by Rajesh Agrawal
It is wrong for commentators to lazily blame Labour for the economic downturn and credit the Tories with the recovery.
The truth is, the recession wasn’t caused by Labour. It was the result of a serious collapse in the global banking system.
After five years of Conservative spin you might be forgiven for forgetting that Labour’s economic record in power was actually one of remarkable stability and sustained growth for the ten years before the banking crash. It was also a time when the vast majority of ordinary people felt the benefits of economic prosperity.
Far from irresponsible spending, Labour biggest deficit before the crash was 3.3% of GDP. Osborne’s currently stands at 4.6%.
In fact, Labour successful and responsible economic management was arguably the single biggest reason the Conservatives found it so difficult to win back power in 2001, 2005 and a majority in 2010.
By comparison, Osborne’s economic record is hardly a shining success story he claims.
The current recovery is the slowest economic recovery in over a hundred years. It is also an unbalanced recovery with huge areas of the UK and millions of ordinary people yet to feel the benefits, while the gap between rich and poor gets ever wider.
Even on the top lines, the Tories have failed to meet their own targets. On deficit reduction the books were supposed to be balanced by now. In reality, the deficit will still be £75 billion next year and as a result the Tories are borrowing more, leaving national debt rising higher and higher.
But that’s not all, the balance of payments on manufactured good remains is now at its worst ever. Wages have dropped by 9% in real terms since the Tories came to power. UK productivity is second only to Italy in the G7. This does not look like an economic plan that’s working.
What’s worse though, is that the Tory’s economic mis-management has led to a cost-of-living crisis, unprecedented in recent history.
Average wages have fallen by £1,612 a year. Although employment is officially up, 1.4 million are now working on zero-hours contracts. There’s been a 59% rise in working people forced to claim housing benefit and a million people now rely on food banks. This is poverty that no Labour party government would allow.
Looking ahead, the Tory plans for the next five years offer no source of comfort. Even the respected IFS has recognised that Osborne’s plans involve spending cuts after the election twice as deep as anything we’ve seen in the last five years.
The Conservatives are promising £60 billion worth of cuts over the next parliament, including £12billion from the welfare relied on by the poorest and most vulnerable.
On the other hand the Osborne is promising wealthy pensioners that their state funded perks will be protected, and ruling out more taxes on the wealthy, while doing very little to tackle mass tax avoidance by the rich.
The Conservatives haven’t yet explained where most of their cuts will come from. They haven’t ruled out cuts to education and the truth is that without further rise in VAT the NHS would have to be in their firing line.
Deficit reduction is important to our long term stability and I am glad that Labour are committed to it. But there is no reason to sacrifice much needed public services or punish the most vulnerable in order to do so.
Labour are offering a different path. They will share the burden fairly, offering protection to ordinary working people by ensuring those with the broadest shoulders bear a greater burden; clamping down on tax avoidance, reversing the Tories’ tax cut for millionaires, and introducing a Mansion Tax on houses worth over £2 million to help save and transform our NHS.
That’s balanced growth that ordinary people will feel and a bit of much needed humanity back in the Treasury.
Rajesh Agrawal is the founder and CEO of Xendpay