Why Labour?
When Britain was hit by the global recession, we faced a choice – we could let the recession run its course, as the Tories had in the 1980s and 1990s, or we could actively intervene to support the economy, businesses and the family finances of the most hard-pressed. We decided, in line with the views of business leaders and economists, that we had to act to prevent the collapse of our banking system and that cutting public spending in a downturn was the wrong choice, which could have pushed unemployment up to as much as 5 million. Now that the country is moving back into growth, we will continue to support the recovering economy while implementing our strong, clear and sensible plan to reduce the deficit that the recession caused.
The decisions we took during the recession were designed to support the economy to prepare the country for the upturn. We chose to target as much support as possible where it was needed most – in particular, at families, pensioners and businesses. We helped families with children by bringing forward increases in Child Benefit and Child Tax Credits, meaning that families received increased payments for an extra four months. Pensioners benefited from the largest increase in the state pension since 2001, as well as from increased pension credit and winter fuel payments. A reduction in VAT in the toughest period of the world recession also helped family budgets.
Key achievements
Labour is taking action to give real help to families and businesses now and for the future:
- VAT cut to stimulate demand and help businesses during the critical stage of the recession
- 22 million people benefited from tax cuts that raised real incomes at a critical time and helped stimulate the economy
- Business Payment Support Service (Time to Pay scheme) has allowed over 160,000 struggling businesses so far to delay tax payments on a timetable they can afford
- Car scrappage scheme, where owners scrapping an old car receive £2000 off the price of a new car, assisted with over 340,000 orders having been made to manufacturers and has kept the automotive industry on its feet
- Preventing repossessions through supportive policies and using new laws to ensure that repossession must always be a last resort
- Guaranteed job or training place for 18-24 year olds unemployed for over six months
- Increased child benefit and child tax credit
- Increased the Pension Credit to a minimum of £130 a week
- A Winter Fuel Payment of £400 for over 80s households and £250 to the over 60s
- Stepping up the support to help people back into work
- Helped savers by increasing the threshold of Individual Savings Accounts to over £10,000
- Increased statutory redundancy pay to £380 a week
- Extended the Stamp Duty holiday for properties under £175,000
A future fair for all:
- This year, we are providing a guarantee of a job or training place for any 18-24 year old who has been unemployed for over six months, because we believe that no young person should be left behind. Our Backing Young Britain campaign is funding 20,000 internships, half of which will be for 18-21 year olds who haven’t been to university.
- We will continue to help people who have lost their jobs get back into work. The Future Jobs Fund, worth £1bn, will create 170,000 jobs, of which at least 120,000 will be targeted at 18-24 year olds and the remaining 50,000 will be targeted at unemployment hotspots. To date, the fund has created around 104,000 jobs.
- Action like this to help the unemployed is making a difference – Labour’s action has helped to protect up to 500,000 jobs during this recession. Unemployment is 450,000 lower than predicted at the time of the Budget – saving the taxpayer around £2 billion a year in benefits alone.
- We believe that losing your job should not have to mean losing your home. So we will continue to help people stay in their homes through schemes that help them with their mortgage interest payments and schemes like Homeowners Mortgage Support, where borrowers who have lost their income can reduce and postpone mortgage payments until their financial circumstances improve. Over 200,000 families are now getting through these means – with another 88,000 expected to benefit over the next two years.
- Supporting businesses so they come through the downturn stronger is integral to our future economic success. For example, we have doubled the main capital allowance rate to 40 per cent, giving increased tax relief, allowing businesses to plan ahead and invest in their companies. The car scrappage and boiler scrappage schemes have supported industry at key moments, while the Time to Pay scheme has allowed many SMEs to keep going by deferring tax and NICs due.
- Locking in the recovery requires an active strategy to invest in the UK’s fundamental strengths. Labour believes there is a role for government to play in giving industrial sectors the necessary support to allow them to flourish. We will therefore invest in the industries of the future, such as low carbon, biotechnology, advanced bioscience and cutting edge advanced manufacturing. Labour’s aim is to make the UK the best country in the G20 in which to set up and run a business, and become one of the most attractive places in the world to invest.