Making the case for a fair recovery Nicola Smith Head of Economic and Social Affairs, TUC
Introduction Current state of the economy Implications for services and spending Is there any other choice? What do the public think? Arguing for an alternative
State of the economy
The economy is finally growing Quarterly GDP growth rates, ONS
Although it remains the slowest recovery on record The profile of recession and recovery, NIESR
There are also concerns about how sustainable the recovery is George Osborne, 25 th Feb 2010: “The recovery will only be sustainable if it is accompanied by an internal and external rebalancing of our economy: in other words a higher savings rate, more business investment, and rising net exports”
With little evidence of ‘rebalancing’ GDP by expenditure, TUC Economic Quarterly
While household spending is increasing, real earnings are not Contributions to annual growth in real earnings, TUC
Jobs improvements are welcome ILO unemployment, TUC
But under-employment remains high, although levels are starting to fall Involuntary temporary and part-time work, TUC
The jobs market has changed since 2008 with more part-time work Part-time and full-time work, TUC
There has also been some change in jobs levels in different sectors Change in workforce jobs, Sept 2008 – Sept 2013 TUC
Some groups are now at particular risk of poorer outcomes Employment rates for different groups, Inclusion
What does this mean for services and spending?
Growing economy means that public finances are improving Public finances, ONS
But most of the spending cuts in services and benefits are still to come Green Budget 2014, IFS
And public sector employment is set to fall further General Government Employment forecasts, OBR
Is there any other choice?
What choices does government have? Far more than they suggest! We need to consolidate the public finances, but many unknowns: – How much capacity has been lost? – How sustainable is the recovery? And governments have choices: – Speed of consolidation – Balance between tax and spending – Discretion over tax cuts
There are also wider policy choices that could deliver a fairer recovery Employment protection legislation – Unfair dismissal protection – Rights for casual workers Strengthening the minimum wage and tackling high pay Fairness in social security – We don’t need the current sanctions regime Tax evasion and avoidance – How strong is the anti-avoidance strategy? Corporate governance and company decision making – Are firms being made to invest for the long-term?
So what do the public think of the current approach?
A consistent majority think the cuts have been unfair You Gov tracker polls, TUC analysis
Although a majority also think they are necessary You Gov tracker polls, TUC analysis
The proportion who think the cuts are too deep has been falling You Gov tracker polls, TUC analysis
As has the proportion who think the cuts are being implemented too fast You Gov tracker polls, TUC analysis
Public do not back plans for a permanently smaller state TUC You Gov poll
And do not think gains of growth will be fairly shared TUC You Gov poll
Public support social security safety net GQR polling for the TUC
Particularly for people in work TUC You Gov poll
Lots of misinformation about benefits TUC You Gov poll, responses on proportion of benefits bill people think spent on JSA
Few people think they have gained from the economic recovery MORI poll on extent to which people think growth has benefitted their living standards
So what should progressives be arguing for?
What might a fairer recovery look like? Gains of growth that are more fairly shared – Better jobs (better balanced recovery and rights at work) – Fairer pay (at the bottom and at the top) Super-rich paying their fair share – Fair tax – Banks and big business held to account Vital welfare safety net retained – Protection for those who have contributed – A system that is fair Against permanent public service cuts – Childcare, social care, hospitals, schools vital to help households and boost the economy
Over to you!
Thank you!