Growth is long overdue but for millions this is no recovery at all – my article on PoliticsHome

After three damaging years of flatlining, it’s both welcome and long overdue that our economy is finally growing again. But for millions of working people still seeing prices rising faster than wages this is no recovery at all. Only last week official figures showed that working people are on average over £1500 a year worse off since the general election.

So when David Cameron and George Osborne try to claim – when the latest GDP figures are published tomorrow- that the long-delayed return to economic growth is proof that their plan has worked after all, their out of touch boasts will jar with ordinary families.

And with living standards falling, housebuilding at its lowest level since the 1920s, business investment on hold and the deficit much higher than planned, everyone knows that a few quarters of positive growth cannot undo the long term damage that has been done over the last three years. In fact, we would need 1.4 per cent growth in each and every quarter between now and the election simply to catch up all the ground lost since 2010.

What we urgently need now is action to secure a strong, balanced and sustainable recovery and long-term reforms to earn and grow our way to higher living standards – catching up all the lost ground and delivering for the many, not just a few at the top.

First, we need real action now to help people with the rising cost of living.

Prices have risen faster than wages for 39 out of the 40 months David Cameron has been in Downing Street. And the one notable exception was April this year when, as the OBR said this week, high earners delayed their bonuses to take advantage of the top rate tax cut.

While David Cameron has no answer to his cost of living crisis, Labour will act to freeze energy prices until January 2017 as we reform the energy market and expand free childcare for working parents. And we have called for a tax cut not for millionaires, but for 24 million working people on middle and lower incomes by introducing a lower 10p starting rate of tax.

Second, we need to ensure we have a balanced and sustainable recovery that is built to last.

We learned this week that stamp duty receipts are up 39 per cent, reflecting a booming housing market in parts of the country. But by simply boosting demand with Help to Buy while failing to take action to boost housing supply, George Osborne risks making home ownership even further out of reach of the aspiring first time buyers the scheme should be helping.

That is why we continue to agree with the IMF in urging the government to bring forward £10 billion of infrastructure investment this year and next year, which could be used to build 400,000 affordable homes.

And it is why I believe the Bank of England must now urgently review the details of the Help to Buy scheme. How can it make sense for a scheme that should be about helping first time buyers to offer taxpayer-backed mortgages on homes worth up to £600,000?

And third, we need to make long-term changes so that our economy works for working people.

As Ed Miliband said at the Labour Party Conference, Britain must win a race to the top, not a race to the bottom. That’s why Labour will cut business rates to help Britain’s small businesses, entrepreneurs and wealth creators.

And it’s why we also need a strengthened minimum wage, excellent academic and vocational skills for all – not just the 50% who go to university, banking reform and a proper British Investment Bank to get lending going to small businesses and a compulsory jobs guarantee for young people and the long-term unemployed to get people back to work and get the welfare bill down.

Yet the Conservatives oppose every one of these measures, seeing them as unnecessary interventions in our economy.

On every test they set themselves in 2010 – on boosting living standards, securing rather than choking off the recovery, balancing the books by 2015 and keeping the AAA credit rating – David Cameron and George Osborne have totally failed.

And despite the damage of the last three years and the growing cost of living crisis on their watch, the Prime Minister and Chancellor are still making the wrong calls and failing the British people.

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Posted October 24th, 2013 by Ed

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