The recovery is in danger of passing most people by
After three years of austerity-induced economic stagnation, the UK is finally moving back toward recovery. But it’s a recovery that is in danger of passing most people by. The economy may have grown by £60bn in the last four years, but households are nearly £500 worse off. It’s no wonder that polling published yesterday by Class found that four in five people do not feel that they are better off as a result of the improving economy.
The historic link between economic growth and rising incomes has been broken under this government. Households are being excluded from the benefits of growth.
The government has belatedly woken up to our cost of living crisis. But ministers are desperately short of solutions because they’re still not prepared to challenge the ‘market knows best’ ideology that has somehow survived the biggest global crash since the 1930s.
Take soaring energy bills – a flashpoint for Britain’s cost of living crisis. Every day we get a fresh government announcement on how they’ll tackle sky high bills. Customers have been told to wear jumpers, another toothless review is planned and some MPs have even decided to turn a cost-of-living issue into a rally against green jobs and investment. But no minister is prepared to take on the main reason for soaring bills – the excessive profits of energy companies.
On Tuesday, we’ll be marking the 20th anniversary of another great British market failure – the privatisation of the railways. We know from the successful, and publicly run, East Coast mainline that re-nationalisation is not only popular with passengers, it works too. Despite this, the East Coast franchise is being handed back to a private company – great news for shareholders but bad news for passengers.
But there is an alternative to this failed economic model. Firstly, we need to address the chronic imbalance between capital and labour. Living Wage week, which starts on Monday, should provide a stark reminder that in low-pay Britain one in five workers earns less than the living wage. We need a concerted effort to raise workers’ wages, from encouraging employers to pay the living wage to introducing new wage councils. And of course we need more of the most effective way of all to boost pay – collective bargaining.
New high-quality jobs are equally important. The government hails its job creation but fails to point out that four in five new jobs are in industries paying less than £8 an hour on average. We need smart intervention from the state to back growing industries and provide the investment spur they need.
After years of recession and stagnation, a low-pay recovery and a return to business as usual may be good enough for the government. But it’s not good enough for working people who have suffered job losses, real pay cuts and seen their children’s career prospects threatened.