how we as a country can build that new economy. That starts with a plan for growth.

We all know there needs to be a Plan B. We know what the Tories' Plan A stands for.

Austerity.

We have had nine months of the British economy flat on its back. Growth close to zero. Unemployment up. 1 in 5 young people out of work.

And what does George Osborne say?

Britain is a "safe haven".

Tell that to the thousands of people who lost their jobs last month. Tell that to the 16,000 businesses that have gone bust in the last four quarters. Tell that to the millions of British families struggling to make ends meet.

There is no safe haven for them.

The Tories have forgotten the fundamental lesson: You cannot simply cut your way out of a deficit. You need to grow your economy as well. The Government's policies are hurting. But they are not working.

And what is the result? Tens of billions of extra borrowing over the coming years, above what they had predicted. The evidence is piling up showing how the Tories are wrong to be cutting too far and too fast. And how they are failing to share the burden of deficit reduction fairly. Between those who were responsible for creating the crisis. And those who were not. A trebling of student fees. Rising rail fares. And higher pension contributions.

In government, we worked with trade unions to reform public sector pensions. We sat down and we negotiated. It was difficult but we got an agreement. That shows the way we should reform pensions in this country.

It's not about change versus no change. It's about what kind of change, and how it's done.

The Tories have set about reform in completely the wrong way. Even before John Hutton's report was complete, they announced a 3 per cent surcharge on millions of your members. It was a typically bad move by a bad government trying to pick a fight.

So I fully understand why millions of decent public sector workers feel angry. But while negotiations were going on, I do believe it was a mistake for strikes to happen. I continue to believe that.

But what we need now is meaningful negotiation to prevent further confrontation over the autumn. Ministers need to show public sector workers - and the people who rely upon those services - that they are serious about finding a way forward.

The Tories claim to be the party of reform. But their actions risk derailing the vital reform of public sector pensions because many people may now opt out of the system. That won't save money. It will end up costing the taxpayer billions of pounds.

And at the same time as we see millions of hard working families being hit, who is getting a tax cut? This year they are cutting taxes for the banks.

And now what is George Osborne obsession? Cutting the 50 pence tax rate. For the richest 1 per cent of the population. For people who earn over £150,000 a year. They have raised VAT. They have cut tax credits. And they say that these changes are set in stone, and will not be reversed. It tells you everything you need to know about this Government that at the same time they are chomping at the bit to cut the 50p tax rate.

And what excuse do they plan to hide behind? The claim that it doesn't raise that much money because people avoid paying it. It is nonsense. But if that is the best they can do, I've got a suggestion:

Mr Osborne, I've got a message for you. If people are avoiding their taxes it's your job to stop them.

And what do they offer for the other 99 per cent of the population? Greater insecurity. Make it easier to sack people. Reduce protection against unfair dismissal. This isn't an accident. It's because of their values. What they believe. The message is clear.

It's one rule for those at the top. Another rule for everyone else.

They say there is no alternative. But there is. It is fairer and it makes economic sense.

First, prioritise tax cuts for the hard-working majority, not the super-rich. Cut VAT now to 17.5 per cent to get the economy moving again.

Second, insist that those who caused the crisis help pay to put it right. Renew the bankers' bonus tax and use the money to support enterprise, put the young unemployed back to work, and to build homes.

Third, provide some international leadership. Because if every country and continent simply focuses on it s own strategy we will never get the growth we need.

And I say to this Government, if you want an export led recovery, you won't get it from the world engaging in collective austerity.

So these are things Ed Balls and I would be doing to get growth going at home and abroad. But the challenge we face is even greater. This is not just another turn of the business cycle.

A successful economic future can only be built on a different set of values. Hard work. Long-term commitment.
And responsibility. A new economy will mean rejecting outdated ideas. Rejecting the old view that the best government is always less government. The old view that short term shareholder interests are always in best for Britain's companies. And the old view from some on both sides of industry, that employee representation must mean confrontation not cooperation.

A new economy will mean the government, employers, and the workforce all shouldering new responsibilities.

Government must ensure the rules of the system favour the long term, the patient investment, the responsible business. Because paying our way in the world is going to be tougher than it's ever been. The short-term, fast buck, low pay solution. That won't win when we are competing with China and India.

And it's no good government just walking away. If we're going to be the very best at the things we are good at - advanced manufacturing, creative industries, business services, pharmaceuticals, renewables - then government has to work in partnership with business. To understand what technologies and skills we need for the future. To provide the certainty they need to invest. To look at what government buys so that innovative companies can grow.

And that includes companies like Bombardier - being sold down the river by this Government.

To make sure good regulation lets companies win new markets. And to build in every region and nation the universities, the skills, banking services, and the leadership in cities and regions, that will let companies grow and create jobs.

Sometimes government should get out of the way. Sometimes the way it regulates does hold back small business. But sometimes government should lead. And the financial crisis showed that.

The crisis also has significant implications for the way government will operate in the coming years. We are not going to be able to spend our way to a new economy. The deficit caused by the banking crisis is not going to be cured easily.

We need economic growth, and we need people to pay their fair share of taxes. But if we were in government, we would also be making some cuts in spending. I sometimes hear it said that Labour opposes every cut.

Some people might wish that was true. But it's not. We committed ourselves to halving the deficit over four years. That would mean cuts.

Like our plans for a 12 per cent cut in the police budget - not the 20 per cent being implemented by this Government. Like cuts to the road programme. And yes, reform of some benefits too.

And there are cuts that the Tories will impose that we will not be able to reverse when we return to government. And getting the deficit down means rooting out waste too.

We all recognise that not every penny that the last Government spent was spent wisely. All of us know that there is waste in any government. In this Government too.

I say stop the waste. Stop the waste of £100 million on creating another tier of politicians with elected police commissioners. And stop the waste of billion s of pounds on an NHS reorganisation. A reorganisation that nobody wants and nobody voted for.

So government has to change if we're to support the new economy. But so do our businesses. In Britain, we should reward productive companies, not predators. So the way our banks work needs to change. Not just separating the retail and investment divisions, but greater competition too.

If we can strike off rogue doctors and lawyers, the banking industry must be willing to strike off those bankers who do damage to their customers, their institutions and their country. And we shouldn't pretend to be neutral about the way different businesses are run. Between the way Southern Cross ran its business, and how Rolls Royce chooses to run its.

The new economy must mean more firms who invest long-term and pay their employees fairly. That is why, back in power, we will ensure that every firm that gets a major contract from government provides apprenticeships. Good employers recognise the need to foster co-operation between managers and workers. Others need to do this better. And, let's face it, some need to make a start.

Business leaders need to explain how their salaries are related to performance. Over the last 12 years, chief executive salaries in Britain's top companies have quadrupled while share prices have remained flat. In some cases these rewards are deserved. But in others they are because of the closed circle of people that sit on remuneration committees, handing out pay and bonuses.

Frankly it's not good enough and it has to change.

Some companies already have workers on the committee that decides top pay. I say, every company should have an employee on their remuneration committee, so the right pay is set and it is justified.

So for me, the demand for change is from government, employers and trade unions. For you, the trade unions, the challenge of the new economy is this:

To recognize that Britain needs to raise its game if we are to meet the challenges of the future. And to get private sector employers in the new economy to recognize that you are relevant to that future.

Unions can offer businesses the prospect of better employee relations. As you did during the recession.

Of course the right to industrial action will be necessary, as a last resort. But in truth, strikes are always the consequence of failure. Failure we cannot afford as a nation.

Instead your real role is as partners in the new economy.
But, as you know better than I, just 15 per cent of the private sector workforce are members of trade unions.
You know that you need to change, if that is to change.
That is why so many unions are making huge efforts to engage with the other 85 per cent.

But you know the biggest challenge you face when you try to do this: relevance. Relevance in how firms grow. Relevance in how workers get on. Relevance right across the private sector.

And you know you will never have relevance for many workers in this country if you allow yourselves to be painted as the opponents of change.

No.

In the new economy you can, and must, be the agents of the right kind of change. You know the new economy that emerges from this crisis must be built on foundations of co-operation, not conflict, in the workplace.

Let me end with this thought.

I know what a tough time many of your members are having at the moment. Tough times that are also being felt by millions who aren't your members around this country too. The economic crisis is casting a long shadow over the hard working families of this country.

The decent men and women, who do the right thing, and who just want their kids and grandkids to have better chances than them.

So it feels like quite a dark time.

But the reason I am in politics, the reason I believe in the power of politics, is because these things are not inevitable.

So yes this generation, in one sense, faces a huge set of challenges that come out of the economic crisis. But in another sense, as we always know, out of crisis comes the chance to think about the kind of economy and society we want to build.

The opportunity to grasp the change we need in this country. To say, it doesn't have to be this way. An opportunity to rewrite the rules. To build an economy that works for the hardworking majority. To build a society that restores responsibility from top to bottom. To build a country that stands up for the next generation, that fulfils the promise of Britain.

And to build the more prosperous, the more just, the more equal, Britain we all want to see.

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Aid in whose interest?

The government appears to be raiding the aid budget to subsidise big business and the security state.

In March 1988, Scottish aristocrat and Defence Minister to Margaret Thatcher, George Younger visited was part of a controversial offer of £200m of the UK aid budget in exchange for Malaysia signing a £1bn arms deal.

The government promised public money to subsidise UK construction giant Balfour Beatty to build a hydroelectric dam named Pergau in Malaysia’s mountainous north east.

Malaysia’s national utility, the World Bank and auditors at the Overseas Development Administration, the UK aid ministry, questioned the human development value of the project for the middle-income country, finding its costs to be “markedly uneconomic" compared to other options then available.

But these warnings were summarily dismissed.

Thatcher, who I believe saw aid not as a vehicle for eradicating poverty but as a means to advance Britain's commercial and geostrategic interests, wanted the arms deal.

In Malaysia, Prime Minister Mahathir Mohamad wanted an infrastructure project in Kelantan state, which was held by a rival party, which he wanted to wrest votes from.

But the National Audit Office soon got wind of the deal and parliamentary committees started to ask awkward questions of those involved.

The press published dozens of articles and the Pergau scandal was born.

Newspapers soon unearthed other white elephant development  projects resulting from the tying of aid to private British interests that did little for reducing poverty but were a boon for the contractors involved.

The Permanent Secretary to the ODA (Overseas Development Administration, now Dfid – the Department for International Development), Tim Lankester, said that Pergau was “unequivocally a bad buy”, “an abuse of the aid system” and “not a sound development project”.

The World Development Movement (renamed Global Justice Now) won a judicial review in 1994 against the government in the High Court which ruled the payment of aid “for unsound development purposes” illegal.

The Tories reacted, not by untying aid from UK vested interests, but by slashing the aid budget as punishment for the bad press – it seems that Thatcher saw little use for aid that could not be used to subsidise private interests.

Labour came to power in 1997 with an agenda to reform how Britain did development. It established a better-funded and politically-stronger aid department, the Department for International Development (DFID), with a seat in cabinet.

It scrapped the Aid and Trade Provision, the official mechanism by which aid was used to subsidise British company contracts, and in 2001 untied aid from UK commercial interests. The International Development Act of 2002 for the first time legally committed the UK to spending aid only on poverty reduction.

But since the Conservatives won a clear majority in last year’s general election, the government has been wilfully unlearning the lessons of Pergau.

Out of the hobbling coalition with the Liberal Democrats, Prime Minister David Cameron and Chancellor George Osborne have unpicked Labour’s reforms by effectively retying aid to the interests of the private sector and its perceived security interests.

They appear to have deprioritised poverty reduction as the principal purpose of the aid budget. “There is a real risk of the budget being recaptured by commercial interests as it was in the 1980s,” Sir Tim Lankester told me recently. “[International Development Secretary] Justine Greening has been making sure British commercial interests get more and more of the cake.

“What’s remarkable these days is the huge contracts going to the big consultancies to advise government and manage projects – The Adam Smith Internationals. The Crown Agents and others.”

November’s aid strategy “tackling global challenges in the national interest”, written largely by the Treasury rather than by Dfid, announced that aid would be a tool to “strengthen UK trade and investment opportunities around the world”.

The retying of aid spend is sold in the strategy in the same way the Conservatives sell austerity and privatisation at home.

Using the language of “prosperity” and “economic opportunity” (“inequality” was not mentioned once in the 22-page document), the government spins the dubious argument that communities in the world’s poorest nations share the interests of both UK business and the UK security state.

This “what’s good for us is good for you” aid strategy’s promotion of the UK interest over those of the poor grossly undermines the government’s legal duty under the International Development Act.

The aid strategy leaves it to the concurrently published National Security Strategy to enumerate what these imaginative interests are: to “protect our people”, to “project our global influence” and to “promote our prosperity”.

To achieve these ends, the government has allotted half of the aid budget to conflict-hit states, which are expected to be the states Britain has helped destabilise in recent years: Afghanistan, Iraq, Libya Syria and Yemen.

The government also successfully lobbied the OECD to widen the official definition of “Official Development Assistance” (aid) to include military spend on counter-terrorism and expand the use of aid subsidies for private – and inevitably British – projects in the developing world.

Over the course of this Parliament, the Tories will triple to around £5bn the amount of aid to be spent outside of Dfid. The main beneficiaries of this diversion of aid are the Ministry of Defence (MoD), the foreign office (FCO) and the business department (BIS). These departments are considerably less transparent than Dfid and, according to the National Audit office, spend most of their aid on middle income countries, rather than low-income countries.

This slide towards using aid to subsidise British business and as a slush fund top up its military and security budgets means that development projects devoted to public health, education and countering the agricultural and ecological destruction wrought by climate change, will suffer.

***

Take the growing spend by Dfid on private consultants and accountancy firms.

Under the Tory austerity programme Dfid’s staff has been slashed, which means there is less public capacity to allocate, monitor aid projects.

To compensate for this under capacity the government has farmed out the aid budget in bigger and bigger parcels to private contractors and accountancy firms to do the work for a profit.

Dfid spends some £1.4bn directly through private contractors and several times more than that through its payments to multilateral development banks that recycle British aid back through the private sector.

In 2014, Dfid said 90 per cent of its contracts are awarded to British companies, strange for a department that claims to have untied aid. Almost no contracts are signed directly with NGOs or contractors in the Global South.

In 2014 alone, it spent £90m through a single private consultancy, Adam Smith International (ASI), which that year declared £14m in profits, a profit that doubled in two years on the back of Dfid and British taxpayers.

ASI, which was spun off from the neoliberal think tank Adam Smith Institute, is in the business of privatising public works in the Global South from Nigeria to Afghanistan and deregulating the Nigerian economy under its “Business Environment” stream of Dfid’s £180m Growth and Empowerment in States scheme.

In 2014, Dfid spent £42.9m on the services of one accountancy firm alone (PwC), in spite of its part in the LuxLeaks tax avoidance scandal. It is this tacitly sanctioned flight of wealth that costs poor nations (non-OECD) three times more each year in tax avoidance to tax havens than they receive in aid from rich nations (OECD) according to the OECD itself.

Contrary to the public perception, aid is for the most part not “given” to poor countries. At present, only 0.2 per cent of the world’s humanitarian aid goes directly to local and national non-government agencies and civil society organisations. This is despite a consensus that these groups are the most effective engines for development.

The increasing use of private contractors and large bilateral financial institutions to get aid out of the door constitutes nothing less than a capture of the aid budget by corporate interests, which also advise the government on where to direct future aid flows.

Under this government, aid has become less a tool for development but a rent for a veritable industry that concentrates the knowledge, skills and finance in the companies and institutions of rich nations.

***

Take the amount of British aid that subsidises the fossil fuel industry and therefore promotes global warming, which affects the poor considerably more than the rich because they lack the resources to adapt.

The effects of climate change are already biting. The rising frequency of drought on the world’s semi-arid regions of the world, including the Middle East constitutes, to borrow a term from Professor Rob Nixon, a “slow violence” enacted by industrialised nations on the poor.

Our refusal to take commensurate action on climate change means that water stress is rising across the world, which impairs development and has even been linked to conflict in Nigeria and Syria.

In April, I visited Somaliland, which is experiencing the worst drought in living memory along with the rest of east and southern Africa. Agriculture has collapsed, the animals are dying and migration is rising fast.

Many of these climate refugees are washing up on the shores of Italy and Greece. Survivors in are being sent back to Turkey because there is no international protection available to a subsistence farmer without water or a parent who cannot afford to feed their children.

In 2009, the UK pledged at the G20 to phase out inefficient fossil fuel subsidies but instead it has been using public funds to increase them, according to the Overseas Development Institute.

Using aid money to give the fossil fuel industry a leg up and imperil us all to the onslaught of global warming entrenches inequality and hampers sustainable development.

***

Last year the EU signed a €1.8bn aid package with the governments of 20 African nations, including Eritrea, a totalitarian state financed by slave labour, to keep Eritreans in their country and to accept planes filled with their citizens who are denied asylum in Europe.

Clearly, this aid money is being spent principally the interests of the donors and not the world’s poor.

But aside from using aid to forcibly return people at risk of human rights abuses, this aid holds development back in other ways. Migration is the biggest driver of development because economic migrants from poor countries who work in rich countries back remittances that amount to three times the international aid spend.

“Migrants are the original agents of development,” William Lacy Swing, director of the International Organization for Migration, told the World Humanitarian Summit in May.

In effect we are spending public money legally allocated for reducing poverty on keeping the world’s poor mired in it.

***

Take the UK’s “preventing violent extremism” agenda – borrowed, of course, from the Americans – under whose banner projects can be now funded with UK aid.

Britain’s successful lobbying of the OECD – in opposition to other large donor states, including Sweden – to include some counter-terrorism military spend in the definition of aid is of deep concern.

The OECD already allowed for the provision of aid to prevent conflict and promote peace but this new extremist lens, as opposed to the purely conflict lens, allows the aid spend to become politicised.

After all, governments across the world call their political enemies “extremists” or “terrorists”, but the term is rarely ascribed to governments themselves, even when they brutalise their populations.

The government seems ready to exploit to this change, having set up its new £1bn aid-funded Conflict Stability and Security Fund (rising to £1.3bn in 2020), of which 90p of every pound is spent by the FCO and the MoD.

The stage has been set for Britain’s security state to raid the aid budget to pursue the ill-conceived and expensive military strategy du jour.

The government’s agenda to spend aid in conflict-hit and fragile states on counter-terrorism projects has a bad precedent. The US development agency USAID spent billions in post-2001 Afghanistan, which was embezzled or spirited out of the country.

Even worse, the aid was destabilising. “Instead of rescuing the [political] transition process, aid contributed to its failings,” said the NGO Saferworld in a report this year on the lessons learned from the American state-building strategy in Afghanistan. “Large aid volumes overwhelmed local absorptive capacity and sustained a rentier state . . . The influx of aid funds and the competition over the illegal economy strengthened predatory and opportunistic elites that the US and its allies tried to reform.”

The British government risks falling into the American trap of using counter-terrorism aid to remake conflict-hit fragile states into democracies.

The Independent Commission for Aid Impact (ICAI), the government’s own aid watchdog, has criticized the government’s failure to learn lessons from the past, adding that its security initiatives are “naïve” and perform “poorly” in terms of both effectiveness and value for money.

***

In another dangerous case of aid not being used in the interests of development, the Tories are using it to establish private healthcare and education across the Global South.

Publically provided, free and universal health and education of the type we enjoy in Britain should be pursued across the Global South because it reduces inequality and strengthens democratic accountability.

Private provision of these services in the words of turns these basic needs into commodities whose price variable and unaffordable to poor and marginalised sections of society.

In Britain we should be internationalising the principle of free-at-the-point-of-use health and education, a privilege hard fought for by a generation of Labour politicians interested in social justice and the condition of the poor.

Instead, Dfid’s Education Position Paper calls for “developing new partnerships across the public-private spectrum” and commits Dfid to promoting low-cost private schools “in at least four countries”.

Its flagship education programme of the Department of International Development, in partnership with Coca Cola and PwC, is the £355m Girl’s Education Challenge, which rolls out private education across 18 countries, including 15 African nations.

In signing up to last year’s Sustainable Development Goals last year, Britain committed to “achieve universal health coverage”, which is directly undermined by a development agenda which favours fees.

***

The privatisation of our aid budget alongside its entrapment by enormous multilateral financial institutions is symptomatic of the wider erosion neoliberalism is enacting on the British – and global – economy.

In 2016, aid should be about empowering the losers of neoliberalism across the Global South to cut poverty and reduce inequality. This means placing more emphasis on working directly with the poor, colonised and, more-often, the women of the Global South.

Aid should not be spent on the five and often six figure salaries of the global financial elite, nor should it be tied to Britain’s commercial interests to provide public subsidy for private interests. If we wish to subsidise our private sector, that’s fine, but should do it using export credit and not disguise it as aid.

I can already hear the outcry from development experts that spending money at the grassroots is harder to track and the shrill headlines that taxpayers’ money is being wasted on bee-keepers in Kyrgyzstan or on a Somali radio drama that gave tips to illegal immigrants (all real headlines from the Murdoch press).

But I would accept more “waste” by employing more Dfid civil servants to monitor a greater number of smaller grassroots aid projects on a trial-and-error basis than I would accept the other now ubiquitous form of waste that we do not call waste: the subsidising poverty barons, who enrich themselves off the aid ‘industry’.

This is not a particularly radical agenda. Aid under Labour’s Clare Short, Dfid’s first head, targeted the grassroots and there is a growing consensus among the establishment that we must return to this model to make development more effective and give poor people ownership over projects rather than imposing them from above.

More power and capital needs to go into the hands of grassroots groups.

We must recall the lessons of Pergau and redesign our aid system so that it is not captured by industry or distant elites for their own profitability but a means by which the poor can bring about transformative social change for themselves. 

Diane Abbott is Labour MP for Hackney North and Stoke Newington, and shadow secretary of state for international development.