The Labour plan: How to fix the economy

Britain’s economy has flatlined for the last two years. Our deficit is going up, not down. Nick Clegg admitted recently that the government had cut too much, killing growth. George Osborne’s trickle-down economics and austerity, involving tax cuts for the very rich, squeezing those of low and middle incomes and cutting infrastructure and capital spending, just isn’t working.

It could not be more obvious. There can be no doubt whatsoever that Osborne’s policies have been bad for our economy – the facts and figures are there for all to see.

I know that many people in Lincoln, including many families, have seen their cost of living go up over recent years. Things aren’t getting any easier. Everything seems more expensive – the weekly shop, driving to work, train tickets, childcare.

People also say to me saving to own their own home has gone from ‘obtainable if we work and save hard’ to totally impossible. This is backed up by national statistics, which show that saving for a deposit, on average pay, now takes 22 years.

Last week, as is unfortunately becoming common place, the Bank of England told us the economic outlook looks gloomier than they thought. What’s more, the Office for National Statistics reported that pay packets are now no heavier than they were in 2003. It’s not just in Lincoln that year on year people feel worse off, not better.

To top off the bad news, the respected Resolution Foundation revealed that it will take until 2023 before the earnings of families with low or modest incomes recover to 2008 standards.

Labour have said that our exact tax and spending commitments for the next Parliament will have to wait until we publish our manifesto in 2015. That’s still true – any other approach would not be sensible – but people also rightly want to know more about what Labour would do to help in these tough times.

That’s why last week Ed Miliband made it clear that a Labour government would cut income tax for 25 million people across Britain. The 10p starting rate of tax would be brought back. Labour would pay for the introduction of a 10p tax rate by taxing properties worth over £2 million.

At a time when the economy is flatlining, the cost of living is rising and living standards are falling, this move would put money back into people’s pockets. Vitally, it would also be good for the economy – both locally and nationally. We will only get growth again if the majority of people in Britain prosper, not just those at the very, very top.

Also importantly, it would make work pay by ensuring people keep more of their income if they increase their hours – which, wrongly, is sometimes not the case at the moment.

Labour will be putting pressure on the Tories to implement this policy now, for the good of the economy and for the good of 25 million people. However, it seems unlikely that Osborne would implement a measure that would help the majority. Instead, this April, the Conservatives are giving every millionaire in Britain a tax cut of £100,000 a year.

Labour’s proposal therefore represents a very clear choice for 2015: Labour is offering income tax cuts for millions which would put Britain on track for economic growth; the Tories have cut tax for millionaires and are presiding over a stagnant economy. I know which I’d choose.