State of the Economy Conference 2018

 

Introduction

This is the final session of the day.

Some of you will want to rush off shortly and watch a minor football match, which they describe as the cup final but we all know the real final is in Kiev in a week’s time.

Anyway thank you all for coming today. I hope that you have found the day interesting and hopefully inspiring. I would like you to join me in thanking all our contributors today. All our economic advisers who have lead our discussions. I also want to say a special thanks to two people who have worked like Trojans to organise this conference. This event wouldn’t have happened without them. Please join me in thanking Jacqui Conor and Carol Linforth.

 

Economic Review of the Year

Every year now I convene our “State of the Economy” conference. Yes, to analyse the performance of the economy over the last year. It’s our economic review of the year. But more importantly it’s the forum in which: we explore the challenges we face, we clarify our objectives and we discuss our strategy and policies to confront those challenges and achieve those objectives.

Era Changing Week

The timing of this year’s conference couldn’t have been more significant. In this one week we have witnessed a display of some of the most grotesque aspects of neoliberalism. But I also believe that in this period we are witnessing the darkening twilight of the era of corporate greed and corruption that is the product of neoliberalism.

Just take this one week.

TUC Demo

On Saturday I marched along with tens of thousands of trade unionists in the TUC’s march calling for a decent wage and end to austerity. In that march were the young workers from McDonalds and TGFI demanding a living wage and respect. Alongside us were the striking university cleaners and the protesting Deliveroo drivers.

This is the new emerging generation of active trade union campaigners, growing from the precariat created by neoliberalism. These are the new challengers to the whole system of low pay, zero hours contracts and insecure work.

Grenfell

On Monday I joined the silent march to mark the 11 month anniversary of Grenfell. 71 people died because neoliberalism has created a culture of inequality and neglect in the wealthiest borough in the country. People housed in unsafe accommodation. Their pleas for safety ignored for years by a local authority more interested in saving money than saving lives.

The backdrop to Grenfell though is a housing crisis created by the neoliberal belief that the state has no role to play in providing shelter. The silent march was a whole community mobilised to demand change.

 

Carillion

On Wednesday we then received in Parliament the Joint Select Committee’s forensic investigation into the scandal of Carillion. The company that was the ideal type example of neoliberal business practice. Carillion owed its existence to the core neoliberal beliefs: that the market always know best- and private sector good – public sector bad – and therefore privatise and outsource at all costs.

And what costs there have been. To quote the chair of the Select Committee as the directors filled their mouths with gold and apparently the auditors looked the other way Carillion “treated with contempt” their obligations to their workers’ pensions and 2000 lost their jobs.

East Coast Line

By Thursday the disintegration of neoliberalism turned to farce as we saw a Conservative Secretary of State for Transport effectively renationalise the East Coast Line as a result of the predictable failure of the private sector. Remember this line has been privatised twice and this will be the second time it’s been brought back under public control.It’s a funny old world. The Tories have now nationalised more railways lines than any Labour Minister in 6 decades.

What does all this point to?

First, all the evidence points to the dominance of the neoliberal regime imposed upon our society for the last 40 years is collapsing all around us.

Second, that people are not just waking up to the failures of the current system, they are also beginning to challenge them on some scale.

A culture of challenge is emerging. All those expressions you are hearing more frequently. “We don’t have to put up with this.” “We’re not taking it anymore.” “It doesn’t have to be like this.”

Third, as a result, people are looking, indeed at times demanding an alternative. That’s where we come in. We are that alternative.

Our Core Objective

You have seen today that the Labour Party has re-emerged as the centre of the storm of new thinking. New ideas about the society and economy we want and new ideas about how we intervene in our economy to create that society.

Our core economic objective is to create a prosperous economy that provides the richest quality of life possible for all our people and is at the same time environmentally sustainable. That means demonstrating how we can create the wealth needed to support this society in the new era of the fourth industrial revolution that is upon us. Whilst at the same time we have to show how we can confront the urgent existential threat of climate change.

Wealth Creation

Today you will have heard and discussed some of the methods we want to use to mobilise the resources to invest in skills and infrastructure we need. This can not only provide the tools to create the wealth we need but also decarbonise our economy once and for all.

You will have heard about the institutional reforms we aim to make to ensure the effective direction of investment. This is to secure immediate but more importantly long term patient capital investment. The National Investment Bank, The Strategic Investment Bard and the review of the Bank of England’s mandate.

But we have also discussed the essential structural reforms that we need if we are to ensure that the wealth we create is fairly shared and that wealth creation does lead to a better quality of life for all.

Democratising our Economy

Essentially our structural reforms are aimed at securing what Tony Benn described as an irreversible shift in wealth and power in favour of working people. To shift wealth and power it means addressing the ownership, control and regulation of our economy. It means democratising our economy at every level.

Level of the Firm

At the level of the firm it means the massive scaling up of the co-operative sector in our economy. It means introducing the right to buy for workers when their companies are up for sale or threatened with takeover. It also requires significant reform of corporate governance to give workers representation on company boards and the introduction of supervisory board structures.

To ensure workers share in the wealth created by their firms we are exploring examples of legislating for profit sharing and share distribution. Plus we need to think again about the quality of a person’s working life. We work to live not live to work. We seem to have got things the other way round. In this country we work some of the longest hours in Europe.

Lack of investment results in low productivity. A British worker produces in five days what a French or German worker produces in 4. As we invest and improve productivity we should look again at how we can reduce working hours, giving people more time for leisure and family life.

But the bedrock of any worker getting a fair deal must be the restoration of trade union rights in this country and a government committed to abiding by basic internationally accepted trade union rights, the International Labour Organisation Conventions.

That’s why we will scrap the anti trade union Act introduced by the Tories to undermine trade union rights and why we will establish a new department for Employment to establish sectoral collective bargaining.

At the National Level

At the national level of course we have already set out our policies for extending the democratic control of our economy by bringing back into public ownership and control water, rail, energy and Royal Mail.

We are working now upon the detailed plans and drafting the legislation to re-establish the vital and beneficial role public ownership can play in our economy.

 

Regulation

Whatever forms of ownership exists, there will always be a need for the democratic regulation of the operation of our economy.

If Grenfell, Carillion and the East Coast line prove anything, it is that precious little has been learnt from the Banking crash in 2007/8. And when it comes to setting up an effective system to regulate our economy even less has been done.

Our regulatory system is simply not fit for purpose. The financial sector alone has at least 29 overlapping regulators, including the Faculty Office of the Archbishop of Canterbury. Some professions continue to be largely self regulated.

The four big accountancy firms dominate the market and operate seemingly with impunity. Whether their clients win or lose, the big four always seem to ensure they themselves make a profit.

 

The current regulatory maze creates enormous opportunities for waste, duplication, obfuscation and buck-passing. It does not protect consumers, workers or shareholders and it certainly does not promote confidence in our system. We need a complete overhaul of the entire regulatory framework for finance and business, to promote openness, transparency, accountability and – yes, where necessary – to impose appropriate punishments.

 

People are sick of losing their jobs, their pensions and their shareholding but watching the culprits keep their large pay offs, pension pots and bonuese. So I have asked Professor Prem Sikka (Professor of Accounting and Finance at the University of Sheffield) to examine our regulatory system and bring forward proposals for reform to reinvigorate it.

 

My aim is to bring forward reform proposals to the Labour Party Conference, our party’s sovereign policy making body, in September.

Global Level

In our policy discussions we are also reminding people of the long held tradition in this country of the commons, which has suddenly become relevant again in an age dominated by access to and ownership of data. You will have also heard today ideas about how we can intervene in what many describe as cognitive or info capitalism, where data is the essential raw material of wealth creation.

The collective ownership and co-operative sharing of data, developing platform co-ops, will be a focus of our work and discussions in the coming months. This includes the recognition that it is the mega data corporations that increasingly dominate the global economy with more influence than many individual sovereign states.

So in this coming period we will need to consider what new transnational vehicles or structures and agreements are needed to secure the global regulation of the activities of these corporations.

Measuring our Economic Progress

We can’t tell when the next election will come. Given the deep and increasingly bitter splits in the cabinet it could come at any time. Alternatively, fearful of the electorate, the Conservatives could cling on to office for as long as possible. Either way we have to demonstrate that we are ready and willing to take up the reins of power.

So over the next 6 months, building on our Manifesto from the last election, we will be setting out in greater detail for widespread debate and discussion how we will manage the economy to achieve the transformation of our economy.

We always want to make the debate about the future of our economy real for people. The current discussion of economic performance is dry and arid. Terms and metrics are used that are meaningless and distant from the lives of most people. Our economic discourse largely doesn’t explain but mystifies economic policy making.

So if our management of the economy is about securing prosperity and quality of life then we need measures to explain and assess our economic performance that reflect those objectives in real life terms and a trustworthy institution to independently assess progress.

Measuring economic performance by just calculating growth or lack of growth in GDP, current account deficits and productivity is not only pretty meaningless for many people it doesn’t assess the economy as they experience it.

People base their assessments of the economy on whether they have enough income to get by, whether they can afford a roof over their heads, whether they can enjoy a decent standard of living, not have to scrimp for the basics, and maybe having a night out every now and then or a family holiday this year. They also want to feel if they and their community are being treated fairly.

That’s why we need to think again and for our government introduce new additional methods to assess our economic performance. Measures which are of course comprehensive and are also based upon the real world of our peoples’ lives.

We also need to specifically assess in detail how the economy works from the point of view of different groups in society for example women, young people, older people and disabled people. The IPPR have published some excellent ideas on this.

We will bring forward proposals on how we better assess the performance of the economy and which institution is best placed to provide that trustworthy independent assessment. It may well be that we expand the remit of the Office of Budget Responsibilty to undertake the operation of Labour’s Fiscal Credibility Rule. We may want to extend the ability of the OBR to report independently and directly to Parliament to include these new real world measures of the economy.

What an Agenda.

I hope that today you have gained an insight into the vast agenda we are now tackling. But this is not some academic debate. This is serious business before us. We are preparing for government. We can’t predict when the next election will come. That’s like trying to predict the next split in the Tory party. You now it’s going to come but you can’t be precisely sure when.

So we have to be ready with our ideas translated into policies and those policies developed into detailed implementation plans and the necessary legislation drafted. That is our task in hand and all of you have a role to play in this preparation for government because when we go into government we all go into government.

Today’s conference will have assisted us greatly in shaping the ideas that will lead us into government and I want to say again thank you for all your contributions today.