Labour has a troubled reputation for managing the economy. Some MPs – including, it has to be said, some Labour MPs – claim a Jeremy Corbyn lead government is a grave and radical threat to business. Well, as we politicians like to say in corridors of power, what complete and utter rubbish. And here’s why.
People often forget that it was a Labour government that rebuilt this country after the War. “Don’t go making any promises” Churchill warned the Atlee “the country’s broke”. And yet Labour created a virtuous economic model, based on robust growth, fair taxation and redistribution. Labour built the foundations for a long golden era of development that, despite subsequent Conservative governments, couldn’t be undone.
Our country today stands at a similar crossroads to the one we faced in 1945, after a long depression and war. The facts for business are clear. The economy lacks no clear avenues for growth. Despite the rhetoric, austerity has not lead to a restoration in business confidence. Quite the opposite, as even the IMF admits.
To take just one indicator, the OBR announced this month that it has been far too optimistic over Britain’s productivity growth. Successive forecasts that predicted a rise have been revised to show a negative trend.
Business knows that low productivity means sluggish growth. And there’s at least two reasons for this, on top of mountain concerns over Brexit. First that business investment remains low, at only 5 per cent above it’s pre-crisis peak, in the era of fictional financial profits. And second, unproductive firms are clinging to life and dissincentivised to change course due to endlessly low interest rates. British business is just about keeping afloat.
So why this persistent sluggishness? The simple reason is that the economic logic driving the Tories also happens to be utter rubbish. The free marketeers that live on in the party believe the intervention of government crowds out investment. Yet, in circumstances of low growth, the situation is exactly the opposite.
What Labour proposes is an entrepreneurial state, one that will crowd-in business through investment in infrastructure, the serious development of human capital and crucially, by providing long term patient finance via a national investment bank. All these plans are made clear in our manifesto and additional resources online.
So after seven years of Tory failure and despite Labour’s track record after the War, why does our Party often have the reputation it does?
The answer to my mind is simple. In the 2010 election the Tories inched across the line by blaming Labour for the crash and we, for our part, failed to defend ourselves. Why? Because as we all know New Labour, and Gordon Brown in particular, cultivated a deep relationship with banks and finance – the exact place from which our economic problems flowed.
It’s clear today that British business needs a new deal. Austerity can’t continue for much longer, it’s not good for anyone. The invisible hand of the free market has had a chance to deliver and, frankly, it’s so invisible that next to no one has seen a positive outcome.
It’s time then for some big thinking and some real leadership and that today is exactly what Labour are about.
This Article first appeared in Business Network, the members’ magazine of East Midlands Chamber