Our new economics will bring sustainable, progressive growth

A new politics needs a new economics which was the message from the speech by Shadow Chancellor John McDonnell today.

His speech was driven by four key themes – how we tackle the deficit, how we build a stable economy, how we change the economic discourse and how we create an entrepreneurial state. The themes and speech received a warm response from business roundtable this afternoon as we started our engagement.

We know that Osborne’s plans have failed to achieve the outcome he hoped. He promised to balance the books by 2015 but the deficit is forecast to be £69.5bn this year. In August borrowing was £1.4bn higher than August last year. Recent figures showed a rise in unemployment in every region, and household debt is also on the increase. Next year almost three million families will see a cut in their household income of an average of £1300. Productivity is lower in the UK than others in the G7.

Today we have said we will manage the economy in a fairer more progressive way. Competent but compassionate, adopting an approach that will see us develop policies for sustainable growth – building on the foundations laid by Ed Balls and Chris Leslie, and offering an approach different from Osborne by shifting from short-term thinking to long-term thinking.

Labour will tackle the deficit and will live within its means. By investing to grow and sharing the proceeds across all parts of the UK, supporting key industries and sectors to see long-term sustainable growth that reaches all.

We will build a stable economy. A radical review of the national institutions that manage our economy is being launched today – reviews of the mandate of the Bank of England, HMRC and the Treasury to ask whether there needs to be any reform to better drive growth. And we will ask that we have access to modelling of the Bank of England and the Office of Budget Responsibility, so that we can ensure our policies are rigorously tested, workable and affordable.

Our thinking will be complemented by Labour’s new Economic Advisory Committee, bringing together economists including David Blanchflower, Mariana Mazzucato, Simon Wren-Lewis, Thomas Piketty, Joseph Stiglitz and Ann Pettifor. A rigorous, evidence-based approach that asks new questions will be vital to ensuring we win back confidence to run the economy and do it better than the Tories.

We will change the economic discourse by launching a national debate offering the electorate a real alternative to the lack of support for industry and low pay economy. Public sector receipts will come through growth, reform and tackling tax avoidance and evasion. We need to see a shift in the burden from the low- and middle-income earners who are currently paying for a crisis they did not cause.

This is an opportunity to think differently, to challenge Osborne on his record as well as shift the national conversation on the economy. It’s the first step in building our offer for the next election.

As an active government Labour will improve our workers skills, tackle the productivity crisis that the Chancellor continues to ignore, and shift towards a more long-term, sustainable and fairer form of growth.

Seema Malhotra MP is Shadow Chief Secretary to the Treasury