Tuesday, 23 September 2014

Analysis: Miliband's Six National Goals

At Labour Party conference, Ed Miliband used his leader's speech to outline six national goals if Labour takes power in 2015 - and governs until 2025. Andrew Fisher evaluates those goals ...

It was long, heavy on rhetoric and contained some of the worst devices in modern political speech-making. But, if you wade past the references to 'Gareth' and 'Together', the awkward phrasing at times, and "aren't I clever at remembering my speech" (oops) ... yes, if you forget all that ... then actually, buried deep in there, was a bit of substance. But was it good substance?

1. GIVING ALL YOUNG PEOPLE A SHOT IN LIFE: Ensure as many school-leavers go on to apprenticeships as go to university.

What's right with it?
Labour has previously vowed to ensure vocational education is as valued as academic qualifications, and this could be the meat on the bones of this. The UK labour market seriously lacks skilled work, and this could be part of rebalancing the economy away from the increasingly low skill, low wage, low productivity one that Osborne's policies have intensified.

But ...
Currently there's a real issue about the low quality of many apprenticeships. This is an issue that the Labour-affiliated UCATT highlighted at TUC Congress. This is highlighted by the fact that the largest single provider of apprenticeships is Morrison's. So Labour has a real challenge in simultaneously improving both the volume and the quality of apprenticeships. Otherwise it's just a way of driving down wages and allowing employers to undercut wages, which will hinder Miliband's second goal:

2. TACKLING THE COST-OF-LIVING CRISIS: Help working families share fairly in the wealth of our country so, when the economy grows, the wages of everyday working people grow at the same rate.

What's right with it?
Industrial strategy. It's back on the agenda, and credit to the work of academics like Mariana Mazzucato (among others) for putting it back there. Warm words on science and innovation budgets, the promise of a British investment bank, and building better vocational, skills-based, qualifications.

But ...
The detail is thin on the ground, e.g. how much will this investment bank have to lend? How much will science and innovation budgets actually increase? This Labour conference sent mixed messages. How does a cap on public sector pay or on child benefit help tackle a cost-of-living crisis? And what of non-working families? 

3. RESTORING THE DREAM OF HOME OWNERSHIP: Meet demand for new homes for the first time in half a century - doubling the number of first-time buyers getting on to the housing ladder a year. 

What's right with it?
With London house prices averaging over 14 times the average London wage, and house prices across England now 12 times average earnings, this is a real crisis that has to be challenged. It gives private landlords an increasingly dominant position to use their capital live off the backs of others struggling just to keep a roof over their heads.

But ...
With Ed Balls imposing a no borrowing rule even for capital investment, it seems that councils have no role in tackling the housing crisis. And so Labour's policy seems to be based on simple supply and demand: flood the market with new homes and bring down prices? But how will private developers be incentivised to build substantially more than now? Does it mean a Land Value Tax to put pressure of developers to develop hoarded land, or tax breaks? Does it mean deregulating planning laws, opening up (some of) the greenbelt for development? Finally ... and what does this do for those nowhere near able to buy - those in overcrowded, temporary accommodation, on council waiting lists?

4. TACKLING LOW WAGES: Halve the number of people on low pay in our country, changing the lives of over two million people

What's right with it?
The scourge of low pay is a massive issue (one we've blogged on - we all need a pay rise). It's seen rising in-work poverty as the national share of GDP going to wages has dropped substantially in the last generation. Raising wages means lowering the taxpayer subsidy for low pay - the rising cost of tax credits and housing benefit because wages aren't enough to make ends meet - something we've termed the 'public ownership of living standards'. Miliband is proposing to re-privatising these burdens to employers - and that's a good thing.

But ...
Where are the policies to deliver this? The Labour opposition is pledged to maintain the public sector pay cap - at least in 2015-16, and it's commitment to raise the minimum wage to £8 an hour is nothing if not modest (see analysis). The most effective means of raising wages is to unshackle trade unions - and strengthen employment and trade union rights. Collective bargaining covered 85% of workers a generation ago, but now covers less than a third of workers - but Labour has been silent on trade union rights ... and the sadly inaccurately nicknamed 'Red Ed' appears terrified of doing anything that benefits unions (which by extension means not benefiting workers).

5. SECURING THE FUTURE: Create one million more high-tech jobs by securing the UK’s position as is a world leader in green industries

What's right with it?
Break open the ethical locally-sourced champagne like fizz! He's signed Labour up to the demands of the One Million Climate Jobs pamphlet. The Uk lags woefully behind in investment in green techonologies and only 4% of total UK energy use is renewable, compared with an EU average of 12%. This is great and long overdue.

But ...
Who is doing this investment? Ed Balls says no borrowing (even for investment) and the UK has a long way to catch up just to be a world middle-of-the-road country, let alone a world leader. Something has to give, and if it's Ed Balls, good. Oh, and never use the phrase "securing the future". Nobody speaks like that ... it jars.

6. SAVING OUR NHS: Build a world-class, 21st century health and care service.

What's right with it?
The NHS is - as Miliband says - creaking due to real terms cuts in budgets and to staffing levels. We need investment in the NHS, and a people-centred approach. Ensuring better care is going to be massively popular. A more humane, personal and caring NHS is a vote winner - and is a move away from the mechanistic target driven approach of the last Labour government. Taxing hedge funds, tobacco companies and tackling tax avoidance is also good popular stuff.

But ...
The funding - clamping down on tax avoidance is a good thing, and is doable, but it requires more staff (not less) at HM Revenue & Customs - and Ed or shadow ministers have made no mention of supplying the resources. The proposed surtax on the tobacco companies' profits is very welcome too - they profit from addiction to carcinogens - but sin taxes tend to be regressive (not a reason not to do it, but it necessitates further rebalancing).

There is undoubtedly some good stuff there - and the issues identified are all important ones. With some careful shaping, there are some potentially good punchy messages for Labour activists, affiliates and supporters to go and convince people that Labour is worth voting for next year.

But, there's also a lot of gaps, a lot of issues where Labour is still saying nothing or saying the wrong things. It would be easy to simplify this as Ed Balls giving the 'bad cop' tough messages to appease the media pack and financiers, while Ed Miliband playing 'good cop' wins the people over with some fluffier stuff. But that tension can't be contained - and the contradictions cause mixed messages, sowing the seeds of doubt, and undermining trust in what either of them says.

"Together we can", was the phrase used by Miliband repeatedly. Trouble is, when applied to Miliband and Balls, it means "Together we can ... come across as contradictory and confused". No wonder the electorate is yet to be convinced ...


Jeremy Corbyn MP said...

Well put Andrew; the ghost of Ed Balls and freeezing child benefit is a problem for us and its symbolism is huge. Not much said about TTIP by most platform speakers except NHS reference. TTIP is much more than the NHS. Richard Murphy's fihures on tax avoidance are staggering - we could not just end the freeze idea on benefits but really make a differenc eto the poorest by collecting coprporate taxes. Jeremy Corbyn MP

PeterM said...

The problem is that there's no real desire by the Labour leadership to explain how the economy really works. I'm sure Ed Balls does he's a smart guy.

On the back of an envelope we can cost one of the promises of extra staff to the NHS at around £3 billion. Where is the money going to come from? That's the usual question. Like any other sort of government spending, government just creates it.

For a start, why bother about any NI contributions? Where does that go? Straight back to government. Also if we are talking wages and salaries about a third of that will come straight back as income tax. So, now, it really is only £2 billion.

That will get spent into the economy. Most will be spent on items which will attract 20% VAT. So, that's another £300 million or so back into the treasurers coffers. ( down to £1.7 billion) Then some will be spent on petrol and alcohol related products. (£1.6 billion) . Then there are lots of other taxes like CGT and even TV licences that will pick up at least another £100 million or so.

So what was £3 billion of new money just created and spent into the economy is quickly down to £1.5 billion. Then we can apply the process over and over again so £1.5 billion comes down to £750 million, then half again £375 million, then half again etc etc.....

I've missed out that some of that money will be saved and some will be net spent on imports. But this money is then just used to buy government gilts so it ends up back with government anyway.

The government is in a situation where no matter what it spends it all comes back in taxes or through the purchase of gilts. It literally never, ever, gets into the position where it needs to go off and ask anyone else, like the IMF, for a loan. Any sovereign government which does that really doesn't know how its own system works.

So does this mean government can spend without limit? Sadly no. If it overdoes it then we'll have inflationary problems back. Then, and only then, will government need to throttle back on the spending.

I'm not a professional economist, but this doesn't seem a difficult concept to get across. What's the problem?