Labour should focus on driving down the cost of goodsby Gisela Stuart / June 5, 2013 / Leave a comment
On Monday night, the Institute of Economic Affairs hosted a panel discussion on “Labour and the economy: addressing the cost of living.” It was chaired by Mark Littlewood (Director General of the IEA) and featured Dan Hodges (Telegraph blogger and columnist), Paul Ormerod (economist, author and entrepreneur), John Rentoul (chief political commentator for the Independent on Sunday) and Gisela Stuart (Labour MP for Birmingham Edgbaston). Prospect was the media partner.
We are putting up a blog from one of the speakers every day this week.
In the late nineteenth century Birmingham City Council, under the radical leadership of Joe Chamberlain, passed a resolution that stated: “Whereas there should be a profit made on the gas undertaking, the water should never be a source of profit; all profit should go in the reduction the price of water.” What has this got to do with what Labour should do to reduce the cost of living?
Rising unemployment and the lowest wage growth on record is likely to dominate the political debate. We are seeing the deepest decline in wage growth since the start of the 2008 recession and soaring energy prices continue to squeeze household budgets—the price of gas is up 8.3 per cent year-on-year. There may have been a year-on-year drop of fuel costs, but with petrol at over £1.30 per litre it is for many households simply “a lot of money to fill up the car.” Low inflation is good for some, but for those on fixed incomes and pensioners in particular it increases the problem
Labour’s response to this must be based on the assumption that we will be the government in 2015.
A few don’ts:
– Don’t be driven by electoral positioning
– Don’t get bogged down by gimmicks which don’t add up
– Don’t start believing that governments create prosperity
A few do’s:
– Accept that markets are social—they challenge vested interests and allow outsiders in
– Accept that food, housing, heating and transport proportionally takes out more of the budget of low-income families; rather than subsidising them, drive down prices
– Accept, that in order to influence behaviour, structures have to be simple, transparent and predictable—and there is nothing that helps low income families more effectively than taking a whole lot of them…