From the TUC

Congress 2011: Campaigning for the alternative

09 Sep 2011, by Guest in Economics

Next week sees the TUC’s 143rd annual Congress in London, and a lot has happened since the union movement met in Manchester last year.

A year ago we were being told that everything was set for recovery. Yet here we are 12 months later facing a real prospect of a double-dip recession.  Trying to eliminate the deficit in just four years can now be seen as nothing more than a national programme of self-harm.

It has killed both consumer and business confidence. With the cuts already putting the brake on government investment, the net result is that almost no-one is investing. Yet without growth there is no prospect of closing the deficit gap in the short, medium or long term.

The desperate position that the government now finds itself in is shown by the sheer irrelevance of its ideas for growth. Scrapping the 50p tax rate as many Conservatives want, or tearing up a planning system that has not stopped growth when the economy was functioning well shows just how far away from the real economy and real people they are.

The problem is that the government has not just produced the wrong answer, they don’t even understand the question. Our economic problems lie in the collapse of an economic model that started in the 1980s and ended with the collapse of Lehman Brothers in 2008.

Its central flaw was that it encouraged the rich to get richer, while those in the middle and bottom had their living standards held back. Instead they were sold credit. The result was not sustainable economic growth, but what has now been cruelly exposed as a huge debt bubble.

Debt and the deficit are very real issues, but they are symptoms of what went wrong, not the cause. But you cannot cure the patient by treating symptoms alone, especially when the treatment’s side effects make the root illness worse.

It is hardly surprising that consumer confidence has collapsed. The study we’ve published today reveals that in two years time a typical middle Britain family will be suffering a living standards gap of £4,600 by April 2013 or 6%.

A single parent also with middle earnings is the biggest loser in our four families. She is hit by 10% – more than £6,200 by 2013. And as for us all being in this together, it’s the single parent and the low paid worker’s family who lose the most, and the well paid couple who suffer the least in percentage terms. We’ve not bothered to model anyone right at the top as we know they will be hardly touched.

When even the IMF says that a root cause of the crisis was the growth in the gap between ordinary people and those at the top, making it even bigger is like trying to put out a fire with paraffin.

In the past year the TUC has led the campaign against the cuts, with half a million on our March for the Alternative. We can now see that the cuts are not just hurting, they are not even working. The challenge to this year’s TUC is to step up our campaign for an economic alternative.

We need fair tax that asks those with the broadest backs to pay the most – not special cuts for the wealthy, and a national investment bank and a green investment bank to drive investment.

If companies and individuals are not spending the state must fill the gap. And it is a lack of demand and investment – not a lack of land – that is holding back building the houses we need at least at the moment.

Above all we need this government – and others – to put the brake on austerity. This is the only way to restore confidence and get the economy growing again. And that means boosting the living standards of those who did least to cause the crash.

The world looked over a financial abyss in 2008. Bold action to rescue banks and ensure liquidity meant that we did not repeat the mistakes of the 1920s and 30s.

Recent economic events show that we have yet to fix what is really wrong. Yet now we are faced with prolonged and damaging stagnation rather than a precipice, world leaders are sitting on their hands.

That’s why next week is such an important week for the TUC. Now the government’s strategy is so clearly not working it is up to us – and anyone who wants to join us – to campaign for that alternative.

NOTE: Congress 2011 takes place from the 12th to 14th September in London, and will be streamed live online via the TUC site’s Congress pages. You can also follow the discussion on social media by visiting the aggregator site CongressVoices.org.uk