Our economy has, at long last, got back to the size it was before the global financial crisis, the latest growth figures on Friday are expected to show. The fact that Conservative strategists believe this to be a significant moment for celebration is revealing.
Not only is it two years later than the chancellor’s original plan said, and three years after the US reached the same point, it’s also the case that GDP per head won’t recover to where it was for around another three years – in other words, a lost decade for living standards.
So while David Cameron and George Osborne complacently claim the economy is now fixed, most people are worse off. As even Ken Clarke, the former Conservative chancellor, recently admitted, most people are not feeling any sense of recovery.
It wasn’t supposed to be this way. The Tories said their policies would deliver rising living standards, but working people are worse off with wages after inflation down by more than £1,600 a year since 2010.
The myth that we were all in this together was shattered by the £3bn tax cut for the top 1%. Far from balancing the books by 2015 as promised, borrowing is set to be £75bn next year – because Osborne’s reckless first budget choked off recovery back in 2010.
Even with the economy growing again, Conservative complacency is now deeply misplaced. Because while they said they’d rebalance the economy, housebuilding under this government is at its lowest peacetime level since the 1920s, business investment is lagging behind our competitors, apprenticeships for young people are falling, and our export growth since 2010 is sixth in the G7.
Despite all this, ministers think all we need is more of the same. But we are not going to deliver a balanced, investment-led recovery that benefits all working people with the same old Tory economics.
Hoping tax cuts at the very top will trickle down, a race to the bottom on wages, Treasury opposition to a proper industrial strategy, and flirting with exit from the European Union cannot be the right prescription for Britain. We need a different approach to deal with the deep-seated cost-of-living crisis, build a stronger and more balanced recovery, and tackle the substantial deficit the next government will face.
That means making work pay and tackling insecurity by expanding free childcare, introducing a lower 10p starting rate of tax, raising the minimum wage and ending the exploitative use of zero-hours contracts. We need to create more good jobs and ensure young people have the skills they need to succeed when technological change is hollowing out middle-income jobs.
To build a stronger and more balanced economy we need to get at least 200,000 new homes built a year, and devolve more power and funding to city and county regions.
British businesses should be backed by cutting business rates, maintaining the most competitive corporation tax in the G7, and arguing for Britain to stay in a reformed EU.
And we must also get the deficit down. Labour will balance the books and get the national debt falling as soon as possible in the next parliament – as the national policy forum voted for last weekend. But we will do so in a fairer way, which includes reversing Cameron’s tax cut for millionaires, tackling tax avoidance, and cutting the winter fuel allowance for the richest pensioners.
While the Tories claim all we need is one more heave of the same old policies, Labour’s radical and credible economic plan is the only way to make Britain better off and fairer for the future.