Making the case for a fair recovery

Nicola SmithHead of Economic and Social Affairs, TUC

Introduction

• Current state of the economy• Implications for services and spending• Is there any other choice?• What do the public think?• Arguing for an alternative

State of the economy

The economy is finally growingQuarterly GDP growth rates, ONS

Although it remains the slowest recovery on record

The profile of recession and recovery, NIESR

There are also concerns about how sustainable the recovery is

George Osborne, 25th Feb 2010: “The recovery will only be sustainable if it is

accompanied by an internal and external rebalancing of our economy: in other words a

higher savings rate, more business investment, and rising net exports”

With little evidence of ‘rebalancing’

GDP by expenditure, TUC Economic Quarterly

While household spending is increasing, real earnings are not

Contributions to annual growth in real earnings, TUC

Jobs improvements are welcomeILO unemployment, TUC

But under-employment remains high, although levels are starting to fall

Involuntary temporary and part-time work, TUC

The jobs market has changed since 2008 with more part-time work

Part-time and full-time work, TUC

There has also been some change in jobs levels in different sectors

Change in workforce jobs, Sept 2008 – Sept 2013 TUC

Some groups are now at particular risk of poorer outcomes

Employment rates for different groups, Inclusion

What does this mean for services and spending?

Growing economy means that public finances are improving

Public finances, ONS

But most of the spending cuts in services and benefits are still to come

Green Budget 2014, IFS

And public sector employment is set to fall further

General Government Employment forecasts, OBR

Is there any other choice?

What choices does government have?

• Far more than they suggest!

• We need to consolidate the public finances, but many unknowns: – How much capacity has been lost? – How sustainable is the recovery?

• And governments have choices: – Speed of consolidation– Balance between tax and spending– Discretion over tax cuts

There are also wider policy choices that could deliver a fairer recovery

• Employment protection legislation– Unfair dismissal protection– Rights for casual workers

• Strengthening the minimum wage and tackling high pay

• Fairness in social security– We don’t need the current sanctions regime

• Tax evasion and avoidance– How strong is the anti-avoidance strategy?

• Corporate governance and company decision making– Are firms being made to invest for the long-term?

So what do the public think of the current approach?

A consistent majority think the cuts have been unfair

You Gov tracker polls, TUC analysis

Although a majority also think they are necessary

You Gov tracker polls, TUC analysis

The proportion who think the cuts are too deep has been falling

You Gov tracker polls, TUC analysis

As has the proportion who think the cuts are being implemented too fast

You Gov tracker polls, TUC analysis

Public do not back plans for a permanently smaller state

TUC You Gov poll

And do not think gains of growth will be fairly shared

TUC You Gov poll

Public support social security safety net

GQR polling for the TUC

Particularly for people in workTUC You Gov poll

Lots of misinformation about benefitsTUC You Gov poll, responses on proportion of benefits bill people think spent on JSA

Few people think they have gained from the economic recovery

MORI poll on extent to which people think growth has benefitted their living standards

So what should progressives be arguing for?

What might a fairer recovery look like?

• Gains of growth that are more fairly shared– Better jobs (better balanced recovery and rights at work)– Fairer pay (at the bottom and at the top)

• Super-rich paying their fair share– Fair tax– Banks and big business held to account

• Vital welfare safety net retained– Protection for those who have contributed– A system that is fair

• Against permanent public service cuts– Childcare, social care, hospitals, schools vital to help

households and boost the economy

Over to you!

Thank you!

nsmith@tuc.org.uk