Labour wants to create a society that is fundamentally fairer, more equal and more democratic, based on an economically and environmentally sustainable economy where prosperity is shared by all. Under the Tories, the British economy faces a turbulent and potentially deeply worrying future. The uncertainty caused by the vote to leave the European Union has exacerbated long-term structural weaknesses in our economy; weaknesses that the Conservative Government has failed to remedy, and in many cases made worse.
Seven years of failure on the economy have left us with stagnating wages, weak growth and poor public finances. Business investment has been sluggish and underlying structural problems in the UK economy have worsened, with a deepening skills crisis and a widening of the UK’s productivity gap with our major competitors.
Alongside this we have seen the rise of insecure, low-skilled and low-paid jobs, and exploitative employment practices. There have been a number of significant, and high-profile, corporate governance failures which have highlighted a problem of short- termism on the part of too many businesses. Austerity cuts to public spending budgets have damaged the growth and capacity of the British economy.
We are also now faced with additional challenges in the coming months and years as the UK negotiates its exit from the European Union and as we begin to chart new trading relationships with the European Union and the rest of the world.
Existing economic headwinds, and the Conservative Government’s handling of Brexit, are therefore real risks to long-term prosperity and opportunity. It is for the Labour Party to produce a credible economic alternative, with a twenty-first century industrial and trade strategy at its heart, which will secure our long-term prosperity.
At the heart of our radical alternative will be our commitments to full employment, decent wages and working conditions, equality and environmental sustainability.
Last year the Economy Policy Commission looked at ‘building a productive economy’. This year the National Policy Forum (NPF) identified further work on building a productive economy, on developing our industrial strategy, and on fostering the workplaces and work practices of the future as priorities for this year. A new priority for this year is work to integrate our international trade strategy with these other priority areas.
The UK economy is failing to deliver for many millions of people, with 19 million people living below the Minimum Living Standard and seven million in in-work poverty. We must build a growing economy which raises living standards for the many; in addition to a better organised and regulated labour market this should be supported by rising productivity.
The Conservative Government has failed to invest in the things that make our economy more productive and as a result we have sluggish growth and insecure work despite high levels of Government borrowing. Labour will need to urgently address this chronic underinvestment in our society’s infrastructure, both physical and social, by investing in publicly funded and owned health, education, childcare and social care systems.
Productivity growth is a crucial component of rising living standards. When people produce more at work – for example, because the service they provide or the goods they make are of a higher standard or in greater quantity – that can help improve and increase the output of their employer. Through collective bargaining the workforce can then secure increases in pay and working conditions.
Productivity growth remains weak, and as such prospects for rising living standards are limited. Labour will come forward with a serious plan to invest in our future, to raise our productivity, and create the high-wage, high-skill economy of the future. A Labour government should lead the way with a programme of long-term investment and by embedding principles of workplace rights, equality and sustainability in procurement processes.
Labour is committed to working with businesses to deliver the high-skill, high-wage successful economy we need.
Most businesses are hardworking and law-abiding, however the image of some businesses in the UK have been damaged by a few recent high-profile scandals. More generally, our corporate culture has been criticised for being too short-termist and focused on short- term dividends rather than long-term company growth. Too many British companies are under-investing, contributing to the productivity gap. Corporate governance reform to ensure that companies are run with a view to long-term stability and growth, to prevent undercutting in corporate governance standards by a few bad apples, and to improve the reputation of business therefore makes good economic sense.
In the longer term it is clear that the coming digital revolution will transform our world; this will usher in a new era of fast technology-driven change, and will transform our workplaces, economies and the world. The potential opportunities offered by digital and technological change are enormous. However, the risks are also great. If not managed properly, it has the potential to exacerbate inequality of income, wealth and capital. This is particularly concerning given the existing trend in the labour market towards low-paid, low-skilled and insecure work.
Labour will build the productive working relationships with industry, businesses and trade unions to take advantage of these opportunities and foster the modern and positive workplaces of the future.
Only through structural and institutional changes, supported by innovative business models, can we achieve this. This means looking at democratisation and new forms of organisation and ownership as central planks in the transformation of our economy.
Labour is clear that we are pro-trade and pro-investment. The future prosperity of the UK is dependent on minimising trade barriers, both tariff and non-tariff , that prevent us from exporting. We want to create jobs and economic growth, and an open, rules-based trading system can help us achieve this.
We must create a modern, 21st century, trade strategy that builds fair and sustainable trading relationships with partners around the world. This is increasingly important in order to promote UK trade and take advantage of opportunities outside the European Union.
Trade and investment are essential for jobs, growth and prosperity. However, progressive trade deals are needed to ensure that the benefits of globalisation and trade are equitably shared. Labour is committed to building a trade strategy that ensures future trade deals are mutually beneficial, democratic and transparent.
The Labour Party will be developing a trade strategy that protects and promotes skilled jobs, human rights and workers’ rights and which preserves and enhances social, health and environmental regulation, here and abroad. These are the red lines that the Labour Party will be insisting upon in all of our future trade agreements.
Only a bold, transformative industrial strategy can fix the structural problems with our economy. An industrial strategy is first and foremost about deciding what kind of economy we want. Labour’s answer is that we want an economy that is prosperous and that leaves no one behind. This means cultivating industrial strength, while guaranteeing a good standard of living for everyone, everywhere.
Labour is committed to working in partnership with businesses and trade unions to develop an industrial strategy that will bring high-skill and high-wage jobs to every corner of the country. A large body of work has already been undertaken by the Party on developing this strategy, including the work of a National Investment Bank supported by a series of regional investment banks.
As part of this, Labour launched a wide-ranging consultation with businesses, trade unions, third sector and party members on our industrial strategy. This included the priorities, interventions, institutions and processes that will shape our industrial strategy.
Specifically, this document moves that discussion on to the important issue of how we integrate our industrial strategy with our trade strategy. We need to look at how we ensure that our industrial strategy and our trade strategy are joined up and complementary. Only by joining these two strategies together will we truly unlock the UK’s potential to create jobs, grow our economy and raise people’s living standards.