Stagnant wages and the scourge of child poverty show Britain’s economic model is bust – Lilian Greenwood’s report from Labour for the Common Good

British wages have been stagnant for over a decade. The share of wealth owned by labour, as opposed to capital, is in long-term decline. Median household income peaked somewhere around 2003. The five richest families in this country now own more wealth than the poorest twelve million. The typical earnings of millenials are around £2,800 a year lower than the generation before them at a similar stage of their lives. Nearly 4 million children are growing up in poverty. Last year, the Trussell Trust, Britain’s biggest food bank agency, handed out over one million three-day emergency food supplies, in 2008 the figure was just 25,000.

Most Labour MPs do not need a recital of such statistics to know Britain’s economic model is bust. Practically every time we run a constituency surgery we are confronted by the sad and brutal reality. Yet it is still important to remember the depth and length of this crisis in our political economy. Because the truth is, in so many Labour areas the malaise predates austerity and even the 2008 financial crash. Of course a pro-austerity Tory government doesn’t help – it never does. And there is also no doubt that the last Labour government offered these communities a far more generous social safety net and life-changing investment in public services. Nevertheless, we have to be blunt and admit that many of the problems faced by our most deprived communities – places like Clifton or The Meadows in my constituency – run much deeper than cuts to public services and social security. We need to move beyond campaigning slogans about what we oppose and nurture a positive alternative which looks to the future rather than the consensus of the past – whether you prefer pre-1979 or post-1997.

This, ultimately, is the task Labour for the Common Good initially set out to explore – so it was a fitting theme with which to end the parliamentary year. The first presentation came from John Harris, whose ‘Anywhere but Westminster’ film series for the Guardian has done so much to highlight Britain’s political dislocation. And inevitably, much of the focus turned towards Brexit and the light it shines upon our growing disconnect with the working class. John suggested that reconnecting with these former Labour supporters represents an existential challenge for the Party. He also argued that whilst this disconnect was clearly related to economic and social policy – particularly immigration – it also felt deeper and more profound; a sense that progressive politics simply has nothing to offer such people anymore. The big challenge this creates is that tackling the problems of globalisation and inequality, which are so often the root cause, requires a strong response from the state. Yet when trust has frayed to this extent John suggested people may only greet such offers with a mixture of disdain or disbelief. The key issue then, becomes one of restoring trust.

The second presentation came from Dr. Jeremy Green from the University of Bristol and focused on the economic platform. Again Brexit dominated but Jeremy was keen to stress that leaving the EU might finally – if only out of a lack of viable options – force us to face up to the enormous task of economic rebalancing and moving our model away from a financial services dominated industrial model. Like many economic commentators he also suggested that if there is a downturn following Brexit there may be little left that monetary policy can do to boost demand, so attention should now turn towards fiscal policy. In short, he argued that Labour now needs an activist fiscal policy, rather than more asset-inflating quantitative easing; a transformative regional industrial policy which goes way beyond the bromides of the northern powerhouse; and a clear commitment to borrow and invest in housing and growth-boosting infrastructure.

To some extent the ‘Brexit’ vote represents a howl of anguish at long-term changes, such as globalisation and deindustrialisation, that have brought few benefits to Labour communities. Whichever way we turn now the key task is to find a way that gives such towns and cities an economic stake – to provide jobs which are not only stable, secure and well paid, but can also restore a sense of community pride. In other words, our challenge now is to find an economic platform which can deliver the very traditional socialist goal of dignity in labour. This task opens up basic questions of political economy and industrial policy that have been left unexplored for too long – and Labour’s future now depends upon answering them.