100 Days to Transform Britain

Labour has promised bold action to tackle Britain's social injustices within 100 days of a new government by ending austerity, raising the minimum wage, nationalising utilities and fighting regional inequality.

It is often said that our economic model is broken, or that the system has failed. It hasn’t – neoliberalism is doing precisely what it was designed to.

Inequality skyrockets as the wealth of the 1% grows and the state continues to shrink. Politicians representing this ideology have disdain for its human consequences – just yesterday, during a filmed interview, Boris Johnson pocketed a photo of four year old Jack Williment-Barr sleeping under clothes on an NHS hospital floor. Jack has suspected pneumonia, and was waiting hours for a vacant bed in an overcrowded hospital in Leeds. The Labour Party’s manifesto in this election aims to dismantle this unfair system, and lays the groundwork for a broader economic paradigm shift. 

In his speech on Labour’s first 100 days, Shadow Chancellor John McDonnell recognised the urgency of the need for change. He announced that Labour’s first Budget will take place on February 5th and will conclusively end austerity, a decade since it began. The budget aims to both empower citizens financially and democratically, following 40 years of both money and power being concentrated in fewer and fewer hands.

First and foremost, Labour would immediately introduce a Real Living Wage of £10 per hour for all workers over 16. We are coming to the end of a ‘lost decade’ for wages – real wages (after taking account of price increases) remain below their pre-crash level, marking the worst period of wage stagnation since the Industrial Revolution. Wages have not even kept pace with the weak growth we have seen since 2010. 

What increase in earnings there has been has not occurred evenly: capital gains incomes for households earning over £100,000 a year has trebled in the last five years, which likely means the real picture of income inequality is far bleaker than statistics show. Richer households’ preference for income from capital gains and not from work is a result of lower rates of tax on that form of income – further bolstering Labour’s argument for income from wealth to be taxed at the same rate as income from work.

Gross Domestic Product (GDP), often heralded as the ultimate marker of economic progress, has barely grown since pre-financial crisis levels. Just last month the UK narrowly avoided a recession, after figures showed growth of only 0.3% in the last quarter – the lowest rate of growth since immediately after the financial crisis. In the previous quarter, GDP was negative. This is an economy that is failing on its own terms.

The result of weak GDP and low wages is soaring in-work poverty, with the majority of people in poverty now living in working households. In the mid-1990s, 37% of those in poverty lived in a working household. That has reached 58% today. While the Conservatives boast about the high levels of employment, an unprecedented amount of this employment growth is in insecure work. Zero hours contracts are rising back to their record levels set in 2016, up 52,000 to 896,000 in the last year.

Labour’s first budget also promises funding for a welcome 5% pay rise for all public sector workers after years of seeing their pay frozen. This year, the Living Wage Foundation found that over a million public sector workers are in in-work poverty, a direct result of the Conservative pay freeze. As a further indictment of our sick system, cuts to public services are disproportionately affecting low income workers in a way that doesn’t show up in wage or income inequality statistics. 

A cleaner working in your local NHS hospital is unlikely to be earning enough to live on. They are not likely to have had a payrise in years. Furthermore, they are more likely than most to rely on local public services, which have also been cut under the Conservatives. This snowballing of effects is not captured in official national statistics, so however bad the economy is reported to be – for the poorest in our society, it’s worse. It is a true indictment of the austerity programme that it has disproportionately taken away from those who already had the least.

The third promise McDonnell makes for his first budget is an emergency package of reforms to Universal Credit, while Labour designs a replacement social security system for the longer term. Since it was announced in 2010, Universal Credit is almost unanimously seen as a disaster. According to the Institute of Fiscal Studies, the mandatory transfer onto Universal Credit from the old benefits system has meant a loss of at least £1,000 a year for 1.9 million adults.

Even if it had been designed well, Universal Credit’s execution was pitiful, leading the National Audit Office to conclude it suffers from “weak management, ineffective control and poor governance.” The Trussell Trust, which manages two thirds of the nation’s food banks, has found that the top three cited reasons for food bank use are insufficient benefit income, at 36%, followed by delays in benefit payments at 18% and changes to benefit levels at 16%. 

The UK is the fifth largest economy, and yet there are more food banks than McDonald’s and Burger King outlets combined. At the sharpest end, this system and the wider austerity programme has resulted in 4 million children in poverty, and over 120,000 deaths. 

In the first 20 days of its administration, Labour has pledged to promote investment to expand and create new industries in every region. Instrumental to this is a National Transformation Unit, which will be based in the North of England by early 2020. The Unit will provide the initial finance for Labour’s new National Investment Bank, regional development banks and Post Bank, using the power of the Treasury to get affordable finance onto every high street in Britain.

Tackling regional inequality will have emancipatory effects for communities across the country. The UK is more regionally divided than any comparable advanced economy in terms of productivity, disposable income and life expectancy. Furthermore, we have the most centralised government of any comparable economy. Again, these two factors snowball as decisions taken in London and the South East are biased towards the region. Centralisation has also left the provision of local services weakened and undermined the capacity of local authorities to take investment decisions. 

Even controlling for factors such as population growth, local authorities have seen a real cut of 24% to their budgets, with the cuts falling disproportionately on councils in deprived areas. This has hurt those who depend on local services most; in 2018, only 1⁄3 of councils felt they would be financially able to provide the “bare minimum” in public services after 2023. 

Labour’s regional manifestos, and plans to address regional inequality, are a crucial ingredient for an efficient programme of public investment, as decentralised decision-making allows for more efficient and targeted spend. Furthermore, a programme of decentralisation of power could serve to waylay concerns about the government’s capacity to undertake a transformative investment programme. Compare this to the Conservative 2019 Spending Round, which only goes one fifth of the way to reversing the cuts to local authorities. 

Finally, the first 100 days will see the beginning of the process of bringing key utilities into public ownership under democratic management. The question of public ownership has been starkly posed by Labour’s manifesto, which commits the party to placing ‘rail, mail, water and energy’ and ‘the broadband-relevant parts of BT’ into public ownership. This would represent a major reversal of four decades of neoliberal economic policy, in the UK and elsewhere, and would transfer 5% of total UK assets held in private companies into public ownership.

Changing our ownership structures have been an essential component of each economic paradigm shift over the last century. After the Second World War, Atlee brought around 20% of the economy into public ownership; Thatcher privatised roughly the same amount. Between 1980 and 1996, our approach to ownership was more neoliberal than most; the UK accounted for 40% of all privatisation revenue in the OECD during this time.

To move away from neoliberalism we must redistribute and change our ownership structures. Only then can we create a more democratically-engaged population with the ability and means to address wider challenges – most pertinently, the climate crisis. 

Labour’s plans for its first hundred days include essential measures to help those that are suffering today from the impact of ten years of austerity. Longer term, the manifesto promises much more substantial change, proportionate to the scale of the overlapping democratic, ecological and inequality crises that have resulted from forty years of neoliberalism. Another world is possible, credible, and necessary. Hopefully it starts on Friday.