The ink is barely dry on the Chancellor’s “audacious gamble” of a Budget and already the OECD is warning that Britain is re-entering recession. It is increasingly clear that, for all the weaknesses and complexities of coalition, the Government’s robustly right wing austerity programme adds up to a game changer that has profound implications for British politics, our economy and ordinary working people.
The question for unions is whether this will prove to be the death knell for 30 years of neoliberalism that has seen inequality rocket and wages stagnate. Can we build an unstoppable movement for a new paradigm, a new kind of economy that serves ordinary people, with greater equality and deeper democracy at its heart? Or will US-scale gaps between the rich and the rest, high unemployment and political disengagement be deemed a price worth paying to ensure that this financialised model of capitalism survives?
The TUC is leading a battle of ideas, narrative and practical policies to shift public opinion in favour of an alternative. In the short term, we need to convince people that this is no temporary or necessary sacrifice. Massive cuts are destroying growth, increasing unemployment and have led to the government borrowing an extra £158 billion. The TUC has called for a Plan B based on growth, jobs and tax. The public knows that the cuts are unfair and there is still seething anger that the real culprits have walked free. Calls for a crackdown on tax havens and tax avoidance, and a Robin Hood Tax help reframe the debate back to the root causes of the crash.
But in the longer term, trade unions need to articulate a compelling vision of a new kind of economy: fairer, greener, stronger. The eclipse of the free-market model of the past three decades has left an ideological and intellectual vacuum but, as campaigns from Bombardier to the Occupy movement show, there is a genuine appetite for a fundamental change in government values, policies and priorities.
So what would a progressive economic settlement look like?
First, decent work and higher wages must lie at its heart. We need to reverse the pernicious legacy of neoliberalism that has seen a diminishing share of GDP ending up in workers’ pay packets– which led to the catastrophic build up of household debt and many economists argue underpinned the crash. Meanwhile profits have returned to trend and corporations are sitting on over £700 billion of cash reserves, equivalent to half of our total GDP. Unproductive rent seekers must be confronted and constrained, and the spoils of economic growth must be shared much more fairly. That requires stronger unions, more collective bargaining and new institutions, to protect the struggling middle as well as the working poor.
Second, it would build the high-growth industries, jobs and skills of the future. Since Thatcher, policymakers have bet the house on the City, to the detriment of the real economy. We now need an intelligent industrial strategy that nurtures the cleaner, greener industries of tomorrow – simultaneously rebooting our manufacturing base and helping us tackle climate change.
And third, it would create a new kind of financial system. In plain English, we need banks that work for us, not for themselves, including a new state investment bank and a properly capitalised green investment bank. We need hard-touch regulation, much more rigorous lending targets, and proper oversight of remuneration – starting with worker representation on company boards.
Frances O’Grady is the Deputy General Secretary of the TUC, and is the keynote speaker at the Unions 21 Annual conference tomorrow. Other speakers include Andrew Harrop , John Harris, Stephen Timms MP, Lisa Nandy MP, Michael White , Diane Abbott MP, Lord Glasman and Owen Jones.