Osborne's Failed - It's Time for Labour to Lead the Way on the Economy

Six months since we lost the general election, and Labour has moved on but cannot lose sight of the hard truth that a large section of the public still doubt our ability to make the right decisions on tax, spend and investment. This was top of voters' concerns last May. Success in the elections next May, and in 2020, depends on getting to grips with it fast.
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Six months since we lost the general election, and Labour has moved on but cannot lose sight of the hard truth that a large section of the public still doubt our ability to make the right decisions on tax, spend and investment. This was top of voters' concerns last May. Success in the elections next May, and in 2020, depends on getting to grips with it fast.

However George Osborne sets up the politics of the Spending Review in ten days' time, we can't let him make it Labour's 2010 ground hog day.

Tory ministers spent the last Parliament blaming Labour. But they now have their own record to defend. And the verdict on the Chancellor is clear: he's made the country's economy weaker, not stronger. So the first step to winning with the public is to expose the failings of the last five years.

Incomes are down, with workers still worse off than in 2010 in real terms, but this is more than just about living standards.

Rather than helping British business sell to the world, Osborne has overseen our trade gap last year plunge to -£93bn, the lowest level since records began in 1946.

Rather than backing our manufacturing base we've seen major firms in strategic industries like steel and renewables forced out of business, while jobs in manufacturing remain almost 10% below pre-crisis levels.

Rather than committing British government investment in our own essential infrastructure, Osborne courts the Chinese to fund it for us, and has halved UK infrastructure spending over the last Parliament.

Rather than investing in building new homes to cut housing benefit costs, Osborne has slashed housing investment and housing benefit has risen by over £4bn a year.

Rather than re-balancing the economy away from consumption and debt as he promised, household borrowing is forecast to top the high-risk levels it reached in 2007 by the end of this Parliament.

And despite declaring in his 2010 Budget Osborne that "The deficit is our most pressing national problem" and he'd eliminate it by 2015, this year it still stands at £70bn.

When you cut through the politics, the economic facts tell us that five years of George Osborne has been bad for Britain.

Labour's answer to these failings must be radical and credible.

Radical to show that we will make the big changes to strengthen the British economy where Osborne has failed.

Credible to show that we will set out not just what we would do, but how we would do it and above all how we'd pay for it.

As John McDonnell said in his speech to Labour's conference: "We will tackle the deficit fairly and we can do it."

A sound starting point for 2015 is our own record in government after 1997.

Then as now Labour policy was constrained by the public finances. The deficit this year stands at 3.7% of our national income, little higher than the 3.3% Labour inherited in 1997, while debt repayments are lower than 1997 because of rock bottom borrowing costs.

But then unlike now, more balanced fiscal rules didn't choke off vital investment or limit Labour from looking at a radical set of economic policies from the minimum wage to Bank of England reform to the Regional Development Agencies.

As an alternative to Osborne's deficit politics now, this means scope for sharp differences between Labour and Tory economic plans.

For a start no fiscal imperative for punishing cuts, so we can afford to protect vital tax credits and housing and disability benefits.

But above all, the confidence for Labour to take the argument to the Tories where they are the weakest - on the strength of the British economy. On the lack of investment, the failure to build new homes, the absence of backing to bring on the next generation of British businesses and the gap where a real plan should be for encouraging enterprise growth in all parts of the country.

As the IFS have shown, it would be possible to avoid deep welfare spending cuts, increase public capital investment, raise no taxes and still balance the current budget by the end of this Parliament.

The Chancellor's spending review is the chance to show what a stronger economy would look like with a Labour government. Radical, credible and better for Britain. Our challenge to convince the public must start now.

John Healey is the shadow housing minister and Labour MP for Wentworth & Dearne