Stewart Wood, an adviser to Ed Miliband, has published an important piece in the New Statesman, responding to just these questions.
And the role of devolution, and of city regions like Leeds will be paramount.
Woods’ first point us about the nature of the recovery we’re experiencing – one driven by consumption and debt,
Our recovery is fuelled by consumption more than that in any other major economy.
And this consumption is coming ‘Partly from the expansion of household debt, which reached a record high at the end of 2013. And partly from people running down their savings to spend more. Between January 2012 and December 2013, the UK savings ratio went from 8 per cent of GDP to 5.4 per cent.’
By comparison, Germans save nearly twice as much.
His second point concerns the inefficiency of the UK economy.
Since the crash, our productivity has slumped.
This ‘is now about 20 per cent below the average of our G7 competitors.’
No better news on the trade deficit.
‘This year, Britain’s trade deficit is predicted to rise to the highest level of any industrial country in 2014, its highest level for a quarter of a century.’
And when it comes to investment, the picture is similarly bleak.
‘ As a share of GDP, investment in the UK economy dropped by a quarter in the five years after 2008. We now rank 159th in the world, just behind Paraguay and Mali.’
His third point is about the benefits of the ‘recovery’, and how they are shared. what recovery we’ve seen has benefited only a ‘very few’.
‘ And not any old “very few” either. City bonuses are predicted to be 15 per cent up on last year. Meanwhile, average earnings are £1,600 a year lower than at the last election, and earnings will only have grown by half the level of the overall economy by the next election. The median household has seen their income drop by nearly 4 per cent since the recession. In our country, the poorest 40 per cent have the lowest share of national wealth of any western country.’
So who has the answers?
Not, in Stewart Woods’ view, the Tories. Their answers are essentially more deregulation. For Osborne, the role of government is ‘to feed the low wage, low skill monster’.
‘The response of Labour under Ed Miliband’s leadership is different.’
What Labour under Ed Miliband looks to is a real reform of the way the economy works.
‘We refuse to accept that there is nothing to be done about the snapping of the link between the fortunes of the economy and those of working people. Britain’s problems with productivity, competitiveness and living standards are interconnected. ‘
So what Labour plans is
– a transformation of the banking system
– a ‘resetting of the energy market’
– a step change in housing, with 200,000 homes a year to be built
– a new deal for the young, with apprenticeships and more emphasis on technical education in schools
– and a new devolution of power
‘ a historic transfer of many of the levers of economic policy from Whitehall to city regions and county-regions.’
You can read the whole of this article here.
What he makes clear is how far Labour is putting together a new vision of Britain and its economic future.
Britain will be better under Labour.