FULL EMPLOYMENT IN THE SECOND TERM

Ed Balls Chief Economic Adviser to the Treasury
CHAIR: Adrienne Margolis Editor, Unions Today

Key ideas:

"Full employment in every region and every community should be our goal for the second term." Ed Balls "If stability and competence were the only things economic policy was about, then I believe we would be failing the test of Labour politics of putting values into practice – of aiming higher to achieve radical goals." Ed Balls "To meet our goals of higher growth and full employment in every region in the next parliament we are going to have to shift to a greater focus on strategic decision making and policy innovation at the regional and local level." Ed Balls

Report:

Three days after Gordon Brown's last Budget before a likely general election, the Chief Economic Advisor to the Treasury, Ed Balls, defined the strategy and goals of Labour's economic policy for the second term, including full employment across Britain for the first time in a generation.

It had been a good week for Balls in which economic and employment strategy had been the stable foundation for new policies that, he said, delivered a 'clear choice' for British voters.

"On Monday an announcement that the National Minimum Wage will rise to £4.10 this October and £4.20 next."

"On Wednesday a budget that set out radical, long term goals for Britain, and long term investment in public services, while targeting support for families, work, parental leave and pensioners.

"On Friday an announcement of new resources and flexibilities for Regional Development Agencies and Regional chambers – the next steps for balanced growth and full employment across the regions."

Balls believes that, after taking difficult fiscal decisions in the early years in office, Labour have developed a reputation for sound economic management. However, he continued, "If stability and competence were the only things economic policy was about, then I believe we would be failing the test of Labour politics of putting values into practice – of aiming higher to achieve radical goals."

Balls is determined that Labour's economic and employment strategy for the second term could achieve one of the 'radical goals' committed to for a generation by Labour and the trade union movement – full employment, "For all of my life, the scandal of mass unemployment has been the dominant economic, social and political issue. It has scarred the lived of families and held back the prospects of young people for too long."

Economic stability is what Balls sees as the foundation for a radical Labour second term, with the prospect of halving child poverty, stronger public services, and full employment. He set out four key policies designed to entrench long-term full employment in the second term. The policies are aimed at abolishing youth and long term unemployment; giving real employment opportunities to those excluded from the Labour market and official unemployment statistics; and giving everyone, in every region and community, the opportunity to work and gain skills.

"First, a new phase of the New Deal will provide more focused help and support on the pockets of unemployment in our inner cities, people lacking basic skills, or people who have had problems with drugs or crime. Alongside initiatives to match workers who want to develop new skills with companies needing skilled workers, and also extra help for lone parents who want to go back to work."

"Second, a new approach to providing skills training for both the unemployed and those in work so we can have full employment with more people with good jobs paying higher wages. The fact that 30% of the workforce lacks basic level 2 qualifications is holding the economy back. The TUC and CBI are investigating how to take this skills agenda forward and the government are considering radical new options to propel this productivity drive, including a new tax credit for employers"

"Third, we must create and sustain more high skilled jobs by promoting long term investment, backing entrepreneurs, taking a tough and independent approach to competition policy and mergers, and supporting innovation and new businesses in every community."

"But fourth, with unemployment still high in many regions, and with six of the eight English regions still below the average income per head in Europe, I believe we are going to see in the next term a new approach to regional policy in Britain."

Although many of the cities North of London have fallen behind the South East and Europe, Balls holds a conviction that there is nothing inevitable about the regional inequalities in Britain. Substantial work has had to be done at a national level and he believes that to meet the goals of higher growth and full employment in every region in the next parliament Labour will focus on strategic decision-making and policy innovation at the regional and local level, "The Treasury and Government are embracing a new approach to regional policy that will strengthen the essential building blocks of growth in the regions, chiefly innovation and skills, while exploiting the indigenous strengths of every city in Britain. Also a bottom-up approach will be taken, with national government enabling powerful regional and local initiatives to work by providing substantial and flexible resources."

Regional Development Agencies (RDAs) will be entrusted as the strategic leaders in regional and local economic development. Alongside substantially expanded budgets that will now rise annually to £500 million by 2003/4, RDAs will be given full control of their budgets by next April. Rather than working to top-down budgets controlled from the centre RDAs will be able to shape their spending to meet local and regional priorities.

To match this responsibility and empowerment RDAs are committing to a more rigourous working practice that includes self-set output targets, and the top class leadership necessary to work with central and local government, and the Learning and Skills Councils to deliver sustained growth and full employment. Yet Balls stressed the need for better systems to ensure that the new resources and flexibilities for RDAs are subject to effective political and public scrutiny. "We are going to need regional chambers and assemblies to hold annual hearings to examine the work of the RDAs to hold them to account; and to build a wider consensus for that new regional dimension to economic policy." He went on to highlight the £5 million a year for the next three years that will equip the Regional Assemblies to play this role and the important part the trade union movement should play, working with RDAs at the regional level.

Full employment in every region and community, and a stable, more productive economy are the foundations upon which Balls believes Labour can further progress towards a fairer society and social justice for all in the second Parliament. The next steps are to halve child poverty by the end of the decade, support families and tackle pensioner poverty. He described a new approach to the welfare state and tax system that delivers universal support for all, but is also progressive, targeting the greatest help to the greatest need. "On the foundation of Child Benefit, the National Minimum Wage and Income Support we are introducing a new Children's Tax Credit to support families, it all adds up to a new progressive universalism."

While describing this targeted approach Balls referred to the basic and fundamental standards discussed in other sessions of the Unions 21 conference such as the Minimum Wage and Fairness at Work and emphasised the importance of supporting parents and enabling them to balance work and family. He commended the hard work of trade unions that helped shape the changes announced in the budget on extended statutory maternity leave, paid paternity leave and a larger rise in maternity pay over the next two years than has been achieved in the last forty.

"Together we are building a fairer society in which families are put first. Support for all families, but more support when families need it most."

The ideas spelt out by Balls were greeted with an eager show of hands when questions were invited from the floor. In response to a delegate's enquiry into the governments 'obsession' with the private sector and investment through private public partnerships (PPP) Balls volunteered a robust case for one such partnership, the plans for the Tube.

"Our 'obsession' is with reversing the massive under-investment in the country's infrastructure and this cannot be done through the public sector alone. All aspects of the Tube will be managed in a unified way by Transport for London but the work, such as construction, and long-term investment will be covered by the private sector. We want to make sure that the work is done for the best value and that all of the private sector costs for overruns and extra expenditure, seen in every project of this scale, are met by the shareholders of the big construction companies rather than the taxpayer."

While declining to alter government policy on entry to the Euro he did respond to a question. "We think the Euro is a good idea for Britain, but will only decide to join if this takes forward our goals to for stability and productivity, full employment and tackling child poverty."

Balls agreed with a delegate who proposed that family friendly government policies are an investment rather than a cost. "The half a billion package announced in the budget is an investment in the future and family life. In terms of the prospects of higher employment and also giving all people the chance to take time off work when they have children and the choice to find the right balance between life and work."

He went on to reassure delegates that the skills training and support being offered to lone parents through the New Deal are voluntary and benefits would not be cut due to under-performance in training. He also repeated his call for trade unions to engage in the regional development needed to entrench full employment in the next parliament.

Balls concluded his contribution with a call for the chance to deliver in the second term. "If we stay united and are confident about our values and our long term goals; if we reject short termism and the easy option; if we stick to the path of credible radicalism; then together for the first time in a generation, Britain does have the chance to deliver in the second term balanced growth and full employment in every region and in every community of our country."

Reporter: Ben Rodway