It’s almost every week now that we’re hearing of businesses cutting jobs, downsizing projects, or leaving the country. Last month, Jaguar Land Rover announced it was cutting 4,500 jobs. Marks and Spencer then said it would cut 1,000 jobs. This month, Nissan stalled its Sunderland X-Trail SUV project. Yesterday, it was revealed Honda is set to announce the closure of its factory in Swindon, which employs 3,500 people.
Some of this is because of the government’s blundering over Brexit. But it’s also because the fundamentals of our economy under this Tory government are not sound. Figures from the ONS out last week confirmed a manufacturing recession – six consecutive months of a decline in manufacturing output – as well as business investment dropping 3.7% compared to the same quarter the year before. And the work done by Graham Turner and his team paints a stark picture of an economy that has long been out-of-kilter, where investment and lending for housing far outweighs investment and lending in productive sectors.
This is an economy that isn’t working for the many. This Tory government at best doesn’t know how – and at worst doesn’t care – to get the economy working for everyone. The government has tried to cut its way to growth, claiming that a tighter public service will make room for private sector investment. But despite years of savage austerity, growth has remained stagnant – just 1.4% in 2018 – and real wages remain lower than they were in 2008.
Its other favoured strategy is to carve large chunks out of the tax base, under the false belief that the offer of less tax will drive people towards productivity. We lose hundreds of billions every year from our hospitals, schools, and public services because this government thinks tax reliefs are the way to redirect investment. But this has not yielded results either. The government set up a department with responsibility for industrial strategy, and has announced several sector deals. However, these have lacked ambition, coherence, and coordination.
We have a different view of how to reinvigorate our economy. Under Jeremy Corbyn’s leadership, and as demonstrated in our 2017 manifesto (and the accompanying Grey Book), we have stayed steadfast: we have to invest to grow.
That is why when we are in government, we will set up a National Transformation Fund of £250bn over ten years, focused on delivering essential investment in transport, housing, and communications. It’s why we’ve committed to establishing a National Investment Bank, which with its network of regional development banks will lend to small businesses across the country as part of advancing an ambitious industrial strategy.
It’s why we have excluded investment from our Fiscal Credibility Rule: because we understand that investment in stocks of assets must be treated differently from day-to-day spend. This investment must be coordinated – and it’s for this reason that we’ve announced the establishment of a Strategic Investment Board, which will work with the Bank of England, the Treasury, and other institutions in driving forward productive investment.
With just twelve years according to the IPCC to change course to avert climate breakdown, it is crucial too that we go green. So every part of our investment agenda is underpinned by the imperative of decarbonising our economy. As our Shadow Business, Energy and Industrial Strategy Secretary, Rebecca Long-Bailey, has said, meeting the challenge of climate breakdown will be “embedded into the DNA of every single department and every single economic decision we make”.
And growing green is an opportunity. Decarbonisation will be a mission of our National Transformation Fund. It is a reason to look afresh at the Treasury Green Book for spending decisions. It will be a guide for the green jobs revolution that we want to see take root across the country, especially in communities that have been ignored for too long.
If resourced properly, the public sector – with its ability to borrow cheaply, secure economies of scale, and pool expertise – has the capacity, alongside workforces around the country, to coordinate this drive towards decarbonisation. Investing to grow, and going green – as part of a broader socialist project – will secure real transformation of our economic system. It will ensure that we are able to lead the rich, full lives that ought to be the birthright of all of us.
This piece was commissioned by Labour Together, which is guest editing LabourList this week.
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