Monday 29th May 2017
Peter Dowd, Shadow Chief Secretary to the Treasury and Labour MP for Bootle, talks with Marcus Papadopoulos about Labour’s plan for the UK economy
The decision of the British public to leave the European Union is the most significant political event in British history since the Second World War. Indeed, supporters and opponents of Brexit are unified in the conviction that the ramifications for the UK of leaving the bloc are huge.
Whilst the warning issued by David Cameron and George Osborne, of Britain going into an imminent recession, in the event of a Brexit vote, has not materialised, the UK, once it withdraws from the EU, will be in unchartered waters.
The separation process with Brussels requires leadership of the highest order on behalf of Theresa May, Boris Johnson, Liam Fox and David Davis. Intellect, experience, foresight and level-headedness are crucial, for it is the UK economy that is at stake – and with it, millions of British jobs.
However, those essential elements of leadership are equally required on behalf of the Labour opposition when monitoring and scrutinising the government’s divorce plan with Brussels. Enter Peter Dowd.
Peter, who entered the House of Commons at the 2015 General Election, representing the constituency of Bootle, has rapidly risen up within the Parliamentary Labour Party.
Having been a local councillor for nearly 30 years, combined with a vast experience in the health, social care and regeneration sectors, Peter is an MP whose roots are truly within the community that he was born into and grew up in. His background epitomises what the background of an MP should be.
It is Peter’s background, coupled with his strong ability to empathise with the lives of ordinary people, as well as his warmth and likeability, that accounts for why he was appointed, this February, as the Shadow Chief Secretary to the Treasury. Intellect, experience, foresight and level-headedness have been brought to that Shadow Cabinet position, as a result of Peter’s appointment to it.
In this exclusive interview, Peter discusses how a Labour Government would maintain and enhance the UK economy’s standing in a post-Brexit world, what Labour’s strategy would be for reassuring foreign investors in Britain, how Labour would approach SMEs and why middle England would be safe in the hands of a Labour Government.
Q. What are Labour’s economic plans for forging a new path for the UK in a post-Brexit world? And are there specific countries which a Labour Government would seek to sign extensive trade deals with?
A. Labour has a continuing commitment to open markets. We support a rules-based trading system. We want to minimise barriers which stop us from exporting goods and participating in Europe-wide manufacturing supply chains. We want to create jobs and economic growth – and trade can help us to do this.
Brexit presents challenges but also opportunities for UK manufacturing and other sectors of our economy. A Labour Government would want to take full advantage of those.
We support the establishment of bilateral trade agreements with countries across the world. But we have made it clear in the past that any agreements must be underpinned by shared values, similar standards and not at the risk of putting key sectors of the British economy at a competitive disadvantage. In the case of an agreement with, for example, the United States, we will oppose any deal that gives American healthcare companies a foothold in the NHS, or free trade agreements that will lead to a reduction in food safety standards or environmental protections.
In a post-Brexit world, a Labour Government would want to maintain close economic, cultural and political links with our European neighbours. Whilst we are leaving the European Union, the UK should not abandon the close cooperation that we have with EU countries across a whole range of issues, from our combined efforts to tackle climate change to fighting terrorism. Our economic prosperity and security will continue to be closely entwined with the prosperity and stability of our European neighbours.
Q. How would a Labour Government reassure foreign investors in Britain, such as the Japanese, Chinese and Indians, that it is in their interests to remain in the country?
A. The first step in reassuring foreign investors of a future in Britain has to be ensuring access to the Single Market. If hard Brexiteers get their wish, and the UK Government fails to secure a deal over access to the Single Market, it will potentially have a significant impact on the levels of foreign investment.
In general, we are already seeing a slowdown of investment, including from China and Japan, with business investment falling last year for the first time since the financial crisis. Major international investors have expressed their concerns about the need for stability in relations with the EU and continued tariff-free access to the Single Market. The Government cannot simply offer a sweetheart deal behind closed doors to every foreign company which is investing in the UK.
The answer to attracting investment in the UK, in the long-term, is by the UK Government, itself, playing its role by investing in skills and infrastructure. Investment, globally, is increasingly driven by the need to secure high skill levels, good infrastructure and access to major markets – rather than cost alone.
That is why, for example, a Labour Government is committed to establishing a National Investment Bank to leverage in private investment alongside public funds for small businesses and high-impact local projects.
Q. Turning now to domestic economic matters, what is Labour’s number one priority for the UK economy?
A. Labour’s number one priority is creating an economy where people are not held back and where everyone in every community can lead a richer life. That means delivering real improvements in working people’s standard of living. Importantly, there is context to that aim.
Under the Conservative Government, the gap between the wealthiest and those on low to middle incomes has continued to grow. Real pay is still lower than before the financial crash nearly a decade ago and is forecast to remain in the doldrums for perhaps another decade, despite economic growth.
There are now four million children living in poverty and six million people earning less than the minimum wage. Public sector employees have not had a pay rise since 2010, despite many taking on more hours and more responsibilities. All of that points to an economy that is increasingly failing the vast majority of people, as the current government prioritises large tax cuts for those, the wealthiest and corporations, who least need them, while cutting in-work benefits for those on low pay.
It is hardly rocket science. Everybody who has a job should receive a wage that they can live off. It is not fair if those at the top of our largest companies and corporations can receive large payouts whilst the wages of their staff stagnates. That is not the politics of envy; it is the politics of fairness.
At the heart of the problem is the weakness of UK productivity growth under the Conservatives. Sustained productivity improvements are the motor of sustained improvements in living standards, but productivity – measured by the amount produced per hour worked – has barely grown under the Conservatives, even as other comparable economies have recovered.
That means that, despite their hard work, British employees take five days to produce what a German or a French worker can produce in four, which directly impacts on the standard of living we can enjoy here. If we want a more productive economy and more growth, we need to tackle pay levels and the growing inequalities between the top earners and those on the lower end. So, for instance, through the introduction of a pay ratio between the highest and lowest paid in a company.
We need a shake-up of how our corporations are governed, to incentivise long-term investment instead of short-term shareholder gain – and this includes worker representation on boards. And, above all, we have to deliver investment across the country in infrastructure, research, and skills. The current government is failing on all three of those.
Q. Why should SMEs trust Labour?
A. Labour recognises that small businesses are the life blood of our communities. SMEs employ over 15 million people, or two-thirds of all jobs in the private sector.
Labour opposed the proposed hike on National Insurance Contributions for the self-employed. The government has now recognised its error and has done a U-turn on the issue. But it was a blow to people’s confidence.
From the mishandling of the business rates revaluation – small businesses experienced massive tax bills as some huge firms saw a reduction – to the introduction of burdensome quarterly tax returns reporting, time and again this government has shown its true colours. The Conservatives are planning to cut £73 billion from taxes on corporations and the wealthiest. That is a wrong priority.
The Government has, at last, announced some transitional funds to mitigate higher business rates. But it falls short of the support which SMEs need. Labour would ensure that SMEs and local businesses are protected from business rates hikes, with fully funded transitional measures and a clear timeline before their implementation. We will speak up for SMEs.
Looking ahead, we want a rebalancing of the whole tax system, away from workers and small businesses and onto the broadest shoulders – the wealthiest and corporations.
The Government’s continued inability to deliver any clear strategy on Brexit is creating huge uncertainty for SMEs, who have no idea what kind of Brexit we will get, when it comes and what it will bring.
That is why Labour is pushing the Government to avoid a hard Brexit that will hurt SMEs and those in the supply chain. Labour supports, as do the clear majority of small businesses, full, tariff-free access to the Single Market as a part of any Brexit deal.
Q. What message does Labour have for Britain’s financial centres?
A. Labour’s message is simple. We recognise the importance of the Single Market to Britain’s continued status as a leading financial centre and will support the continued rights of UK-based financial service companies to win business across the EU. We support full, tariff-free access to the Single Market as part of a comprehensive deal that works for every sector.
Q. Finally, how will Labour make the case to voters in middle England that their jobs, savings and pensions would be safe under a Labour Government?
A. First, this Conservative government have hinted at removing the vital “triple lock” protection on the value of the state pension. Labour will guarantee that lock for the duration of the next Parliament because we think it is essential that pensioner incomes are protected.
Second, we will provide Pension Credit to women affected by unfair “WASPI” changes to their pensions. Clearly, many of these women in particular continue to have lower incomes than the working population. So for many continuing to receive, for example, free TV licences, winter fuel allowances and bus passes, is not just an economic lifeline but also a social need.
Third, savings under this government have fallen, despite a proliferation of schemes to encourage more saving. That is because real earnings have not risen, meaning people have less and less money to put away. Labour will take action to put more money into the hands of low and middle earners by ending the cuts to in-work benefits which are counterproductive.
Our commitments are costed and accounted for. Moreover, unlike the Conservative’s serial inability to achieve targets for the debt and the deficit, Labour’s Fiscal Credibility Rule, drawn up with world-leading economists, is a guarantee of a Labour government’s fiscal stability. It will legally commit the next Labour Government to reducing the deficit over a five year period, and to having the debt lower as a share of GDP by the end of the Parliament than at the start. To enforce that, we will make the Office for Budget Responsibility accountable to Parliament, not the Treasury. As we meet the challenges of Brexit, government probity is essential.
The Conservatives have borrowed over £700 billion since 2010 – more borrowing than every single Labour government in history added together. The Tories have managed that extraordinary level of borrowing even as they drove through the biggest spending cuts in generations.