The construction figures released today – showing a fall in output of 1.1 per cent in the first three months of the year – are yet another deeply worrying sign of a stalling economy.
They will also be excruciatingly embarrassing for the Chancellor. Last October George Osborne declared to Conservative Party Conference ‘we are the builders’. Yet since then, construction output has shrunk. The sector has stalled under the Tories; in six long years, construction output has grown a deeply unimpressive 1.6 per cent.
The same is sadly true on manufacturing. In his 2011 Budget speech, George Osborne vaingloriously laid out his plan for growth, claiming;
‘We want the words: “Made in Britain”, “Created in Britain”, “Designed in Britain” and “Invented in Britain” to drive our nation forward—a Britain carried aloft by the march of the makers. That is how we will create jobs and support families. We have put fuel into the tank of the British economy.’
Unfortunately, the march of the makers hasn’t even left its staring point yet and the engine seems to be running on empty. Manufacturing output today is 1.0 per cent lower than when he made his speech. This week we found out that UK manufacturing industry had entered recession for the second time under this government. It has declined by 1.9 per cent in just twelve months.
The Chancellor – like the Prime Minister – may be good on rhetoric and full of glitzy PR, but the reality always fails to match up. They are good at delivering speeches. But they just don’t deliver for working people.
Beyond the worrying figures on construction and manufacturing, there are many other warning signs flashing on the economic dashboard. Productivity has stalled under the Tories, with the gap between the UK and the rest of the G7 opening up to a yawning 17 per cent. This has been the main cause of the ferocious squeeze on living standards – now the longest in over a century. Pay remains lower in real terms than when the Tories came to power. Public and private investment remain worryingly low.
The Tory failure on the economy is increasingly clear for all to see. Osborne promised in 2010 to eliminate the structural deficit in five years and to preserve our AAA credit rating. He failed on both promises. His budget earlier this year revealed huge downgrades in estimates for future growth, wages, productivity and levels of investment. It also showed he was failing on two of the three targets he had set himself on welfare spending and debt. As the economy stalls, he looks increasingly likely to fail on his third target – the economically illiterate promise to run a surplus by 2020.
This all goes to show the urgent need for a modern industrial strategy.
Our economy needs to build on the pragmatic and progressive work begun by Peter Mandelson and continued by Vince Cable when they ran the Department for Business, Innovation and Skills. Unfortunately, the current Secretary of State – Sajid Javid – is so hidebound by his restrictive economic orthodoxy and his ideological disinclination to intervene, that he just is not capable of doing what is necessary to give the UK economy the best chance to thrive and prosper.
We need a Government that is willing to work closely with employers and unions, with skills providers and city regions, and with many other stakeholders to address common challenges. We need a Government that will work with employers to tackle the skills emergency, address the productivity crisis, and unlock other structural barriers to growth. We need a Government that will re-set the rules of the game to incentivise long-term patient investment, innovation and value creation, rather than the short-termism and debt-fuelled value-extraction which we see in too many areas of our economy today.
If the Business Secretary and the Chancellor are unable to do this, Labour will. Over the coming months, I look forward to working with employers, experts, unions, skills providers and others to develop the modern industrial policy that we need. One which supports high-skill, high-pay jobs, and delivers strong, sustainable, and shared growth.
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