There is an alternative to austerity

George Osborne will be publishing his latest budget on Wednesday 16th March. This will be a budget that will deliver more cuts and austerity while ignoring the real reasons for the failing economy. He will say that due to the failing world economy there is no alternative to further cuts and austerity, making the poorest people in our society pay even more for the failings of Osborne’s own economic policies.

His obsession with deficit reduction and making Britain a low wage, low skilled economy has done nothing to help working people, but has achieved his aim of making the rich richer.

There is an alternative to austerity and this Wednesday the Labour Assembly Against Austerity will be outlining the alternative. Labour is now an anti- austerity party, but we need to say exactly what we mean when we talk about being anti-austerity. Labour lost the last election because we didn’t have a clear economic strategy, even though living standards were falling and the economy slowing. One of the reasons Jeremy Corbyn was elected was because he set out a clear economic plan based on investment.

In 2006 investment started falling and this eventually led to the crisis as the private sector failed to invest. Governments traditionally counter downturns in the economy by letting consumer spending rise, as the last Labour did by cutting VAT and increased spending. The Tories inherited a growing economy in 2010, but immediately slammed on the brake through cuts and reduced growth almost leading to a double dip recession. The Tory-led recovery has been on the back of an unsustainable housing boom, rather than any boost in investment. The private sector is still not investing and taking risks despite Osborne’s pleas and bribes.

John McDonnell is now speaking about investment in the economy as a key objective in growing the economy. The main channel will be a National Investment Bank. This is mainstream across the world but almost unknown in this country. A National Investment Bank borrows money at very low interest rates, allowing all of the investment that is required in the economy without adding to government borrowing. It allows investment to be made at rates far cheaper than can be obtained commercially. So vitally required needed projects can be easily started. This along with peoples quantitative easing if needed, which is not inflationary, can be used to immediately stimulate and grow the economy, leading to higher living standards and more skilled jobs.

Next week, George Osborne will offer no solutions to the longest economic crisis ever seen and will prolong a stagnating economy with zero interest rates. He will continue the neo-liberal ideology of increasing profits for the private sector and the ruling elite. We need to speak about the alternative, starting with a National Investment Bank and Peoples Quantitative Easing, that can lead to decent well paid, skilled jobs, more housing and fixing the Health Service. There is a deficit of investment to the tune of £80bn a year on what is required. Remember for every £1 increase in GDP – 75p comes back to the government.

By Mike Hedges, Vice-Chair, Labour Assembly Against Austerity and Chair, Unite London & Eastern Regional Political Committee

Better off with Labour: The alternative to Osborne’s cuts with John McDonnell MP, Diane Abbott MP and Steve Turner AGS Unite.

7pm Wednesday 9th March, Committee Room 10, House of Parliament – register in advance online at www.labourassemblyagainstausterity.org.uk