Below is the full text of the speech delivered by the Labour leader this morning.
Thank you, Rachel. I’d like to start with an observation about recent crises. Whether it’s the cost of living or recovering from the pandemic our economy is weaker than our competitors. Less resilient. Brittle. And ultimately, we are all poorer for it. This is why I am clear Labour will fight the next election on economic growth. That there is no task more central to my ambitions for Britain than making the country and its people better off.
Tonight, I think you will hear two other candidates for Prime Minister who will also define the choice for their party to be about the economy and growth. But what a choice it is. In one corner you have Rishi Sunak, the architect of the cost-of-living crisis. In the other, you have Liz Truss, the latest graduate from the school of magic money tree economics. Neither of them has the answers to the economic challenges we face – and who can be surprised?
Under their watch, the average British family is £8,800 poorer than their equivalents in other advanced economies. This isn’t just a failure of policy, it’s also a failure of philosophy. Their leadership contest won’t change that. Because both Rishi Sunak and Liz Truss rage against the dying of the Thatcherite light. They don’t understand economic strength in the 21st century needs partnership. They don’t believe you need state and market.
Business and worker. The everyday economy and the technological frontier. All contributing together if you want strong, secure and fair growth. I am under no such illusions. Rebooting our economy in this way will be the defining task of my government. It will ask searching questions of my party and our instincts. We cannot be like the Tories – clinging to old ideas, trapped in our history. To give Britain the fresh start it needs, we need a new approach.
The goal is straightforward. To maximise the contribution we all make to national prosperity. Every business. Every person. Every community. It sounds simple. But in reality, we failed to do it for decades. The best of British business is the best in the world. But we have geared our whole economy to delivering only for those firms. We have been complacent about the number of jobs created which are low paid and insecure. When insecurity stops people getting on and too few communities feel the benefit of the wealth we create, which makes people feel hard work is not rewarded. In a nutshell: we draw our economic strength from too few places.
And like a skyscraper built without foundations, that ultimately leaves us weak. If you want evidence of this, look no further than the cost-of-living crisis. Everywhere I go, I hear the same stories. People scared about the future. Worried that when winter comes, they will face horrible choices about what to spend their money on. Pensioners who can’t afford to turn on the heating. Families cutting back on what they buy their children. But there’s one thing I hear time and time again that worries me more than anything else. That is: working people telling me hard work doesn’t pay. That they’re working harder and harder just to stand still.
That alarms me for two reasons. First, because I’ve been lucky enough to take a journey in my life. From a working-class family to head of the Crown Prosecution Service. And my fear is an economy so wracked by low growth and insecurity means people from my background can’t get on. Second, because honestly: what does it say about the state of Britain when working people feel that hard work doesn’t pay? What does it say about the health of our country? nThe health, even, of our democracy?
It says an unwritten contract is broken. A contract that says in return for hard work you get a fair reward. That you don’t have to feel insecure about your prospects. That your contribution is respected. It’s a two-way thing. A strong national economy needs everyone making the best contribution they can. Whatever their circumstances, wherever they live.
But in exchange, we must make sure the contribution working people make to that national effort is fairly rewarded. That hard work does pay. That their effort is respected. That they enjoy the security they need to get on. To do all that we need three things: growth; growth; and growth. That’s why I have told the shadow cabinet that every policy they bring forward will be judged by the contribution it makes to growth and productivity.
Because everything I want for Britain comes back to this central mission. Without growth we won’t get a high wage economy. Without growth we can’t revitalise public services. Without growth we can’t repair that broken contract, re-energise communities or unite the country. Low growth countries are weaker at standing up for the national interest. Low growth economies can’t support people from my background to get on. Low growth economies can’t rise to meet the challenges of the future.
Challenges like climate change. I want to be very clear on this point. We will not be distracted by the siren calls – from the right or the left – that say economic growth and net-zero do not go together. That these two objectives are somehow in tension. Or even that we should actively pursue a policy of no growth. I reject that completely. It is totally the wrong way round. A plan for net-zero needs growth. A plan for growth needs net-zero.
This is about the future of course. Fail to tackle climate change and you can forget about growth – there is no bigger business risk. Look at how our infrastructure has struggled in the last few weeks. But tackling climate change is also a clear opportunity to create wealth in the here and now. That is why Labour is committed to a climate investment pledge worth £28bn a year until 2030. And we see that pledge as a down-payment that will unlock the private investment which delivers the next generation of jobs.
Because – the way I see it – some nation is going to lead the world in electric vehicles, in floating off-shore wind, in new hydrogen and nuclear technologies. Why not Britain? But to maximise our collective contribution, we must be clear about the kind of growth we need. The growth I want for Britain is strong, secure and fair. Strong, because it will build a foundation where every business and every person plays a role. Secure, because it will produce good jobs that don’t leave people feeling insecure. Fair, because it will unlock the potential of every place – every community, every town and every city.
This last point is so important and strikes at the structural weakness of our economy. It’s not an issue of city versus town. The productivity gap between our cities and their equivalents in Europe is too big. And too many of our towns don’t have a fair chance to contribute in an economy still dominated by London and the South East. This is the hurdle we must clear. We need growth that is strong, secure and fair to re-establish the contract between people and prosperity. The distinction I would make is this: an economy can grow and leave some of its people behind. But a nation based on contribution cannot grow in that way.
But of course all promises need a plan. Boosterism and fantasy economics are not the same as ambition. So, today I want to share with you some of the plans Labour has to reboot growth – and set out five principles that will guide my government in growing our economic contribution. These are:
1. We will be financially responsible.
2. We will be distinctively British.
3. We will work in partnership with business.
4. We will re-energise communities and spread economic power.
5. We will refocus our investment on boosting productivity.
Let me take each of these in turn, starting with the most direct – financial responsibility. The risk of rising inflation could not be clearer. So we will not announce a single penny of day-to-day spending without saying how we would pay for it. We will only borrow to invest to meet the challenges of the future – that’s what our climate investment pledge is all about. And we will set a target to reduce debt as an overall share of our economy. That’s the responsible thing to do. And the contrast with the Conservative competition to waste more of your money could not be starker. With me and with Rachel Reeves you will always get: sound finances; careful spending; strong, secure and fair growth. There will be no magic money tree economics with us.
My second principle is that we must grow our contribution in a distinctively British way. This means two things. First, that we need resilient supply chains in sectors which are vital for British security and growth. That’s why we have a strategy to buy, make and sell more in Britain, why £3bn of our climate investment pledge will help forge a new future for our steel industry, and why we have committed to new public procurement rules that will build up Britain’s sovereign capabilities in key industries.
And let me be clear: it isn’t protectionist to say this. Or somehow old fashioned. Britain will always be an outward facing, confident, trading nation. But all around the world, businesses are looking again at the resilience of their supply chains. Reacting to the crises we have faced and will face in the future. Countries must do the same.
Second, a British approach means we cannot transplant the economic model of another country onto ours. I met Olaf Scholz, Chancellor of Germany and leader of our sister party, the SPD, the other day. He is showing that when levelling-up is based on practical plans, not far-fetched promises, amazing things can happen. In eastern Germany right now, some of the poorest parts of the country are leading the continent in the lucrative race to develop batteries that store renewable energy. This is what can be done.
And, as Lisa Nandy has spelt out, just because the Tory commitment to levelling up is dead, doesn’t mean the idea of levelling up is dead – Labour will take it on. But to do this in a way that isn’t pure boosterism, we must be honest about British strengths.
Take manufacturing. Britain has an extraordinary genius when it comes to manufacturing. We lead the world in pharmaceuticals, bio-science, aerospace. The Nissan factory in Sunderland is one of the most productive in Europe. And the Covid-19 vaccine developed by AstraZeneca and Oxford University has saved millions of lives around the world. When I was at Airbus in Filton, I saw them working with 3D engineering – literally shaping components by bringing together particles and matter in a way unimaginable in the factory my dad used to work in.
We can and should take advantage of these strengths. The road to higher growth and productivity runs right through them. But we are not Germany. The role manufacturing plays in our economy will always be different. And we have superpower strengths – in universities, in creative industries, in exporting services – that other countries can’t compete with. The challenge in both services and manufacturing is the same.
The best of British is the best in the world. And the way we stay competitive is to get more of it: more innovation, more new technology, more research and development, more unlocking the commercial power of our universities, more specialising in the knowledge-rich industries of the future, and more start-ups, which is why we have asked Lord Jim O’Neil to look at how we can make Britain the best country in the world to start a new business. And why we have a plan to Make Brexit Work that doesn’t ignore the strength of our services or our universities.
But an economy that grows our contribution, must rest on strong foundations. Foundations that are there in every community. That is why the work Rachel has been doing on the everyday economy is so important. Retail, education, health and care – we saw in the pandemic how much of the wealth we create depends on these sectors being strong. For too long industrial strategy has simply ignored them. And with that, ignored one of Britain’s distinctive challenges on growth.
Labour’s industrial strategy will contain a plan for the everyday economy. And our new deal for working people will introduce new employment rights to give greater security for people working in it.
That brings me to my third principle: partnership. For growth that is strong, secure and fair – we must work together. We need real partnership between state and market. Business and worker. The everyday economy and the technological frontier – and it is the job of a modern industrial strategy to make sure this partnership grows our collective contribution.
Not in a nostalgic way where government directs the activities of businesses. Modern industrial strategy isn’t about growing the size of the state – it’s about what the state does. How it supports businesses to innovate and grow. Brings in the creative brilliance of our universities. And applies them to the national missions we must all contribute towards. Whether that’s leading the world in artificial intelligence or applying our genius to the challenge of net zero.
Just down the road, at the Materials Innovation Factory, the University of Liverpool and Unilever are partnering to bridge the gap between scientific research and production. Developing the new materials we need to tackle climate change or discover life-saving new medicines. We need to do so much more of this mission-driven partnership. But the government doesn’t have a plan. And we have a massive job on our hands when it comes to private investment.
For decades, we have trailed our competitors. In France, businesses invest around 30% more relative to GDP every year. If we could just close this gap, we would land a serious blow in our battle against low growth. We know it requires public investment – that is why we have our climate investment pledge. We know it requires fair taxation – that is why we will scrap business rates and replace them with a system that levels the playing field.
But we also know it requires stability. And that requires institutions that take a serious, patient, long-term view about what needs to be done. So, today I can announce we will establish an ‘industrial strategy council’. And we will go further by putting it on a statutory footing. It will provide advice that shapes policy in the way the climate change committee does or the Office for Budget Responsibility.
A permanent part of the landscape that sets out our strategic national priorities that go beyond the political cycle, brings in the expertise of business, science, and unions. Holds us to account for our decisions and builds confidence for investors that will boost long-term growth and productivity.
My fourth and fifth principles are best taken together. Because spreading power and raising the productivity of the economy everywhere are fundamental to growing our contribution. On spreading power, I have asked Gordon Brown to look at new forms of economic devolution. To make sure the decisions about things that drive regional growth: like skills, infrastructure, attracting investment… are all made by people with skin in the game.
Labour will not attempt to run our levelling-up strategy from the centre. Nor will we offer it alongside a divisive argument about North versus South. City versus towns. To me, they’ve always felt like false choices. A productive Liverpool is good for Birkenhead. A strong Dudley is good for Birmingham. And each has a shared fate in a wider battle against regional inequality.
But we must also recognise that every place needs the power to grow its own economy. So our reforms will allow devolved and local government to make long-term financial decisions. To reap the rewards of investment in their economy. That way you make sure every city, every town, every place takes ownership of their contribution. That people and businesses with a long-term commitment to their community, work together in partnership. It’s what Labour is delivering where we are in power. And it’s what Labour will deliver in national government.
But as well as spreading power, real levelling-up also requires investment. And this is where my Labour Party will move on from the old ideas. Because the old approach focused on growing the pie in any way possible. Then redistributing. But this is not strong, secure and fair growth. It leaves too many people in insecure jobs where their hard work is not fairly rewarded. Too many communities locked out from the benefits of growth. And redistribution cannot repair the contract.
There is no point looking to the right on this. The evidence of the past decade shows they will only give us stagnation. But what we will do – what winning centre-left parties around the world have done – is to adopt a new approach to investment. An approach the US Treasury Secretary Janet Yellen has called modern supply-side economics. It rests in part on a universal truth about social democracy. A strong economy needs strong public services. And strong public services need reform and investment.
But it also depends on something more subtle. Because the investments we make now should have a laser-like focus on boosting long-term productivity across the country. Not just quick wins in the South East, which means we must learn to focus on the supply side. On growing the collective contribution. Everywhere.
You can see this approach in our fully-funded plans for public service reform. Whether it is our 8,500 new mental health professionals or our national excellence programme for schools that will tackle the educational inequality at the heart of low productivity – our policies are not just an investment in the health and wellbeing of our communities.
They are also an investment in the long-term growth and productivity of the country. There is no tension here – just look at how many people at the moment can’t work because of their health. A highly skilled and healthy nation and a fast-growing modern economy depend on each other. I never think it’s too hard to identify what people want from politics.
At the moment, it’s probably easier than usual. People want a fresh start for Britain. They want the opportunity to get on. And above all they want to be free from the insecurity of the cost-of-living crisis. The approach to growth I have set out today will challenge my party’s instincts. It pushes us to care as much about growth and productivity, as we have done in the past about redistribution and investment. Not to hark back to our old ideas in the face of new challenges. You will see a clear contrast between my Labour Party and the Thatcherite cosplay on display tonight.
The difference between a Labour Party ready to take Britain forward – and a Tory party that wants to take us back into the past. Between Labour growth and Tory stagnation. That will be the choice at the next election and we are ready. Ready to renew the contract with working people. Ready to reboot our economy and end the cost-of living crisis. Ready to unlock the contribution of every business, person and community. And deliver the strong, secure and fair growth our country needs.