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  1. Politics
31 July 2017updated 05 Oct 2023 8:53am

Labour has an economic plan for the many – the Tories barely have one at all

We welcome debate about our manifesto, but critics should look at the whole programme.

By Chi Onwurah

A successful manifesto captures people’s imaginations, and Labour’s certainly did that at the general election.

As I’ve written before, “For the many, not the few” offered hope to people across the country – from the single mum looking to change career to the ageing care worker trapped in a long-hours, low-pay job.

The critics

But some critics – including John Rentoul and Sean O’Grady, both writing in the Independent last week – are now arguing that this hope was misplaced. That Labour’s 13 million voters were hoodwinked by promises which “won’t work”. That our policies would be “disastrous” for the economy, hitting businesses and workers hard.

Now, I’m happy that our manifesto is still a topic for debate weeks after the election, in contrast with the Tory effort which has already been removed from their party website. Even Philip Hammond – hidden from view during the election campaign – joined the conversation last week, accusing Labour of “misleading” voters about our spending plans.

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The economic situation

One thing that I agree with Philip Hammond on is that we need serious, credible economic policies – because our country is in a mess. For seven years now the UK’s potential has been choked by austerity – what I call George Osborne’s zombie economics – and we are now one of the weakest economies in Europe, with GDP growth in the second quarter of this year only 0.3 per cent. What little growth we do have is being fueled by consumer debt – a point underscored by last week’s Financial Stability Report from the Bank of England.

This dismal long-run performance is underpinned by levels of productivity that are the second worst in the G7, and a third lower than France, Germany and the United States. Improving our country’s productivity would go a long way towards generating greater economic growth and paying off the deficit. Instead, we’re losing billions in underutilised human capital.

Labour’s industrial strategy

Given the economic mess we’re in, it’s peculiar that Rentoul, O’Grady, and Hammond all failed to mention a critical part of our programme – Labour’s industrial strategy.

This is our plan for a high-wage, high-growth economy that provides people with the skills and jobs they need to thrive and to become wealth creators in their own right. We want to build an economy for the many, not the few – and this isn’t only about making our country fairer, it’s about making it more prosperous.

Our industrial strategy is challenge-led – which means it’s informed by the big challenges that our economy and society will be faced with over the coming decades. We’ve laid out two “missions” – decarbonising the economy by 2030, and building an “innovation nation” with the highest percentage of skilled jobs in the OECD.

Guided by these missions, a Labour government would mobilise public and private capital to create one million good jobs in five years.

Procurement and state aid

O’Grady’s piece in particular is highly critical of two ideas – procurement and state aid – that he believes are central to Labour’s economic plans.

He argues that procurement for social good – choosing whom government should buy services from based on the wider impact it will have – is detrimental to economic growth and efficiency. This is a strange line to take if you value the EU and are opposed to a hard Brexit – as O’Grady is – given that the European Commission actively promotes “the strategic use of green procurement, social procurement and the procurement of innovation”. On a local level, grassroots procurement for social good has paid dividends in areas such as Preston and, over the Atlantic, in Cleveland.

O’Grady also suggests that Labour is pushing for state aid to companies and industries of the sort that would be incompatible with the rules of the single market. He goes on to say that this would lead to a sluggish economy with inefficient companies kept afloat.

This is where it would have helped for him to have read our industrial strategy. Labour doesn’t want a return to top-down subsidies and “command-and-control” intervention in the economy. Instead, we want to build an economy where public bodies work with the private sector to promote innovation and drive economic growth.

It is true that single market rules prohibit heavy-handed state aid when it distorts competition – but there are ways to strengthen and support industries without falling foul of EU guidance. And our programme – inspired by the work of world-leading economists such as Mariana Mazzucato – certainly is possible under EU law, with Mazzucato’s work cited by politicians of all political hues across Europe, as well as members of the European Commission.

The Tory approach

The Tories, too, say they are developing an industrial strategy – but so far it hasn’t materialised. In an answer to a written question from my colleague Rebecca Long-Bailey, the government stated that they do not expect to publish a response to their industrial strategy consultation until “late 2017”.

The proposals they have released are small-scale and ad-hoc – industrial strategy without the strategy. The Government has made a decision to focus on a small selection of industries, ignoring key sectors such as retail, the UK’s largest source of private employment.

This “sectoral approach” has been strongly criticised by the non-partisan business, energy and industrial strategy select committee – and research from Sheffield Hallam university has shown that the measures announced by the government will affect only 1 per cent of the economy, leaving the vast majority of British workers out in the cold.

From spending 20 years in industry as an engineer, I know that what businesses need the most from government is stability – so the Tories should lay out their plans as soon as possible.

Government-in-waiting

Labour is a government-in-waiting. In marked contrast to this Tory government, we’ve put forward credible economic policies and a genuinely new vision for the country. It’s right that these plans should be scrutinised, but on the basis of our whole policy programme, not selected snippets. So by all means, read our industrial strategy. Critique it. We’re happy to debate it with all comers.

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