In its budget submission published on Friday 4 October, the Trades Union Congress (TUC) sets out the challenges of the toxic legacy the new Labour Party government has inherited.
After years of stagnant growth, underinvestment, falling living standards, and broken public services the submission sets out the urgent need for change.
To fix the foundations of our economy and deal with major challenges ahead, the TUC says that the new government must end the short-termism of the last government.
The union body is warning that ministers must deliver an investment boost and a long-term plan for economic renewal, with oversight from an Industrial Strategy Council. This would provide much-needed certainty for workers, businesses and investors.
Labour must learn from success
A growing body of international evidence shows that public investment attracts significant private investment.
For example, in the US a boost to public investment in clean technologies and infrastructure from the Inflation Reduction Act (IRA) was followed by a 71% surge in private investment.
The TUC says that both the Labour government and the OBR must learn from success in other countries.
The Treasury should amend fiscal rules in line with common European practice so that funds invested in productive assets like Great British Energy and the National Wealth Fund are kept off the balance sheet for public debt.
And the OBR should update fiscal multipliers so that its forecasts reflect evidence on the crowding in of private investment by public investment in clean energy and green infrastructure.
Investing for the future
The TUC is calling for higher public investment from the Labour government to boost growth now and to expand the potential for long-term economic performance.
The submission also includes proposals for:
- A properly empowered Industrial Strategy Council with the remit and resources to provide oversight and accountability on ambitious industrial strategy, acting as a critical friend of government.
- A closer trading relationship with the EU, based on mutual high standards of employment rights and environmental protections.
Stronger, fairer growth
The TUC is calling for Labour budget reforms that deliver higher productivity, along with higher pay, so that working people have a fair share of the wealth they create.
The submission includes proposals for:
- Full implementation of government’s plan to Make Work Pay, with effective enforcement to ensure the benefits reach workers and employers.
- A Public Sector Workforce Commission to tackle the key challenges facing the public sector workforce, and to advise the government to drive improvements and deliver services as effectively as possible.
- Fair pay setting in the public sector, including reform of pay review bodies to improve workforce representation, transparency, timeliness and political impendence.
- Fairer taxes, so that incomes made from wealth are no longer taxed at lower rates than incomes made from work.
Labour must fix the ‘rudderless economy’
TUC general secretary Paul Nowak said of Labour’s first budget:
In the last 14 years, our economy has been like a rudderless ship. There was no drive or direction from Conservative government, just managed decline.
But after years of underinvestment, Britain has tremendous pent-up potential. Labour plans to invest in Britain can unleash this potential to create a new era of growth.
Everyone can see the problems holding us back – skills shortages, NHS waiting lists, lack of childcare, expensive energy imports. Families and businesses must be freed from these constraints.
Investment alone is not enough – a long-term industrial strategy is important too. Our investment must deliver profit with purpose – better jobs, higher living standards, clean energy, decent homes and UK industry that can compete with the world.
Featured image via the Canary
