Corbyn’s Labour has the antidote to Tory economic doom

An array of policies that will significantly improve the lives of ordinary people are the best reason to trust Jeremy Corbyn’s leadership, argues KEN LIVINGSTONE.

The Tory government, dutifully echoed by the majority of the media, never tires of telling us how rosy the picture looks for the economy but recent data — including regarding GDP — shows the opposite and reveals that the outlook for the economy is deteriorating.

The Tories are taking Britain backwards and the reality of seven years of economic failure becomes clearer by the day — the economy remains in a crisis and now the indications are that it is going to get worse leading to a sharpening cost-of-living crisis for millions of people.

This is within a context where the British economy grew last year by just 1.8 per cent — below even the weak average rate of growth since the recession.

On the main measures of living standards the UK is in the worst position of all the advanced industrialised economies and is in a unique position of seeing GDP expanding while wages have contracted.

Working families are set to be on average over £1,400 worse off following the recent Budget, while those at the top get bigger tax breaks.

One part of the approaching cost of living crisis is the toxic combination of rises in inflation alongside a flattening of wages and incomes.

The latest consumer price inflation data showed a sharp acceleration in price increases, which Labour has rightly pointed out is yet more worrying news for working people.

This is having a negative effect on real wages and real incomes, once inflation is taken into account, because most working people in Britain are now facing flat wages, while at the same time the poorest in society — many of whom rely on social welfare — are seeing freezes or cuts, meaning that all these people will be poorer as a result.

In February, CPI jumped from 1.8 per cent a year ago to 2.3 per cent. There was zero inflation as recently as 18 months ago. It is unlikely that wages will have kept pace with the recent jump in prices, meaning that real wages are set to fall more sharply.

We already know real pay is beginning to decline again, contracting at the start of 2017 for the first time since August 2014.

Britain’s wages crisis was also confirmed in a recent IMF report which showed that the share of national income going to workers in wages has fallen since 2010.

Of course, not everyone is doing badly in austerity Britain.

The Tories’ tax changes that came into effect on April 1 will see £2.5 billion in tax giveaways alone handed out to big business and a wealthy few in 2017-18 and by 2022 Tory Tax giveaways could total around £20 billion, which includes over £2 bn in corporation tax giveaways in the next year alone.

Yet for the many, all the economic trends suggest that their problems will deepen, with the fall in real incomes to be prolonged and Britain facing a lengthy slump in terms of real wages.

As I have argued in previous columns, the big issue stopping Britain’s economy reaching sustainable and strong growth is chronic under-investment and this also underlies our increasingly low-wage economy.

Investment was lower at the end of 2016 than in mid-2015. Without investment it is extremely difficult to create new highly paid jobs. The new jobs that are being created tend to be lower-paid and push down average wages even in nominal terms.

Linked to this is the complete absence of a serious industrial strategy from the Tories.

This is reflected in the fact that recent data showed manufacturing output shrinking for the second consecutive month and our trade deficit, on both goods and services, widening for the second consecutive month.

The latest ONS productivity figures meanwhile have shown the Tories’ abject failure on productivity growth, with it slowing significantly over the last year and the ONS saying there is little sign of an end to Britain’s “productivity puzzle,” or of closing the record productivity gap with other G7 economies.

These failures matter when it comes to people’s living standards as productivity growth is a key enabler of higher pay. But there is an alternative. Under Jeremy Corbyn’s leadership Labour has articulated a correct framework for economic policy and a proper industrial strategy to tackle these problems, with a clear plan for a high-investment, high-skill and high-wage economy. In particular, as part of the current local election campaign, Labour has outlined a plan to transform the British economy combined with concrete policies for better living standards for the majority.

This economic plan consists of:

– Developing a proper industrial strategy to support our key industries.

– Establishing a new national investment bank and regional development banks to drive investment.

– Ending austerity and building world-leading public services by taxing the super-rich.

This is the foundation for a series of welcome, credible and popular policy announcements, including free primary school meals, a series of important pledges to pensioners including keeping the triple lock, banning exploitative zero hours contracts to give real job security and introducing a real living wage of £10 an hour to give nearly six million people a pay rise.

The left and progressive movements need to be clear that the maintenance of the current leadership of the Labour Party is absolutely central to the hope of ending austerity and with it the deep and painful cuts that are hitting the most vulnerable in our society.

We now need to unite behind Corbyn’s leadership and policies, step up campaigning towards May’s elections and then redouble our efforts to secure a Labour victory in the next general election.

First published by the Morning Star