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Charter for Budget Responsibility

The right hon. Gentleman will recall my opposition to PFI and its failures, but let me be clear: to borrow for investment, to ensure that people have the skills and resources necessary to tackle the productivity crisis and thereby grow the economy and create the high skills and wages which mean that people can pay their taxes and fund our public services, is creditable; however, what we have seen over the last seven years is borrowing because of the failure of the Government’s economic policy.

In the past seven years, the Government have actually cut investment, and the consequences of insufficient investment are painfully clear. Austerity measures and low investment have fed directly into what the Governor of the Bank of England has called a “lost decade” for earnings. Productivity growth has stagnated, as even the Government’s own industrial strategy White Paper acknowledged. I share the Chancellor’s concerns: every hour worked in Britain now produces a third less than every hour worked in the US, Germany and France. We have been arguing that case at least since I became shadow Chancellor, but we had no acknowledgment of it from the Government until yesterday.

With that record of under-investment, it is no use those on the Government Benches talking about a post-Brexit Britain taking on the world. An economy with low productivity can only compete on the lowest common denominator, and that means, as has happened, slashing wages and salaries and hacking away at social protections, such as the NHS and pensions. This is the grim reality of the Conservative’s low-investment, low-productivity, low-wage economy, and it can easily get worse. For some on the Government Benches, an economy shorn of basic protections in the workplace, with rock-bottom wages and social spending provisions stripped to the barest minimum, would be a desirable goal. We have had a glimpse of that future in the Chancellor’s own threats to turn Britain into a tax haven. Even to hold out this prospect is to admit that the Government have no better plan than the steady management of decline.