Labour says its new economics will help create the economy of the future and safeguard the new world of work

The Labour Party will today set out the new economic direction for the party ahead of the Spending Review next week.

In a speech at the Imperial College Incubator, Labour’s Shadow Chancellor, John McDonnell MP, will say that the Chancellor George Osborne is only providing short-term answers for the long-term problems facing our economy.

And he will spell out that Labour’s new economics will help create the economy of the future and safeguard the new world of work.

Labour says the problem we face are:

• The UK has so much untapped potential, but we are failing to invest in those skills and technologies that will create the secure, high wage, productive economy of the future.
• Britain spends less as a share of GDP on research and development than France, Germany, the US and China, all of whom are increasing their commitment to science and technology. Government funding has been cut by £1bn in real terms. Public infrastructure spending has been cut under this government from 3.3% in 2009-10 to 1.6% today.
• Short-term thinking means placing our long-term prosperity at risk. Osborne is creating deficit with the future. It’s time for government to step up, act strategically, and support real wealth creation.
Labour’s solution
• Technological change is creating opportunities for wealth creation and prosperity that did not exist before. We need to ensure that we exploit these opportunities in a way that creates and does not restrict opportunities for workers.
• Labour in government would offer a new contract for a new workforce, seeking to extend existing employment protection to the self-employed and those on non-traditional contracts.
• The OECD says developed countries like Britain should spend, from public and private sources, a minimum of 3.5% of GDP on infrastructure. We would meet and exceed that commitment.
• Our large companies are sitting on billions in cash. So we will also look to ways to change our corporate tax system and work constructively with companies to give them the incentives to invest wisely.

John McDonnell MP, Labour’s Shadow Chancellor will say:

Small business:

John McDonnell (CC-BY-SA-3.0)

John McDonnell (CC-BY-SA-3.0)

We have brilliant entrepreneurs like Dale Vince, who started the world’s first green energy company, Ecotricity, from a caravan in Gloucestershire. Ecotricity now supplies 75,300 homes with renewable energy. Their workforce has grown 78% in the last five years. We need more creativity like this. Thousands of new businesses are being created. We want government to work with, not against, those entrepreneurs helping create wealth in society.

Deficit:

Osborne may be trying to close the fiscal deficit. But by failing to invest, he is opening up a massive deficit with the future.

“We believe that any fiscal rule should ensure government’s current spending is brought into sensible balance, consistent with sustainable economic growth, whilst allowing vital investment to continue.

Intergenerational:

Wages for the under 30s have been decimated since the financial crisis, and are still 10% below their 2010 level.

“Home ownership in many parts of the country is out of the reach of the millions whose parents are unable to help with a deposit.

“Osborne may be trying to close the fiscal deficit. But by failing to invest, he is opening up a massive deficit with the future.

“We believe that any fiscal rule should ensure government’s current spending is brought into sensible balance, consistent with sustainable economic growth, whilst allowing vital investment to continue.”

House prices:

Home ownership in many parts of the country is out of the reach of the millions whose parents are unable to help with a deposit.

Skills:

Another priority will be to ensure that our provision of skills is adequate to the needs of the new economy we will to create.  At present, employer after employer reports dire shortages.

“Further Education colleges, a vital lynch-pin of the education system, are threatened with swingeing cuts. If every person is to have the opportunity to share in the prosperity that the new economy can offer, every person must have the opportunity to learn and develop.

Investment:

The OECD thinks that, as a minimum, a developed country like Britain should be spending 3.5% of GDP on infrastructure. Labour in power will meet and better that commitment, reversing decades of underspend. This could include renewable energy, energy efficiency, major public transport improvements and ultra-highspeed broadband.

“The Royal Society recommends a target of meeting at least the OECD average spend on research and development of 0.67% of GDP by 2020.

“A Labour Government will aim to exceed this, with total spending – from both public and private sources – of at least 3% of GDP by 2030.

Rights at work:

Technological change, and the unfettered free market, are tearing up the old work contract. Labour, instead, will offer a new contract for a new workforce.

"Security of income against uncertainty. The same rights and protections extended to all those at work. This is why the fight over tax credits matters so much.

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