How Labour can go beyond Tory ‘levelling up’ and drive real economic equality | Miatta Fahnbulleh | Opinion

How do we create an economy that works for everyone? That is the question that should be at the top of the list for the next leader of the Labour party. It is the question that will continue to shape our politics for years to come.

Alongside this the next leader must find a route back to power from a historic defeat. And to do this, they must unite Labour’s fighting factions, reconnect with communities in its traditional heartlands who have lost faith in the party to make their lives better, and appeal to a broad enough coalition of voters to win an election. The shape of a political project that can pull this off is uncertain, but what is clear is that telling a story about the economy we need and want to build has to be central.

Our economy is running out of steam. Over the past decade economic growth has failed to benefit the majority of people. As a result, people are on average poorer today than they were in 2008 – recent New Economics Foundation (NEF) analysis showed that average living standards are almost £100 per year lower. There is no other example in modern records of average incomes being lower at the end of a decade – or any other given 10-year period – than at the beginning.

Brexit was, in part, a response to this question. Because for many leave voters the referendum was about more than just leaving the European Union. It was a call for change and a clear demand for something better than an economy that does not work for them and a system that felt rigged against them. The paradox of the last parliament is that the political fight over whether and how we should leave the EU completely eclipsed this much bigger challenge. Now that we have left, our politics will be forced to confront this and offer answers that can deliver the change that communities up and down the country want. And its urgency will grow as the prospect of a recession looms closer – driven in part by global slowdown and in part by the economic impact of leaving the EU.

Boris Johnson’s government has grasped this with its promise of “levelling up” the country. What this means beyond the slogan is still unclear. But what is clear is that the government is willing to invest again in infrastructure, health and education to deliver this agenda. And the early indications are that it is likely to pick off progressive ideas trumpeted by Labour – wealth taxes, land value tax, public ownership of railways – in pursuit of this. As the dividing lines on economic policy become blurred, this will create a challenge for a Labour leader trying to carve out an economic agenda that speaks to the country.

But beyond increased public investment to rebalance the economy towards the north and Midlands, the government has no real plan for how to deliver on this wider economic agenda and bring about tangible changes to people’s lives. And herein lies the opportunity for the next leader. If Labour can offer an alternative prospectus that rises to the scale of the challenge with a clear vision of the type of country it hopes to build and a plan to deliver it, it may reverse its political fortunes.

At the heart of this project must be a new social contract that offers fairer pay and more power for people in the workplace. These alongside a commitment to expand and invest in public services to the level that guarantees everyone the basics for a decent quality of life – education, health, care and public transport. It must also provide a response to the climate crisis that will require rapid change over the next 10 years to decarbonise, but in ways that are fair and socially just. And in doing this, Labour should not abandon the ground it has carved out of offering bold, ambitious solutions to the problems we face. But it must do this in ways that empower the people and communities it seeks to help. This means a shift from the top-down solutions that have been central to Labour’s approach for decades to a drive to devolve power and democratise the economy.

In practice this could look like a weekly national allowance, as outlined by the NEF, that gives everyone a minimum income, an increase in public investment in zero-carbon infrastructure to about 3% of GDP per year, and an inclusive ownership fund that will allow communities to retain the wealth they help produce.

The test for Johnson over the next five years is whether the promise to “get Brexit done” can deliver the scale of change that those who voted for it want. Without a clear plan from the government, it inevitably and tragically won’t. Labour’s route to power lies in offering an alternative that can deliver real change by building a different type of economy, one that is both green and fair, that works for everyone.

Miatta Fahnbulleh is chief executive of the New Economics Foundation

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