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1. INTRODUCTION

With less than nine months until the next General Election, Britain faces a choice between the
Labour future of long-­‐term, better balanced growth, and the Tory threat of long-­‐term decline, low
wages and insecurity at work.

We are now into the fifth year of Tory failure. David Cameron and George Osborne came to office
promising to rebalance Britain’s economy across all the regions with an export and investment-­‐led
boom, and have failed. They abolished Regional Development Agencies without putting in place a
proper replacement and their flagship Regional Growth Fund has been mired in chaos and delay.
Now the Government’s own figures show the scheme failing to meet its private investment target
by almost £1 billion.

Business rates have rocketed by £1,850 on average since 2010, forming an ever more significant
part of companies’ overall tax burden. On top of this, businesses are still struggling to get finance
from the banks to expand and grow. Lending to small and medium sized firms is down by over
£2.8 billion in the last year while net lending to all businesses is down by over £56 billion since
May 2010. Businesses, like the customers they serve, have been subject to energy price hikes. The
Tories simply haven’t done enough to help businesses with these issues.

We know that the Tories are not going to deliver a balanced, investment-­‐led recovery that
benefits all working people. The fact they tell people things are solved shows they can’t be trusted
again. We know that their approach will continue to be a race to the bottom on wages and job
security, opposition to a proper industrial strategy and flirting with exit from the European Union.

In contrast, the next Labour Government will back British businesses by cutting business rates,
maintaining the most competitive corporation tax in the G7, establishing a proper British
Investment Bank and arguing for Britain to stay in a reformed European Union.

Labour understands that we will need to act where the Tories have failed, to drive strong growth
for the long-­‐term across the whole of the UK. That’s why, in his report for the Labour Party, Lord
Adonis set out radical plans to devolve £30 billion of budgets away from Whitehall. And we know
also that businesses think in investment cycles that stretch well into the next decade, and that
politicians need to do the same. That is why Labour has set out our ‘Agenda 2030’ plan to earn and
grow our way to a higher standard of living for all across all regions.

There can be no future for Britain competing on the basis of low wages and insecurity with a Tory-­‐
led government focused on short-­‐term advantage that will lead to long-­‐term economic decline. If
we are going to pay our way in the world and generate growth that is better balanced and benefits
all, we need to take a different and much longer-­‐term approach – that is what Labour offers to
ensure people can meet their future aspirations and dreams.

Next May, on long-­‐term growth, the British people will decide between the Tory threat or the
Labour future: that’s the choice.

2. THE TORY FAILURE

The UK desperately needs a recovery that is built on the talents of all – a better balanced economy
for the long-­‐term, which drives the sustainable growth Britain needs. This is the only way we will
be able to tackle the cost-­‐of-­‐living crisis facing the country.

However, the Tories’ record has so far been one of failure. Failure on rebalancing on our economy,
on providing the support businesses need, and on ensuring growth is evenly spread throughout
the UK.

Failure on supporting business and rebalancing the economy

The Tories have repeatedly said they would rebalance the economy and as early as August 2010
George Osborne was claiming that this rebalancing was already underway.

“The much-­‐needed rebalancing of our indebted economy -­‐ away from government and towards the private
sector, away from consumption and towards business demand, away from imports and towards exports -­‐ is
beginning.“

George Osborne, Speech at Bloomberg, London, 17 August 2010

But despite these boasts the Tories have completely failed to deliver.

Our export growth since 2010 is sixth in the G7, 16th in the G20 and 22nd in the EU. This is
despite the fact the Tories have a target to double exports by 2020, a target they are not on
course to meet.

The Tory-­‐led Government’s schemes to boost exports have been a failure. The Export Enterprise
Finance Guarantee was launched in 2011 but folded after helping just five businesses. The
subsequent scheme – the Exports Refinancing Facility – was announced in July 2012. Despite the
Government claiming it would be up and running by the end of 2012 it took almost two years until
it was formally launched on 30 April 2014. And the Office for Budget Responsibility’s latest Fiscal
Sustainability Report, published last month, has confirmed that the Exports Refinancing Facility is
yet to help a single business.

Scheme    

Limit    (cap)     Date    scheme    announced     Period    scheme    operates     Extent    scheme    operating     In    2012-­‐13    or    2013-­‐14    accounts?    

Resource    

accounts    

Export

refinancing

facility

£5    billion July    2012 Permanent Open    for    business,    but    noloans    issued    yet Nothingincluded    untilUKEF    makes    aloan

UKEF

Office for Budget Responsibility, Fiscal Sustainability Report, July 2014, Table 2.18, p.58

While business investment is slowly starting to recover, it is still £6.1 billion below its pre-­‐crisis
peak and is the fourth lowest in the EU as a share of national income – only above Cyprus, Greece
and Ireland.

Merlin

Net lending to SMEs is down by over £2.8 billion in the last year while net lending to all businesses is down by over £56 billion since May 2010.

Graph

At the same time as struggling to access finance, small businesses are also seeing the cost of doing
business rise.

According to the Office for Budget Responsibility, the cuts to the headline rate of corporation tax
in this Parliament have cost around £12 billion. However, they have benefited only 80,000
companies – less than two per cent of all British businesses. At the same time, business rates have
increased by more than £1,850 on average since 2010, forming an ever more significant part of
companies’ overall tax burden. The Institute for Fiscal Studies notes that Britain now has the
highest rates of tax on business property in the OECD. This burden falls particularly heavily on
start-­‐ups which need retail outlets, workshops or offices, manufacturers that need factory space,
and businesses that are taking their first steps towards expansion by growing existing sites or
renting new premises.

Yet the Tories have refused to back Labour’s plans to cut business rates in 2015-­‐16 and freeze
them in 2016-­‐17 for any business – small or large – occupying premises with a rateable value of
less than £50,000. This will benefit the occupants of over 1.5 million business properties.

FAILURE ON INFRASTRUCTURE

Despite all their claims, infrastructure work is down 14.2 per cent compared to when the Tories
took office in May 2010 while house-­‐building under this Government is at its lowest peacetime
level since the 1920s.

Graph

In the first three years of the Parliament the Tories spent almost £5 billion less in capital
investment compared to the plans inherited from Labour.

Public    sector    gross    investment    (£bn)    
2010-­‐11     2011-­‐12     2012-­‐13    
Labour    plans    in    2010 61.3 50.7 48.4
Tory-­‐led    Government 59.4 50.7 45.4
Difference     -­‐1.9     0     -­‐3    
Source: Office for Budget Responsibility

And new figures from the Government have revealed that infrastructure investment is set to fall
by £1 billion in real terms next year. The figures were included in the latest Public Expenditure
Statistical Analyses for 2014, published by the Treasury over the summer.

Total    managed    expenditure    (£m)    
2014-­‐15     2015-­‐16    
Public    sector    gross    investment 51,000 50,000
Source: HM Treasury, Public Expenditure Statistical Analyses 2014, Table 1.2, p.19

Failure on regional growth

Despite the Tories promising to rebalance Britain’s economy, areas and regions are being held
back.

Figures published by the British Bankers Association show a huge disparity in levels of bank lending
to business and small business activity between the regions, with the North East accounting for
just three per cent of SME lending, while London accounts for 21 per cent. There are also huge
disparities in the number of small businesses starting up in each region – London had 65,000 in
2012 and the North East just 7,000.

In addition, according to a recent EY survey, Foreign Direct Investment has fallen since 2010 in six
of England’s nine regions: Yorkshire and Humber, North West, East Midlands, South West, North
East, West Midlands. In 2013, Yorkshire and Humber accounted for just 2.5 per cent of FDI into the UK

FDI    projects    into    the    UK    regions    and    UK    market    share    of    projects    in    2013,    and    change    in    project    numbers        since    2010
Share    of    UK    FDI    projects    in    2013    (%)     Change    on    2010    (%)    
London 47.6 31.5
Scotland 10.3 18.8
North    West 7.0 -­‐12.5
South    East 5.9 14.6
West    Midlands 5.9 -­‐6.0
Northern    Ireland 4.5 56.5
East    of    England 3.8 11.1
East    Midlands 3.4 -­‐34.1
South    West 3.4 -­‐32.5
Wales 3.0 26.3
North    East 2.9 -­‐34.3
Yorkshire    &    Humber 2.5 -­‐33.3
Source: EY European Investment Monitor 2014, EY Attractiveness Survey, p.20

The Government has admitted that its private investment target for the Regional Growth Fund is
behind schedule by £900 million as a result of the slow economic recovery.

The latest Annual Monitoring Report for the Fund, published last month, revealed the figures
saying that the slower than expected delivery of private investment reflected “the progress of the
economic recovery.”

“As with the position at March 2013, job delivery by RGF supported projects and programmes remains
broadly on track, with private investment behind schedule to an estimated total of £900 million. The slower
than expected delivery of private investment reflects the progress of the economic recovery, that has been
gradually building momentum during 2013-­‐14 following a period of uncertain economic performance.”
Regional Growth Fund, Annual Monitoring Report 2014, p.15,

The report has also revealed that 40 per cent of the funds allocated in Rounds 1 to 3 have yet to
be drawn down by the projects and programmes due to receive them. This works out at £750
million of the £1.9 billion total.

Failure on secure work

For too many people in Britain the workplace can be harsh and unfair, leaving people feeling
insecure and powerless. From the exploitation of zero-­‐hours contracts, to agency workers not
getting equal treatment, to some employers not paying the minimum wage, the Tory-­‐led
Government is completely failing to live up to its responsibilities to protect the vulnerable and
ensure people are able to earn their way to higher living standards.

In recent years, people on middle and low incomes have experienced a significant squeeze on
living standards fuelled by falling wages, rising prices, social security changes and increasing job
insecurity.

Despite David Cameron’s claims that he was elected to deliver “rising living standards for all, not
just rewards for those in high finance,” the reality is that wages after inflation are down by more
than £1,600 a year since 2010.

One in five people in work are paid below the living wage. Seven million people in working
families are living below the poverty line. There are now estimated to be over a million zero-­‐
hours contracts in the economy.

The Tories’ “shares for rights” policy, through which employees can give up certain employment
rights in return for shares in the company, is ill-­‐thought through and unpopular, and the Office for
Budget Responsibility has warned that it could open up a £1 billion tax avoidance loophole.

And there is a real risk that the Tories will make things even more insecure for workers, if the
Beecroft Report is anything to go by. This report, commissioned by the Government and written
by Tory donor Adrian Beecroft, recommended a number of measures including “no fault
dismissal”, which would allow employers to fire their workers at will.

Tory ministers have welcomed measures to make it easier to fire people.

“It’ll make employment easier,” says Mr Fallon. “It will simplify the process of employing people. And where
they underperform, it will make it easier… where relationships break down it will make it easier for that
relationship to end.”
Sunday Telegraph, 9 September 2012,

http://www.telegraph.co.uk/news/politics/conservative/9530117/Michael-­‐Fallon-­‐We-­‐salute-­‐those-­‐who-­‐risk-­‐

their-­‐own-­‐money-­‐to-­‐create-­‐Jobs.html

Failure on standing up for our key industries

The recent attempted takeover of Astra-­‐Zeneca by Pfizer has highlighted the Tories’ short-­‐
sightedness when it comes to standing up for our key industries.

Despite concerns within the science and business communities about the impact of the proposed
takeover the initial response of the Tory-­‐led Government was short-­‐termist. It seemed that the
prospect of being able to boast of bringing one of the world’s largest companies onto the
Exchequer’s books clouded the Tories’ judgement on the longer-­‐term consequences of the deal.

Sources close to George Osborne had said the bid was “a massive vote of confidence” in the UK
and Grant Shapps said the takeover could be “a great Anglo-­‐American tie-­‐up”. Treasury Minister
David Gauke said the deal showed how, “[t]he UK is now very much top of the list for foreign
companies looking to increase their activity in the UK”.26

In his eagerness to take ownership of the deal as an endorsement of government policy, the media
were briefed that the Prime Minister had appointed Cabinet Secretary Jeremy Heywood and
senior Treasury official John Kingman to “negotiate” with Pfizer. In doing so, it both undermined
the AstraZeneca board who had so far rebuffed Pfizer and gave the impression that the
Government were driving the deal.

In seeming to promote the deal, the Tories found themsleves out of step with the business and
science communities, and on the wrong side of the argument. The Wellcome Trust warned that
the takeover could lead to a reduction in R&D activity, while the President of the Royal Society
expressed concerns that the commitments made by Pfizer were “vague” and “insufficient”.

“Pfizer’s past acquisitions of major pharmaceutical companies have led to a substantial reduction in R&D
activity, which we are concerned would be replicated in this instance.”
Wellcome Trust letter to George Osborne, 2 May 2014,

“These commitments are vague, come with caveats and have an inappropriate time scale. For example a five
year commitment to the UK is insufficient. A commitment of at least 10 years is required. Science is not a
quick win sector – it requires long term investment.
“The commitments on jobs could mean that one or two executives could be the ‘key scientific leadership’ and
what actual jobs would account for the 20% of the company’s R&D workforce? Will they be good jobs for the
high quality bioscience, chemistry and other graduates coming out of our research universities? And 20% is
insufficiently ambitious. This commitment should be increased and be more specific.
“Pfizer have also said that UK expertise in areas such as oncology, inflammation, and cardiovascular and
metabolic disorders, would ‘represent a vital component’ of the combined company’s R&D. This commitment
is too vague and unless it is more specific offers little reassurance. There should also be a further
commitment to provide more resources to promote collaborations between Pfizer and the UK University
sector. A fund of £100m for such a purpose would be a good start. A similar fund for SME collaborations
should also be considered.”
Sir Paul Nurse, President of the Royal Society, Letter to Business, Innovation and Skills Select Committee, 12
May 2014

Ian Read, the Chairman of the Board and CEO of Pfizer, even admitted to MPs that the any
takeover of Astrazeneca would likely result in job cuts, and a lower spend on research.

Mr Read later admitted to MPs that any tie up between the two drugs giant would cost jobs -­‐ but he refused
to say where the workforce would be slashed.
He said: ‘I am not sitting here saying we will become more efficient without some reduction in jobs. I cannot
tell you how much or how many or where.
‘There will be some jobs cut somewhere. I cannot tell you where in the world.’
He also admitted that he could not guarantee which sites in Britain he would keep open. Mr Read said: ‘I
can’t give any commitment on a site by site bases.’
Daily Mail, 14 May, 2015.

AB: My question was: are you prepared to sustain the level of research and development budget at the level

at which it is jointly between Pfizer and AstraZencea at this moment?
IR: We believe the most important thing on that is not the percentage of sales we spend on research it’s
how productive it is. So, I do not expect that the combined total will remain the same; I expect it will be
lower. How much lower? At this stage I cannot give a figure on that.
Ian Read, evidence to Science and Technology Committee, 14 May 2014

Ministers also failed to appreciate the extent to which the desire to use tax inversion in the US was
driving the deal. Ian Read admitted in his evidence to the BIS select committee that one of the
principal rationales for the deal was tax planning.

“We have made it clear that there are three reasons for wanting to do this acquisition … Then the third part
of the value equation is a lower tax rate and a more flexible use of our financial assets.”

Ian Read, evidence to BIS Select Committee, 13 May 2014

The proposed takeover may be off the table for now, but it’s clear the Tories got it badly wrong.

3. THE TORY THREAT

The UK simply can’t risk another five years of the Tories: five more years of falling business
lending, of rising business rates, and of ever more insecure work. The Tories’ approach risks us
being closed to the outside world and favouring isolation over partnership with Europe, being
wedded to reducing the size of the state as an end in itself, and lacking credibility on science and
innovation given climate change denial in the Tory Party. The Tories are unable to rebalance and
achieve the long-­‐term growth which Britain needs.

Threat on industrial strategy

The Tories are wedded to the goal of reducing the size of the state as an end in itself, with George
Osborne arguing that we need government to be “permanently smaller”.

They have refused to back an ambitious industrial strategy which would allow us to support the
development of UK industry in targeted sectors to make the most of our competitive edge.
Another five years of the Tories would risk us falling behind our competitors when it comes to
these key sectors.

Winning the race to the top means developing solutions to tomorrow’s problems today. But
before you can solve them, you must first acknowledge that the problems exist. Climate change is
perhaps the biggest long-­‐term challenge facing us. Yet the failure of some Tory ministers to even
recognise the problems puts the potential for future innovation at real risk. Defence Secretary
Michael Fallon, for example, has warned against “climate change worship” when it comes to
government policy. And the former Environment Secretary, Owen Paterson, refused to meet the
climate change scientist in the Met Office.

The Tories can’t credibly claim to be supporting innovative companies help Britain become a
global leader in the production of green technologies if a large part of their Cabinet do not accept
the basic science of climate change in the first place.

And other key sectors would be put at risk by the Tories’ complete failure to think in terms of a
long-­‐term industrial strategy.

The example of the proposed Pfizer/Astra Zeneca takeover highlights the real risks of the Tories’
approach. Labour has called for a strengthened public interest test to better protect Britain’s
science base in exceptional cases like this, but the Tories have refused to back our plans. While
Labour will stand up for British jobs and British science, another five years of the Tories risks a
focus on the short-­‐term at the expense of the UK’s strategic economic interests.

Threat on jobs and growth

The UK’s success in the world requires international engagement: an open, outward-­‐looking
approach to the world. To make the most of our opportunities around the globe, we must remain
open to the world and engaged, shaping the forces of change in partnership with other countries –
in Europe and beyond.

But the Tories are intensely relaxed, even enthusiastic, about the prospect of our exit from the EU
and choosing isolation instead, which would be disastrous for Britain.

David Cameron is caving into his Eurosceptic backbenchers – putting the party interest before the
national interest by threatening to walk away from the EU. This would be a disaster for British jobs
and businesses.

In June, John Cridland, Director-­‐General of the CBI, warned that the UK’s EU membership
“supports jobs, drives growth and boosts our international competitiveness” and that leaving the
EU would leave us “beholden to its rules without being able to influence them”.
Cridland told the Observer that full membership of the EU boosted British jobs, growth and investment. ‘The
EU is our biggest export market and remains fundamental to our economic future,’ he said. ‘Our membership

supports jobs, drives growth and boosts our international competitiveness.’
He dismissed the idea that the UK economy could be just as successful outside the EU with some form of
associate membership status, which some Conservatives advocate. ‘Alternatives to full membership of the EU
simply wouldn’t work, leaving us beholden to its rules without being able to influence them. We will continue
to press the case for the UK remaining in a reformed European Union’.
The Observer, 28 June 2014, http://www.theguardian.com/world/2014/Jun/28/european-­‐union-­‐exit-­‐will-­‐
harm-­‐britain-­‐says-­‐cbi

Major UK employers have also warned about the economic impact of the UK walking away from
Europe.

“European aerospace group Airbus, one of Britain’s largest employers, has voiced concerns over the
possibility of the country leaving the European Union (EU), saying the benefits of an alternative economic
model needed to be proven.
“The Franco-­‐German company, that employs 17,000 workers in Britain, is the latest large foreign investor to
say it favours Britain continuing its membership of the 28-­‐member trading bloc.
“Car giants Ford and Japan’s Nissan have said they would have to re-­‐evaluate their operations if Britain pulled
out of the EU in a proposed referendum.”
Reuters, 21 January 2014,

Shutting ourselves off poses a huge threat to our future prosperity. And not only within Europe –
our nearest and biggest market – but across the world: standing shoulder to shoulder with our
European partners gives us access to other markets we couldn’t get into, or not so quickly.

Threat on regional growth

Another five years of the Tories risks another five years of the UK’s regions being held back.

The Tories have failed to match Labour’s ambition to make it easier for Local Enterprise
Partnerships, combined authorities and councils to deliver growth, better-­‐paid jobs and improved
public services in their areas.

They have rejected the Heseltine Report to devolve power and resources to local areas and their
proposals fall well short of Lord Adonis’ radical plans to devolve £30 billion of budgets away from
Whitehall.

The regions simply can’t afford another five years of the Tories.

 

4. THE LABOUR FUTURE – AGENDA 2030

The Labour Party is clear about our goal: a high-­‐productivity, high-­‐skilled, innovation-­‐led economy.
Agenda 2030 is our plan to achieve just that. It has been given that name in recognition that
businesses do not work to four and five year election cycles but look far beyond that.

A balanced, resilient economy succeeding in the world, creating good jobs and opportunities,
offering people a ladder up and the chance to make the most of their potential. That is the only
way that we will tackle the cost-­‐of-­‐living crisis and make sure that any recovery benefits all
working people, and not just a few at the top.

Labour will build on the talents of all, by:

• Investing in skills by using public procurement to increase apprenticeship opportunities,
requiring all firms that wish to get a major government contract to offer apprenticeships and
reforming the skills system to put employers in the driving seat.
• Raising standards by ensuring that young people study maths and English to the age of 18;
establishing a Technical Baccalaureate; moving towards a system whereby all apprenticeships
last for two years and are at level three; and introducing Technical Degrees.
• Supporting small businesses, entrepreneurship and job creation by tackling rising energy costs
facing business, cutting and freezing business rates and removing the barriers on small firms
including by getting tough on late payment.
• Giving regions and Local Enterprise Partnerships the powers and budgets they need to boost
local growth, rebalance the economy and ensure every part of the country succeeds.

Labour will ensure the UK is able to tackle the problems of the future, by:

• Establishing an independent Energy Security Board modelled on the OBR to co-­‐ordinate with
government, the National Grid and regulator to set out and implement a timetable for building
the energy capacity Britain needs.
• Backing the 2030 decarbonisation target, which the Government has refused to do and which
would help support the development of low-­‐carbon technologies.
• Adopting the recommendation of the Armitt Review and setting up an independent
infrastructure commission to identify the UK’s long-­‐term infrastructure needs and building
200,000 homes a year by 2020.
• Giving the Green Investment Bank the borrowing powers to enable it to support low-­‐carbon
industries of tomorrow.
• Investing in our science base and develop our national innovation system, including building on
the role of the Technology Strategy Board.

Labour will promote active government investing for the long term, by:

• Setting up a proper British Investment Bank supported by regional banks to help small
businesses get the finance they need.
• Implementing a cross-­‐government industrial strategy to support and develop key sectors
which will produce the jobs and growth of the future.

• Putting in place a British Small Business Administration to spur growth opportunities for small
firms and improve business support, modelled on the successful US Small Business
• Administration.
• Adopting the recommendations of Sir George Cox’s review into tackling short-­‐termism in
• British business and reforming corporate governance, including by putting employees on
remuneration committees and giving greater powers to long-­‐term shareholders.

Labour will promote an outward-­‐facing approach to the world, by:

• Engaging with our European partners, in contrast with the Tories’ approach.
• Using our membership of the EU to help us as we look to boost our exports in new markets
overseas and help more small firms export.
• Reforming the EU so that it is more focused on growth, including through the appointment of
an EU Growth Commissioner which Labour has led calls for.
• Supporting the investment and jobs which students from abroad bring to our country.
• Building on Britain’s strengths, including our Diaspora communities, to strengthen trade links
with emerging markets.