The TUC’s Pre-Budget Rally heralds a week of planning and protest against the Tory government’s austerity agenda.
Anti-cuts campaigns are springing up everywhere to oppose the bedroom tax, save hospitals, keep fire stations open, defend education.
In all cases local Labour parties and Labour MPs are showing their support and defending public services for local communities.
This new mood of opposition to Tory cuts needs to be translated into a new Labour economic policy that tears apart austerity and makes a clear and reasoned case for government-led investment to create jobs and growth.
As part of the European TUC Day of Action, its General Secretary Bernadette Segol appeared on Radio 4′s Today programme this morning alongside former Labour MEP Richard Corbett, now advising European Council leader Herman Van Rompuy.
Segol made clear the case for ending austerity measures which are lengthening the recession, tackling tax evasion rather than cutting low pay and social protection, and spending on investment.
Labour should take up this message.
In recognising that austerity is failing, it must make some serious policy announcements that demonstrate it’s willingness to challenge that agenda.
With people’s living standards falling, the party should end it’s support for the public sector pay-freeze as well as promising to legislate for a National Living Wage and tackling tax evasion.
And rather than simply investing money raised on the sale of the 4G spectrum, it needs a much more ambitious plan for growth by borrowing significantly money to invest in large-scale infrastructure projects that will boost employment and growth.
Coming so soon after the TUC’s 150,000-strong demonstration, the scale of European-wide trade union protest is a clear message to Labour, and Europe’s social democratic parties, that they must reject austerity and advocate an alternative of investment not cuts.
You can listen here, or read the transcript below:
Skip to 2:15:32
Humphreys: Do you think this is a new stage in the European crisis?
Segol: I think this is a new stage where the trade unions and people in Europe want to show that these policies should change and the result is not what they want to be, the recession, more unemployment, and now we want policies for growth and employment.
It’s now getting unbearable, these policies which are putting pressure on wages, which are diminishing social protection, and attacking industrial relations are just not working. It’s high-time to change the aim and the policies.
Humphreys: And what about this democratic deficit, is that real as far as ordinary people on the street are concerned? Or is it something that is conjured up by people like yourself who say we can’t be told what to do.
Segol: The democratic deficit is quite clear in so far as the economic policy is dictated by the Troika to a number of countries in Europe. Even if they say it’s a recommendation, in fact, if they do not apply their indications and recommendations, then they don’t have the money. So it’s much more than recommendations, it’s obligations, you have to apply. And as far as other countries are concerned we are faced with the country-specific recommendations from the Commission and indeed these recommendations are not democratically agreed so it’s part of the democratic deficit we are facing today.
Humphreys: Richard Corbett do you accept that? That the Troika is pushing it too far?
Corbett: This dilemma is being faced across Europe and it is a challenge. When you have, as some countries do, such high debt levels and still big deficits, you have to address that question. How you address that question is largely a matter of national choice in most cases. Do you raise taxes? Do you cut expenditure? Which taxes do you raise? Do you cut over what timeframe? In some cases the lenders, remember the situation in a country like Greece would be far, far worse even than now if they weren’t getting one of the biggest loans in history to any country from their fellow countries. Just as you go to your bank manager, the manager wants to know in due course you’ll be able to pay it back. Greece has been given a thirty year low interest long-term loan. The creditors do, and the other cuontries in Europe, do want to know that in due course this situation will be rectified, that you don’t then need another loan…
Humphreys: The problem with the bank manager analysis is if the bank manager says no, I can’t then go away and devalue my currency and renege on my debts which is what Greece could do if it were prepared to leave the Euro and that’s the danger in all this.
Corbett: Well Greece is a country that imports almost all its energy and about half of its food so you’d be doubling your prices.
Humphreys: Yeah but it has that option and other countries in Europe recognise it has that option. If the democratic deficit is expressed as strongly as it appears to be being expressed then maybe things are going to be changed in Europe. That’s what i’m suggesting.
Corbett: Well Greece has a democratic choice, as all countries inside and outside the Eurozone are democracies, so ultimately it’s democractic choices that will be made on these things…
Humphreys: Indeed possibly with devastating effects…
Corbett: And a majority in Greece want to remain in the Euro because leaving it would not help them.
Humphreys: That’s the point isn’t it, Bernadette Segol, that if people want their country to leave Europe [sic] then they can do so.
Segol: No they don’t want to leave the Euro and they shouldn’t leave the Euro, but the point is that the Troika is just pushing pressure on people on minimum wages, on social protection. What is being done to make sure tax evasion and tax fraud is stopped? We don’t see anything happening on that front, it is always the normal people who are paying and you can imagine what is the anger of people who see that the diktat of this Troika…
Humphreys: Well how can you blame the Troika for the fact that rich Greeks don’t pay their taxes?
Segol: Which action have they taken to make sure the fraud is stopped? Why is it so important for them to cut the minimum wage again and again and it doesn’t seem so important to look at the tax evasion and so on…
Humphreys: Tell me what you want to happen. Tell me how you think the Troika should respond to what is happening today?
Segol: First of all, stop the austerity measures. They are counter-productive, they have money for investment and growth, that’s the message.
Humphreys: And if they don’t, if they say come on pay your debts back…
Segol: Well they do have to pay their debt back and they have never said they wouldn’t pay their debt back, they know that, but the way to pay the debt back is not to have a bigger recession.
Humphreys: All right, final thoughts from you, Richard Corbett?
Corbett: Well there does become a limit to which a country can sustain a huge deficit. Greece won’t be able to pay its public sector workers in a month’s time unless it secures a further loan because it’s spending much more than it’s receiving. It does need to address that and you’re right to say part of the issue is tax evasion in Greece and that’s up to the Greek government to crack down on it.
In his speech at the TUC yesterday, Ed Balls stated, ‘George Osborne has shown there is no credibility in piling austerity on austerity, tax rise on tax rise, cut upon cut in the eventual hope that it will work when all the evidence is pointing the other way’.
A clear criticism of austerity it seemed. Having also stated how proud he had been to march for the alternative, one would have hoped he was about to deliver that alternative. Unfortunately he followed it up with the line, ‘But a radical plan to kick start our recovery, put jobs first and transform our economy will only be possible if we can win the trust of the British people that our plan is credible.’
Credible? Within the Party the term is used almost solely to prioritise deficit reduction and the need to accept spending cuts.
Those cuts are sucking money out of the economy and destroying growth. That is why Paul Krugman, Josef Stiglitz and Danny Blanchflower are demanding direct public investment – something Brendan Barber did in his opening speech at TUC. We desperately need to fill the black hole of a major debate – one Krugman’s visit should have sparked – on the scale of stimulus required.
Even the Five Point Plan looks a wholly inadequate response to the scale of the crisis. But this economic alternative needs a vision that the public connect with and galvanises them to vote. We will have no electoral credibility if our ‘fiscal credibility’ leaves us advocating cuts at the same time that we condemn austerity.
Ed Miliband cannot go into the next election offering the timid New Labour line of previous elections that ‘we’re not as bad as the Tories’. Such tired triangulation was repeated by David Miliband and Douglas Alexander earlier in the week and wilfully misunderstands who it is we need to win over.
If we are to turn people out to vote we need to offer a different message, including on pay.
A paper for the TUC produced this week showed wages have declined as a share of the economy for 30 years. And it’s getting worse. Research for Unite found the number of people needing to borrow to get through the month jumping by 12 per cent to 45 per cent since the question was last asked in March 2011.
Those in the public sector, suffering three years without more money while prices soar all around them, need to hear more from Labour. Ed Balls recognised that, ‘Living standards face the biggest squeeze since the 1920s with prices rising faster than wages’. But if we can criticise the reduction in income tax for the richest, and we can advocate a reduction in the rate of VAT, we can – and must – also condemn the real terms reduction in pay for hard working public servants.
If Labour doesn’t change it’s tune, on pay in particular, then Labour MPs will appear aloof and isolated – stuck in a Westminster bubble – apparently unable to understand the needs of those they are meant to represent.
As Osborne flounders for something to right the ship in the economic storm, it would not only be the right thing to do economically, but the popularity of Labour challenging the public sector pay freeze would generate new problems for the Tories. .