Not An Accident

Ed Miliband writes:

On Wednesday, when George Osborne delivers his budget, many people will be asking: is there going to be a recovery that will help millions of hardworking families like us – or just a few?

In this budget debate, I will remember the voices of people I meet around the country: the young couple who cannot afford the deposit for their first home because houses are not being built; the graduate struggling in low-paid work; the family where both parents work all hours but still cannot make ends meet; and the small-business owner who cannot get a loan from his bank.

None of these are among the poorest and most disadvantaged people in Britain. But nor did they ever dream life would be such a struggle.

A grim statistic for anyone who hopes our country can make progress is that average wages for young people getting into work today have fallen back to the same level in real terms as they were in 1998.

It means that, for the first time since the second world war, wages paid to young people risk being below those once paid to their parents.

So while there is now – belatedly – a growing economy, the key question that any government needs to answer is whether it will help the millions still caught in the crosshairs of a cost-of-living crisis.

The evidence from other countries where economic recovery began earlier is not encouraging.

President Obama has warned of the "cold, hard truth" underlying four years of growth in the United States: corporate profit and stock prices have gone through the roof, but average wages have remained stagnant and inequality has deepened.

The early signs in Britain are that the greatest beneficiaries of a recovering economy will also be a privileged few.

Rewards in the banking sector in London grew nearly five times faster than the wages of the average worker last year. Bonuses are up at Barclays, Lloyds, HSBC and UBS. 

According to the UK Commission on Employment and Skills, the richest 0.1% currently have around 5% of national income – a proportion that, on current trends, could rise to 14% by 2030.

There are long-term trends that drive this inequality. Governments can prevent them overwhelming our economy, but only if there is a government committed to doing so.

But this government, far from fighting the causes of a sustained cost-of-living crisis, wants to encourage them.

David Cameron is fond of talking about a global race. But his is a race to the bottom in which the only way to win is if the British people lose.

The Tories think the only way to succeed is through insecure work, zero-hours contracts, and fewer rights in the workplace.

A recovery for the few is not an accident of this government's economic policy – this is its economic policy.

This is not just socially unjust, it is also bad for our economy.

Unless we use the talents of all and see rising prosperity for all, our productivity risks remaining low, personal debt will remain high, and our economy will be more exposed.

That is why a Labour government would make the big long-term changes our economy needs: from a transformation of our vocational skills to equip young people for future success, and making our banks more competitive so they properly serve small business, to freezing energy prices while we reset the market, and preventing the exploitation of workers from abroad that undercuts those already here.

All these measures would see us working with business to drive our economy towards the high-skill, high-wage road that we need, and away from the low-wage, low-skill path.

Labour would make fairer and fully funded choices to balance the books in the next parliament, including restoring the 50p rate on earnings over £150,000 a year.

We want to introduce a lower 10p starting rate of income tax, and tax bankers' bonuses to create jobs for our young people.

There is a big choice at the next election: between a government that believes it can make our economy work with just a few succeeding at the top while everyone else is squeezed; or a one-nation Labour party that knows our country is stronger, more prosperous and more successful when everyone has a chance to play their part – and that will build the high-wage, high-skill economy that can power us forward.