August 20, 2013

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For people who have lost jobs, homes and businesses, the fall in living standards has been disastrous. 

Those in part time jobs have been hit hard as the threshold for tax credits has been changed. At the same time, zero hour contracts have become widespread so that there is far greater uncertainty about how much money will be coming in each week. 

And then there is the bedroom tax. 

Anyone in social housing has to pay for an empty room. Never mind if they are disabled or if they have young children. They have to pay. And they have to pay some of their council tax even if they are on a low income and cannot afford to pay. 

The government says that work should always pay more than benefits. And of course that is right. But when the only jobs are zero hours contracts, work simply doesn’t pay because often employers don’t have enough hours for their staff. The government has targeted those on low wages and those in social housing as a means to cut the deficit. 

At the same time those on incomes over £150,000 have had a tax cut and those receiving substantial bonuses in the financial sector and elsewhere delayed their payments from the last tax year to the current tax year to benefit from the cut. All that money paid to some of the wealthiest in tax cuts is not going to cut the deficit that is for sure.  

And it’s all very well for Tories like David Cameron, George Osborne and Lib Dems like Nick Clegg to claim that the number of people out of work is falling. But what they don’t say is that the number in part time jobs is going up, which hides just how tough life really is for many people. And that figure for the number of jobs includes people on unpaid job schemes run by the government, so it’s likely that unemployment is actually falling anyway. 

So much for life in coalition Britain with the Tories and Lib Dems in charge.

But there is another way. 

Life doesn’t need to be more of the same where the many struggle to make ends meet while the few enjoy growing prosperity including massive tax cuts paid for by taxes on disabled people and families with young children. 

If we really are serious about solving the problems created by the financial crisis, if we really want to reverse the fall in living standards and if we want to increase prosperity for the majority of people in this country, then we need to invest in the long term by boosting the construction sector and manufacturing. 

The investment by Peel Ports is one key ingredient and now we need to see jobs created across Merseyside to make the most of the port expansion. 

But we also need the government to boost house building, support the renovation of empty homes and regenerate those brownfield sites which need significant decontamination. To create jobs and improve living standards, will need public investment in the long term. 

At present, the government is increasing the size of the deficit because of a lack of growth. 

By growing the economy, we can create jobs, boost living standards and yes cut the deficit. In fact that is what happened after the Second World War when the deficit was three times its current level, yet was paid off at the same time as the government invested in the infrastructure of the country. 

In fact the deficit was paid off because the government’s policies ensured growth. 

It is only in times of growth that the government can earn more money in the long run. Why? Because the more people who are in work and the more businesses who are making money, the more is collected in taxes, which can be used to get rid of the deficit and start to pay off the long term debt. 

A massive programme of building, especially house building was at the heart of the solution to the post war financial crisis. We can choose to learn from the lessons of history or to ignore them. The lessons are pretty clear that until we invest massively in economic recovery, the fall in living standards will continue, except for the wealthiest. 

In 1945, the Labour government made that investment. It built the houses, it founded the NHS and it created the jobs. As a result, prosperity was created and living standards gradually grew. In fact, even the Tory government which took over from Labour in 1951 accepted the need to invest for growth as it continued the same policies of building houses to boost the economy. 

A policy of growth worked after the war under much more difficult conditions than we face now. Meanwhile, under this government, the deficit is still going up. It is crystal clear that austerity isn’t working. The lesson from 1945 is that putting growth first does work. 

It’s time to go for growth.