Richard Holden is MP for North West Durham.
The Copper Mine, Crook, Co. Durham
For the Labour Left, 2010 is their year zero. The Corbynites, the Trots (and the Tankies) regularly trot out their attack on the ‘politics of Austerity.’ They ignore the whole New Labour era as if had nothing to do with them. Not their party: despite the presence of their favoured Jeremy Corbyn, John McDonnell, Diane Abbott and the rest, every step of the way – even if, on occasion, they demurred from the party line.
But who can really blame the Labour Left for their unwillingness to be associated with New Labour? The lesson from 2008 was that the economic prosperity and public spending seemingly enjoyed by the UK was built on sand. It became patently obvious that Britain can’t just rely on an over-heating metropolitan financial sector, plus unsustainable soaring debt and house prices, to provide tax revenues to keep it all going.
The sustainable structural change that the economy needed didn’t happen during New Labour’s 13 years in power. In truth, during that period, Britain was turbo-charged in the other direction – reliant on cheap finance, cheap immigrant labour and cheap Chinese imports. So New Labour’s “no more boom and bust” mantra became seen as the hubris it was, and the New Labour emperors were left in their birthday suits.
So in that ‘year zero’, the Conservative/Liberal Democrat Coalition was handed a basket-case of an economy. A colossal structural deficit, high unemployment, years of stalled productivity and wage growth – and a long-term pensions system that looked permanently unable to support the needs of a growing retired population.
Getting the public finances in order was, as expected, not wildly politically popular, but it was also understood by the public as totally necessary. During the pandemic, the massive financial support to keep jobs and businesses going, tens of billions more in support for our NHS, and billions to get “jabs, jabs, jabs” into the arms of the public is understood too.
Again, the public isn’t as daft as the far left make out, and understand that this significant but one-off support can’t continue for long. Furlough, grant support and a wide range of other measures must come to an end, and the Conservatives who put it in place must sensibly unwind it, and focus again on our real challenges of levelling up opportunity and the economy across the UK.
Labour’s real issue is that they’ve never quite come to terms with the failure of the New Labour economic programme. Labour’s leaders from Ed Miliband to Jeremy Corbyn have similarly been unwilling to confront it either. Astonishingly, all the real running on understanding the need to change the economy in terms of long-term decisions has been left to the Conservatives.
And it’s clear that the Conservatives know what they’re aiming for, even if, at first ,the necessity of getting the books balanced under the Coalition and, more recently, the pandemic have got in the way. George Osborne called that objective the Northern Powerhouse.
The Prime Minister’s ‘Levelling Up’ is broader, and reflects not a geographically constrained area, but something broader: to ensure that the whole UK, from Kirkwall to Cornwall, needs to see good sustainable jobs and prosperity, and not be reliant on the vagaries of being net recipients of current account transfers from an overheated City of London.
Since 2010, an area in which policy has clearly delivered real structural change is that of pensions. For decades, it was seen as too hard a reforming nut to crack, so decisions could be dealt with another day (in reality, another decade). But the Coalition did it, and Conservatives alone in Government extended it.
Auto-enrolment will come to be seen in the future as one of the key decisions of public policy. Now, everyone aged 22 or over and earning over £6,500 automatically sees eight per cent of their salary go into a pension pot, alongside their state pension.
Crucially, they also only see a reduction of half of that proportion (four per cent) in their take home pay, because three per cent comes from their employer and one per cent from the Government in terms of tax relief.
This weekend, I’m sat in a pub, similar to the one I worked in as a teenager, with two of my friends. And we chat to the young waiter – who was due to start here just before the pandemic struck for a second time and has only just done so now. The question I’m asking as I do so is: “why wait until young people are 22?”
With the retirement age at 68, a young person working and paying in at 18, 19, 20 or 21 will have almost 50 years of compound interest for each of those years of paying in. Those four years, even for someone working full time on the minimum wage, mean an extra £35,000 to £40,000 (with the chance of it being significantly more) equivalent in a pension pot – providing another £2,000 a year for, hopefully, many years of happy retirement.
Such a policy would also be aimed squarely at those striving to work hard and get ahead without the advantages of others who don’t enter the workforce until they’re 22. Firstly, those leaving school at 18 and not going to university; but, also, all those young people who may be earning while learning. Frankly, the kid of striving Britons the Conservative Party should always be seeking to do our best for.
Young people have been hammered by the pandemic in order to help look after all our futures; so as a society we should be doing something for their long-term prosperity, too. Ensuring they have a stake in the future of the economy by giving them the same ability to save towards their future and, in doing so, giving them a proper stake in the economic future of the country would be a sensible next step.